Deciding on a New Accounting Software System

An accounting software system should not be simply used for recording and storing company transactional data.  The main purpose of an accounting system is to allow the user the capability to extract and analyze the transactional information in order to make informed operational decisions.  So often companies are forced into investing in a new accounting system because the current one does not work to their expectations, but the real reason for the problem is the poor design from the beginning.  In addition, many companies want the software and/or modules to be customized to fit their specific personalized company processes, when in fact there are many off-the-shelf software packages out there that are designed for a specific industry and that will meet their needs.  Therefore, process standardization should be the goal.  If you still require customization, understand that there will be increased costs to accommodate your needs from add-on software, development, and/or maintenance.

Before evaluating a new accounting system, you need to answer and prepare the following: 

Are your current accounting policies and procedures documented?

See April 2010 blog on Creating an Accounting Manual.  The document will need to address what steps of a task are systems oriented and which steps are not.  In addition, you will need to document what system data will be required and how it will be generated.

Have you simplified all the existing accounting processes?

See March 2010 blog on Documenting Company Processes.  The last thing you want to do is create poorly designed andor complex processes in the new accounting system.

Have you documented the internal control structure of the accounting department and determined access and processing authority?

See June 2010 blog on The Importance on Reviewing Internal Controls.  Document the roles and responsibilities each person in the accounting department will have and what system access and authority they will be given.  Make sure no person has authority to do all tasks within each area.  Establishing checks and balances within each task area is critical.   

Does your chart of accounts numbering sequence allow for data extraction and improved reporting capabilities?

See December 2009 blog on Designing a Chart of Account Structure.  Structure the chart of accounts to enable you to segment, classify and group similar accounts, create a product line and or consolidate different product lines and/or companies.

Have you designed the required reports that you require from an accounting system?

See January 2010 blog on Financial Reports Every Company Should Use.  Understanding what information you require from an accounting system, in order to make operational decisions, will assist you in evaluating the new accounting system’s capabilities.

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