The Flying Solo guide To Choosing the right accounting€¦ · to regret can lead to...

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The Flying Solo guide To

Choosing the right accounting system

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Choosing the right accounting system www.viridity.com.au

1800 857 273

Putting up with an accounting, inventory management, or point-of-sale (POS) system that has outlived its usefulness isn’t a way of saving money or time – in fact, it’s probably costing you both. Your accounting system should deliver many valuable benefits to your business, including:

• Ongoing efficiency and productivity enhancements that minimise repetitive administrative tasks

• Information about your business and cash position that is both accurate and up-to-date • Helping you make better decisions based on accurate data and meaningful reports • Improving your cash flow thanks to the integration of information regarding accounts

receivable, accounts payable and inventory levels • An ability to scale and expand as your business grows, allowing for additional staff,

customers and products If your existing system isn’t fulfilling all those objectives, it’s time to seriously consider a new one!

Nevertheless, contemplating a new system can be stressful, especially if you and your team have used your existing software for a long time and find it familiar and comfortable - despite its quirks and the fact that it doesn’t quite do what you’d like it to.

Combined with the amount of time and money that need to be invested in implementing a new system, the nervousness and apprehension around making a decision you might live to regret can lead to procrastination, sometimes for years on end!

I’ve written this report to help you feel confident that you’re choosing a system that really does suit your business. It outlines the key issues you should consider when deciding on a new accounting system, and provides you with an easy six-step process to work through when evaluating your options.

With this information at your fingertips, you’ll be in a much better position to determine the right system for you and your business.

If you’d like expert advice, please give Viridity a call on 1800 857 273. We help small-to-medium sized businesses and not–for-profit organisations choose and set up software systems on a daily basis, and will be glad to discuss your options with you.

If you’d like us to, we can then guide you through the implementation process, or can manage it entirely for you if you don't have the time or confidence to get your new system up and running on your own. In many cases, we can also migrate data from your existing business system into your new one (for example migrating MYOB files into Xero).

We can train you and your staff on your new system too, and afterwards can help you with your bookkeeping needs and any questions that come up about the software.

Please get in touch with us today to arrange an appointment – even if we can't help you, we can usually refer you to someone who can.

Rhys Roberts Rhys Roberts CPA, MBA Principal Viridity


1800 857 273

When should you consider implementing new software? • You’re a small business owner in start-up mode who wants to put efficient systems in

place right from the beginning of your business journey • Your business is growing rapidly, and you want the confidence that your system can

handle your future expansion and not hold you back as you strive for your goals • You’re using systems and processes that are no longer efficient and/or don’t provide

valuable business data • You’re trading online or internationally and your current system doesn’t include the

features you need • You want your e-commerce solution and your accounting system to be seamlessly

integrated • You’re sick of re-keying data to duplicate it from one system to another – or paying

someone to do it for you • You don’t have accurate financial and operational information about your business at

your finger tips

Issues to consider before you start Before going through the process of choosing and implementing a new software system, big businesses tend to go through an extensive process that involves consultation with users, identifying the processes the system will need to perform and any issues it needs to overcome, and determining the optimal specifications for the new system.

As a small business owner, your process needn’t be as complex or arduous, but it’s still worthwhile spending time on these issues so that nothing falls through the cracks.

The project of choosing your new business software might take a few days or weeks, so I recommend using a notepad or spreadsheet to record your thoughts and insights as you go – that way you’ll have all the data you need in one place.


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Who will use the new system?

Your software will affect both the processes that occur in your business and the information you can generate in order to make decisions, so it’s important that you consider the needs of all the different people in your business who will use it – now and as your business grows and expands.

Ask yourself and your team what they like about your current system, what frustrates them, and what functions or features they wish they had available to them to help them do their jobs.

• Even if you’re a solo operator, you might find it helpful to make a list of all the different functions you perform in your business and ask yourself the same questions while wearing all those many hats

• On a day-to-day basis, ease of use is important, so it’s likely that you’ll decide that your new system needs to be intuitive, efficient and user-friendly

• Don’t forget to consider the needs of the people you’ll be sharing your business data and reports with (like your board of directors, investors, your bank or any other stakeholders)


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What do you want your new system to do?

The best way to determine the right software for your needs is to be clear and specific about what you need it to do, so start by making a list of all the functions you currently perform in your business, and all of those you would perform if your current system had the capability.

When making your list, here are a few questions specially designed to get you thinking about what you want your new system to do:

• What challenges do you experience in your business? • Which of your business functions and processes are the most frustrating, painful or

time-consuming? • What administrative tasks are performed repeatedly, how much time do they take up,

and at what cost? (And what else could you do with that time and money?) • What types of information or reports do you wish you had at your fingertips to help you

make better strategic decisions? Examples might include sales data, inventory levels (both in total, and by product or product category), and the performance of individual products or salespeople. Increased transparency and awareness of cashflow also tends to be an important consideration for most businesses

• Where do your various business functions take place? Do you want to be able to access your data from multiple locations and multiple devices, or are you content to keep all your data on one desktop or server? (And if so, what back-up systems will you put in place to ensure data recovery in the event of an emergency?)

