Choosing Accounting Software

5. The Options and Costs

Your greatest costs are likely to be incurred in setting up the system and training your employees to use the software.

5.1 Sole traders with simple book-keeping needs may be able to use 'money management' software.

• Well-known packages include Microsoft Money Plus and Simply Books.
• Remember that these packages may be designed for managing personal finances and often have limited business capabilities.

5.2 Accounting packages have been developed to meet the needs of most small businesses.

• Well-known packages include Sage Instant Accounts and Sage 50, Intuit QuickBooks SimpleStart and QuickBooks Pro, Mamut One and Microsoft Money Plus Home & Business.

5.3 More advanced accounting packages come in modules, with each module handling one aspect of financial management (eg sales ledger).

• Well-known packages include Sage 200 and Pegasus Opera. Most businesses use at least three modules (sales, purchase and nominal ledger).

5.4 Multi-user networked systems generally demand more computing power than single-user systems.

• Check your existing hardware can run the packages you are considering. Updating your IT and accounts systems at the same time will be expensive.
• Most Windows packages need at least 256Mb of RAM and 500Mb free disk space on a 1GHz processor.

5.5 You may want to consider a hosted accounting package.

• A hosted package runs on a server operated by another company. You pay a regular fee to access the software over the Internet.
• There are no upfront costs and management costs are lower as the hosting company takes care of the infrastructure and technical support.
• Hosted packages allow you to access your data anytime, anywhere and make it easier to collaborate with your accountant or advisors.
• However, your company's financial data resides outside your business, so you need total confidence in the hosting company.
• Hosted accounting applications have evolved significantly and with the advent of broadband have increased in availability and popularity.
• The number of companies using SaaS (Software as a Service) systems has risen considerably in the last years and now represents approximately 10 per cent of the total market for accountancy software used.
• Hosted packages include Kashflow, Xero and accountsIQ.

5.6 Look for accredited software.

• The Institute of Chartered Accountants in England and Wales maintains a list of accredited accounting software. Visit www.icaew.com for more information.

5.7 Different users will need different amounts of training.

• The person responsible for managing your accounts will need a more detailed understanding of how the system works.
• Employees responsible for particular functions need to be able to perform those tasks only. For example, a sales person may only need to know how to raise an invoice.
• Thorough training can be costly, but is far cheaper than learning by trial and error.

5.8 Maintenance and support are key aspects to consider when purchasing your software.

• You may need to pay an annual fee to receive ongoing technical support.
• You may need to update the software from time to time. Ask about the vendor's track record in providing support for older systems.
• You may need to upgrade your computer system periodically.
• Using a hosted package will reduce supports costs and maintenance considerably.