Does your company need to deploy enterprise accounting software? It's an important question, given that accounting is one of the most important business functions. Choosing the right program to meet your company's requirements, both today and into the future, means the difference between having a well-run accounting operation and dealing with a financial mess.
The software market offers a variety of products that range from relatively simple accounting applications to major accounting platforms that integrate with multiple business processes.
For example, at the low end of the market are reliable but comparatively unsophisticated accounting software packages that are typically suitable for SMBs but don't meet the needs of large enterprises. At the high end of the product range are full-on enterprise resource planning (ERP) systems that have accounting software modules as a key component.
Then there's a middle ground, a sweet spot for many organizations, including growing SMBs and midsize enterprises. These are standalone financial management suites or enterprise accounting software packages that can handle relatively complex accounting, but stop short of full-on ERP functionality.
Determining factors when choosing accounting software
What type of enterprise accounting software is best? Often, geographic scope is a key factor. A company with global operations and an international customer base must have accounting software that supports international subsidiaries, customers, workforce and contractors, or other business partners. That way, it can conduct business, including e-commerce, around the world without issues cropping up because of currency differences, language barriers, regulatory limitations and other challenges.
Tax rules, compliance and inventory
Each country has its own tax rules and reporting requirements, so any accounting software selection must be capable of tracking these items and keeping up with any reporting or regulatory compliance changes.
In addition to international operations, inventory processes can determine enterprise accounting software needs. Specifically, does the company have distributed inventories, including warehouses, in multiple regions or countries?
Inventory management capabilities in software platforms help companies maintain the correct inventory levels to optimize profits, avoid overspending and control the costs associated with inventory depreciation. These systems also keep inventory data up to date by tracking product levels, orders, sales and shipments.
Generally accepted accounting principles (GAAP) from the U.S. Securities and Exchange Commission outline specific ways companies should report the value of inventory to note depreciation or other changes. Accounting software with inventory management capabilities use GAAP to accomplish these tasks. But it's important to note that some companies will need to upgrade from a standalone accounting software package to a full ERP platform or buy separate inventory management software to gain those capabilities.
Divisions and subsidiaries
More robust enterprise-grade accounting systems support multiple divisions or subsidiaries within the same company -- including interdivisional or intercompany transactions – or in multiple nations.
Some smaller businesses also operate multiple divisions or under separate business names, so enterprise accounting software should enable employees to access each division or entity as a user and not as a separate business. That way, the company can operate multiple businesses or divisions within the same system and manage them as part of the same account.
Enterprise accounting software price and ROI
Other major considerations include price and ROI. Quantifying the benefits of accounting software can be a challenge, especially for a fast-growing company or one that operates in a highly dynamic market.
Factors such as time savings due to automation features and reduced errors, and the costs associated with potential noncompliance issues also fall under this category. And while it's not part of a formal ROI calculation, improved employee satisfaction with the new software is important. As with any other major IT purchase, you'll want to create a business case for deploying enterprise accounting software.
Benefits of accounting software
Among the benefits enterprises can expect from using accounting software are reliable financial records and reporting. With older or more limited accounting software -- and manual accounting practices -- companies run the risk of errors leading to inaccurate financial figures and reports. That can lead to audits, legal and regulatory issues and fines, as well as disputes with customers, suppliers and other business partners.
Many vendors provide sophisticated, role-based reporting features that enable managers to easily view records, such as orders and payments, in real time. Accountants, administrators, inventory managers, procurement managers and others can also quickly review relevant financial records using these features.
Improved business process visibility into all accounting transactions and other financial data is vital to running an efficient and profitable business. Enterprise accounting software platforms provide full visibility across an organization, so authorized managers and executives can access and review financial information. In some packages, access is based on preconfigured roles, and business intelligence metrics are displayed graphically on dashboards. This level of visibility into accounting data is critical for meeting regulatory compliance requirements.
Visibility also extends into the area of business performance. Accounting software enables companies to measure financial performance against a variety of metrics and to present this data to executives for review. Users can track metrics -- such as revenue, customer loyalty and retention, procurement costs and payroll -- over time to determine company performance. Other metrics might include working capital ratios or sales by product, region or channel.
Improved forecasting is another benefit. Companies can use the applications for financial planning and analysis, based in part on data from accounting records, such as a general ledger, accounts receivable and accounts payable.
Finally, enterprise accounting software automates all major accounting functions. Automation capabilities for reporting, consolidation, payments, cash management and other areas mean fewer errors in calculations, estimates and other financial functions essential to accounting. With less-advanced accounting systems or manual processes, organizations can take far too long to complete tasks such as closing the books. That can be a major problem when trying to meet tax and other reporting deadlines.
Enterprise accounting software is not just for large enterprises. Midsize and small but growing businesses can use the technology to optimize their accounting processes and operate as efficiently as possible.
The benefits of accounting software can be compelling, so if your company meets any of the above factors, it makes sense to explore options in the market.