• Are you doing business online, offline or both? Do you need your different areas of operation to integrate with each other? (This can be a critical issue for retailers, who typically face issues maintaining the visibility of stock levels between their bricks and mortar and online stores)

• Do you have employees, or are you planning to hire some in the future? If so, an integrated payroll function should be an important consideration

• What are your plans for the future? If your goal is to grow your business, are you looking for a system that will support your needs over the long term, or will you be happy to upgrade again in a year or two?

That’s not an exhaustive list of questions, but when you’ve finished working your way through it, you’ll be a long way towards identifying the criteria your new software needs to fulfil. You’ll probably also have additional issues to consider that are specific to your business. Please talk to us at Viridity if you need assistance with this analysis.


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Six steps to evaluating your options Now that you’ve got your checklist of features and functions in hand, it’s time to take a look at the various options available to you.

Business software these days is sophisticated and complex, so don’t be surprised if you find yourself feeling overwhelmed. If you’re not careful, you can get completely immersed in all the different software options available to you, and end up turning in circles trying to choose one over the other.

To help make the process easier, I recommend you take things step-by-step, and evaluate each of the software packages you’re considering according to the following criteria, which we’ll discuss in more detail shortly:

1. Functionality 2. Cloud or desktop? 3. The credentials of the company behind the software 4. Scalability 5. Speed of implementation 6. Ease of use

How important is the cost? When it’s time to choose new accounting software, cost is an important consideration. Quite rightly, you want to get the best option you can, at the best possible price.

Research has shown that the first time a business purchases new accounting software, the three criteria that most influence their decision regarding which system to buy are price, ease of implementation and ease of use. The factors they consider of least importance are the developers’ track record of performance, and the quality of the documentation and the levels of support available. The system’s functionality, whether the software is a good fit for the business, and whether it is scalable all rank somewhere in the middle.

Fast-forward a few years til it’s time to purchase a new system again, and the priority list has changed enormously. With the benefit of hindsight, business owners now rank the support services available, the developer’s track record, and whether the software is appropriate for the business as their most important criteria when making a choice. Ease of use, implementation and integration fall right down to the bottom of list, and price becomes a medium-level concern, rather than the primary one.


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1. Functionality Any accounting software worthy of your consideration should perform the following basic functions, and any that don’t should be struck off your shortlist immediately:

• Invoicing, accounts receivable and accounts payable • Easy to use bank reconciliations, BAS reporting and other tax office compliance • Good quality reporting, not only for compliance but more importantly to provide you with

management information • If you choose a cloud-based solution, you’ll also want live bank-feeds and real-time

access to your business data from anywhere

Additional functionality you might need includes:

• Payroll management • Inventory management • Integration with your point-of-sale (POS) system and/or online store • Time tracking • Multi-currency conversion • An ability to work from multiple locations • Cross-platform compatibility (Will the software work on a PC, Mac, phone and tablet?)

What else do you need?

Every business is unique, and it’s quite possible that no stand-alone software system will have all the functionality you require unless you buy additional modules for it or combine it with add-on programs.

For example, at Viridity we work extensively with Xero, an extremely easy-to-use cloud-based system that covers all the core bookkeeping functions – and then some. For clients requiring even more functionality, we incorporate integrated add-ons such as Unleashed for inventory management and Vend for POS. These and other add-on options work seamlessly with Xero and enable us to customise our clients’ software solutions without any need for costly programming.

While the solutions themselves are simple (and delightfully elegant to use), it can sometimes be difficult to work out which add-ons will best suit your business, so please get in touch with us if you’re feeling confused.


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2. Cloud or desktop?

In the current business environment, cloud-based software is increasingly popular, and many industry experts predict it will become much more so in the future.

So, when it comes to choosing an accounting system, should you choose one that’s cloud-based or a stand-alone desktop solution?

Both have their advantages, and only you can determine what’s most appropriate for your business.

While we do work with a number of desktop software packages (including MYOB and Triumph), at Viridity we are increasingly impressed with the cloud-based solutions available.

As a small business owner myself, I am particularly excited that cloud-based accounting and operating systems mean that small-to-medium sized businesses and not-for-profits can finally access the business intelligence and systems that have traditionally only been affordable to big business.

Amongst others, I believe that the advantages of cloud-based systems include:

• Minimal upfront costs • Access to your data from anywhere you can get an internet connection • Real-time information about your business and your financial position • Regular feature updates at no additional cost • Integration with other apps that allow the systems you implement to grow with your

business • Ability to collaborate in real time with external advisors, such as your tax accountant or

virtual CFO In contrast, a desktop solution may be more to your liking if your processes require a large amount of manual data entry, or if you require specific functionality.

A word about security The issue of security is perhaps the most commonly raised concern about cloud-computing systems, and if you’re considering choosing one for your business this is something you’ll want to investigate.

