ICT
Choosing
an Accounting Package
Choosing
the right accounting package can be difficult, particularly
as there are so many packages on the market. Not only that,
but price and functionality vary so widely as to make objective
comparisons very difficult without spending days on the task.
We provide below some pointers on what you need to be thinking
about. Please contact us if you require specific advice.
Determining
Your Requirements
A
decision is required as to what level of complexity is required.
At the most basic level, you need to decide whether you just
want something to replace the cash-book, to handle receipts
and payments, or perhaps a more sophisticated ledger-based
system to produce quotes, VAT returns, and monthly accounts.
You may decide that you need a highly sophisticated system
which, as well as doing all of the above, can also handle
stock and job costings and integrates with a web site.
The growing business
Include in the decision the level of complexity that might
be needed in the medium term.
Think about what the business might be doing, in say 12-18
months time:
- will
it be going through rapid growth or a change in direction,
and need more up to date and more accurate financial information,
such as profitability at department or job level?
- will
transaction volumes be rising steeply?
- will
you want to be able to connect your products to your web
site and process orders and payments on-line?
Market
sector
Your business may be in a specialist market sector for which
there are tailor made systems already available. Talk to us
as we have experience of your type of business. Talk to your
trade association - they may already produce information to
help you, and they may hold events and seminars on this issue.
Cost
Cost should not be a primary constraint, as you tend to get
what you pay for. If you are only willing to spend, say £100,
the system will be unlikely to meet all of your needs. This
in turn may constrain the way the business trades, and subsequently
turn out to be a hindrance to expansion. It may also mean
that more expenditure and upheaval is required if you need
to upgrade to a more expensive system in the future.
Some systems are available in modules. Examples of modules
are a sales ledger module and an order processing module.
If you are purchasing a modular system you won't need
to purchase every module at the outset. You will need the
core ledgers to start with (sales and purchases ledgers) and
you can then add any additional modules later. In this way
the costs can be spread out over a period.
Training
Training
is vital for the staff who will be using the system on a day
to day basis. Like the software itself, the cheaper the training
then the less likely staff will benefit from it.
We may be able to provide training for you or help you find
appropriate training.
Your
Detailed Requirements
A
list of your detailed requirements would be useful when comparing
packages. The following pointers need to be considered in
the context of your business.
General points
- What
is the operating system for your computer network? (there
is less of a choice of accounting packages if using a non-Windows
platform).
- How
many users will require access (now or in the future)?
- What
volume of transactions will you be processing and can the
software handle this?
- Can
the system produce VAT returns and, if you are on a special
VAT scheme, can it cope with this?
- Can
orders and payments be taken over the internet and downloaded
to the accounting system?
- Will
the system let you export data to other packages such as
spreadsheets and word processing packages?
Your
specialist processing requirements
Here is a sample list – you will need to add your own
special requirements:
- retentions
- regular
payments to a parent company (or vice versa)
- deposits/subscriptions
- discounts
- part-payments/part-receipts/part-delivery
- currency
fluctuations
- bounced
cheques/stopped cheques
- direct
debits/standing orders (receipts and payments)
- accruals
and prepayments
- debit
and credit card accounts (receipts and payments)
- loans,
grants and mortgages and any special payment terms
- component
stocks and bill of materials
- mixing
of service and stock items on an invoice and as stock records
- payments
to suppliers by BACS
- HP
agreements
- label
and mail shot capabilities for customers/suppliers
- ability
to create XML formatted transactions.
Your
information requirements
You need to determine what kind of management and user information
is required from the system on an ad hoc or real-time basis.
A sample list is:
- stock
balances
- work
in progress and profit/loss on job or contract
- profit/loss
by department, or by cost centre
- customer
balances/customer aged debtors
- cash
flow
- order
status
- actual
v budget reports
- turnover.
Other
points
- How
does the system cope if you need to amend a transaction?
- Is
there a full audit trail (including details of modified
transactions)?
- Does
the system produce the information in an acceptable form
to you or us (as your accountant) in order to complete all
statutory and regulatory financial year-end and fiscal year-end
tasks?
- Are
there adequate security routines to prevent employees exceeding
their level of processing authority (ie being able to restrict
access on an individual user basis)?
The
Final Choice
- Narrow
the selection down to the package(s) that matches your needs
most closely.
- If
the potential user(s) of the system have not so far been
involved, now is the time to get them involved.
- Get
an evaluation copy if possible (many software vendors offer
a free 30-day trial), and also go and see the system in
action at a business similar to yours.
Having
performed an objective review up until now, the final choice
may be more subjective. It will probably be down to look and
feel!
Implementation
The
timing of the implementation will depend to a large extent
on how long is needed to enter the standing data (eg customer
and supplier details) and opening balances.
Whilst the start of the financial year is logical, this may
not be a particularly convenient time for the accounts staff.
You may wish to discuss the timing with us, as we can help
in drawing up a list of opening transactions and the opening
trial balance.
Other issues to think about at this stage are:
- staff
training
- customer/supplier/nominal
and cost centre/stock/job costing codes
- ordering
any pre-printed stationery
- scheduling
the input and the checking of opening transactions
- developing
periodic processing and checking routines
- backup
procedures for the accounting data files
You
may find it useful at this stage to refer to our factsheet
on Data security.
How
We Can Help
We
are here to help you with any of the steps involved in choosing
and implementing an accounting package.
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For information of users: This material is published
for the information of clients. It provides only an overview
of the regulations in force at the date of publication, and
no action should be taken without consulting the detailed
legislation or seeking professional advice. Therefore no responsibility
for loss occasioned by any person acting or refraining from
action as a result of the material can be accepted by the
authors or the firm.
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