Not all accounting software is created equal. Each is designed for specific targets. For example, what is good for a small business, where the owner or bookkeeper does the accounting, likely will not be good for a high-growth start-up with more complex accounting requirements. Or what is good for a single-shop retailer may not work well for a project-based services company.
Early in my career, I was very fortunate to have been a purchasing agent. In this role, I learned best practices for sourcing suppliers, developing requirements, evaluating proposals, and making selections. Later in my career, as the head of IT for a Fortune 500 company, I had the opportunity to apply these skills when acquiring software applications, including accounting software. And today, as a Value-Added Reseller (VAR) of a cloud-based accounting software application (Intacct), my role has been reversed – I am no longer a buyer, but a seller.
As a result, I have been involved in both sides of hundreds of software selections. My observation is that many buyers of accounting software could benefit from following a few fundamental best practices for determining which solution will support long-term plans.
5 Best Practices to Implement In Your Accounting Software Search
1) Think about the BIG picture:
Far too often, organizations choose accounting software to meet an immediate need and therefore find themselves outgrowing the solution quickly. This leads to one of two outcomes – spending time and money working around limitations or replacing a solution much sooner than expected.
With the big picture in mind, your choice will last many years. Ask yourself:
- How will your organization’s strategy impact what functionality is needed?
- Will you add new services or products that will impact accounting?
- Will you expand to new geographies?
- What IT support will be available?
- What type of growth/volume will you need to support in the future?
- How will the accounting system fit in with the other systems used to manage the business?
2) Prioritize requirements:
Too many companies jump into the buying process to put out a fire, without thinking through both short and long-term requirements. This does not need to be a 300-page requirements document, it can simply be a list of 10-20 items.
- If revenue figures will be coming from a third-party application (e.g., a POS or a medical billing system) and posted directly to the GL.
- If invoices need to be generated from figures coming from a proprietary platform (e.g., a provisioning system).
- If purchases need to be held as “construction in process” and not expensed, but capitalized at the end of a project.
- If there are multiple entities, each with its own unique chart of accounts or fiscal periods.
- If financial reports have to account for partial ownership.
This is critical for communicating to each provider what you expect. But even more importantly, in order to make the best decision, you should prioritize your requirements based on importance or impact. Are there certain items that you absolutely must have and others that would be nice to have?
3) Map out key use cases:
Using the list of requirements as a foundation, make sure you get each provider to provide a demo based on your typical transaction flow (e.g., AP, AR, or monthly close). Map out key use cases (the flow of an order all the way through to payment, the calculation of revenue under the new ASC 606 guideline, or the monthly close process). Then, ask that these use cases be demonstrated and compare what you see from each provider.
The goal of Items 2 and 3 is to obtain a true “apples to apples” comparison. If you don’t enter the selection process with a clear set of requirements and use cases, what you will hear and see from each vendor could be very different. As a result, it is almost impossible to make a good decision.
4) Consider the company, not just the product:
When your requirements lead you to middle market providers like Intacct or NetSuite, pay very close attention to the company you keep. Understand their strategy. Consider their pace of innovation. And importantly, get a read for the personality or culture of the company during the sales process. Consider their tactics and approach
If you are working with a re-seller or implementation partner, understand their DNA as well. Are the people you are working with good listeners? Are they responsive to your requests? Are they treating you like a partner? Are they being respectful and transparent? Keep in mind, you will likely be in this relationship for many years to come.
The key point to remember here is that you are buying software, and no software product is perfect. Therefore, you need to know that there is a great company with great people supporting the product.
5) Get independent reviews:
Talk to your peers who are familiar with the solutions you are considering. Ask what their experience has been and why they chose the solution they are using. Leverage your network to query them on different topics about the evaluations that are important to you. If you think one solution is a perfect fit, but there is one negative reference, go back to the provider to let them know what you heard. There might be a good reason for the less than perfect reference.
In the end, having a well thought out buying process benefits both the buyer and the seller. While it requires a little extra effort on both sides, after the decision has been made there will be fewer surprises.