In practice, we find that the security offered by the major players in the online accounting world far outweighs anything that most small business owners could maintain themselves. For example, Xero operate multiple redundant servers at tier-one data centres that are guarded around the clock, and data is backed up every ten minutes.

Nevertheless, if you’re leaning towards a desktop solution rather than a cloud-based one, make sure include appropriate security measures and back-up processes in your implementation plan and budget.


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3. The credentials of the company behind the software With so much riding on your choice of software, you want to be sure that the company that makes it is going to be around for the long haul.

You’ll need them to be around to sort out any issues that arise and keep your software up-to-date as new technology develops and tax regulations change.

Good questions to ask yourself are:

• How do accounting and bookkeeping professionals rate this software? Do they use it themselves? (At Viridity, we use Xero, and we love it!)

• How many users are there? And is the company’s share of the software market growing or declining?

• Does the company demonstrate a commitment to being in the industry over the long term?

• How frequently do they update the software with new features? At what cost to existing users?

• How responsive are they to customer feedback and feature requests? (For example, how quickly do they fix any bugs that arise?)

• What kind of technical support do they have available? Can you access it quickly via phone, email or the web – even after business hours? What costs are involved?

• Does the company treat your local region as its core market (and thus prioritise issues relating to local tax changes and so forth)?

Who are you getting your advice from? Bear in mind that just because a particular product is suitable for a relative, friend or colleague, that doesn’t mean it’ll be ideal for you too. Similarly, when taking advice from your accountant, make sure that they’re not recommending a system just because it makes it easy for them to do your tax return. You need to make sure it does everything YOU need. No-one else’s requirements are more important.


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4. Scalability Your business will inevitably go through many changes during the course of its lifetime, and your accounting software needs to be able to cope with them.

Assuming your plan is to grow your business, the following issues should be considered as part of your software selection process:

• What is the maximum number of customers, suppliers and inventory items that the system can handle?

• Can it be used by multiple users in multiple locations? • If these options are limited, what will it cost you to be able to upgrade the system’s

capacity when you need it? How long will it take? And will you be able to continue to use all your existing data and functionality?


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5. Speed of implementation Inevitably, transitioning to your new accounting system will take some time. You’ll need to factor in both the initial set-up and the time it takes for you and your team to be up and running with the new software and any new business processes involved.

Also consider whether your data can be imported into the new system from your existing software, and how easy or complex that process is likely to be. (This may depend on which system you’re moving across from and to, and whether your data is in solid shape or is in need of a good tidy up).

Should you DIY or hire a consultant to implement your new system for you?

You’ll get the best value out of your new accounting system if it’s implemented properly from the get go, so make sure you set aside the time required to set everything up.

If your time could be better spent on other things, or if you’re not particularly comfortable with new software packages or the principles of bookkeeping, you may be better off hiring a consultant to look after the implementation for you.

• When choosing a consultant to work with, consider the following criteria: • How much experience do they have implementing the system you’re

considering purchasing? • Can they provide references from businesses of a similar size to your

own? • Can they assist with training and ongoing support as well as

implementation? • Will the implementation be done by real, experienced people, automated

using a computerised software migration program or outsourced to a low-cost overseas freelancer?

• Do they listen to your needs and communicate in a way that is easy for you to understand?

At Viridity, we help small-to-medium sized businesses select and set-up new software systems on a daily basis, so please contact us if you’d like some help with your implementation.


1800 857 273

6. Ease of use

If your accounting system isn’t easy to use, you’re going to regret purchasing it in no time at all.

Starting with the functions that you use every day, ask yourself how easy the system is to navigate and operate. In particular, you want to be able to enter information quickly and easily (and only once!). The system should also have built-in failsafe prompts that help you avoid common errors.

Other considerations should include whether there is easy access to tutorials and other education material, how much technical support is available from the software company.


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We’ve made a decision. Now what? Once you’ve finally decided which software to purchase, it’s time to get down to the nitty gritty of setting it up.

Having been through the process hundreds of times, I’d like to offer you four final tips to help make your implementation process smooth and stress-free:

The old computer adage of ‘Garbage in, garbage out’ really does apply. It’s in your best interest to ensure any data you’re importing into your new system is robust and accurate, so clean out any superfluous customer records, supplier details and product files before you start. The time spent will be well worth it!

Don’t underestimate the importance of change management. Changing your software means you’ll probably need to change at least some of your processes. After all, there’s no point buying a new solution to replace something that wasn’t up to scratch, and then using the new one in the same old way. These types of changes will take you and your team out of your comfort zones, so make sure you consult and communicate with everyone affected, every step of the way.

Invest time (and money if necessary) in training for yourself and your staff. Not only will it make everyone more comfortable with the change, but it will also mean you get optimal benefit from your new system, and as quickly as possible.

Get expert assistance. The reality is that unless you’re in IT, you’re probably only going to implement new software a few times during the course of your business life. It’s not rocket science, but it can be complex - and it’s easy to make errors that can come back to haunt you later. For the majority of small business owners, the investment involved in hiring a consultant such as Viridity to implement the new system will pay for itself many times over.

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