What Is Accounting Software?
Accounting software in Canada helps businesses of all dimensions streamline and automate finance management processes, ensuring accurate records and increasing operational efficiency across basic recurring processes such as invoicing, general ledger (GL) reconciliation, accounts payable (AP), and accounts receivables (AR). In addition, depending on the scale of the product, accounting software can include more advanced features such as financial consolidation, fixed asset depreciation, and multi-currency support.
While all accounting tools include basic features for financial management, there are significant differences in functionality between different products. Therefore, it is vital to understand how robust a solution is by evaluating how its features can help a business with its specific needs. In addition, requirements for accounting software can vary per company size and industry, and the company's geographic presence.
Top 10 Accounting Softwares in Canada
- OnlineDesktop Pro
- Sage Intacct
- QB Enterprise
- SAP Business One
Different Types of Accounting Softwares
There can be vast differences between types of accounting software. Accounting programs can be very generic, providing essential features that any company can use or highly sophisticated, including industry-specific functionality for medium and large companies. The delivery model and the way the modules of the solution are delivered are also relevant.
Suite vs. best of breed
Accounting systems can manage any aspect of business finances that involves payment, but many are just the barebones: AP and AR. Suite systems often offer many modules that integrate inventory management, expense tracking, time tracking, payroll, etc. and make reconciliations between these accounts easy and automated. More specialized companies may make better use of a system that caters just to their needs. For example, a service provider may only need a general ledger that includes time tracking information; an accounting system that manages expenses might best serve a consulting firm.
Cloud vs. on-premises
Cloud accounting systems offer a software as a service (SaaS) pricing model and work inside a browser. On-premise tools are installed on hardware owned and maintained by the customer.
Cloud: Most new accounting tools were born in the cloud; their pricing models are usually based on the number of users. Cloud-based solutions are easy to implement, don’t require hardware investments, and allow users to pay overtime based on usage. Often, cloud tools have difficulty providing robust offline functionality that will enable users to complete actions and access accounts while disconnected from the internet. The cloud is usually a better option for small business accounting due to its lower cost.
On-premises: Many vendors that offer on-premises solutions also provide a cloud version of their software. Most customers who use on-premises tools purchase a perpetual license based on the number of users and pay an annual maintenance fee. On-premises systems might be client-server tools requiring software installed on each user’s PC or otherwise be browser-based browser-based. On-premises devices need IT to support installation and maintenance and also require investments in hardware. However, these systems may offer added security and usually can be customized without vendor involvements
Based on the size of the company
Small business accounting teams will often seek a less expensive, easy-to-use interface covering typical use cases such as billing and invoices. These might be single-entry bookkeeping with simple, standard financial reporting capabilities. Still, most are typically cloud-based and include mobile apps, offering a level of convenience to the harried small business owner. Larger companies will need software that can handle many complex accounts requiring input from multiple roles. These should have more rigorous reconciliation measures because the higher volume and complexity mean a higher likelihood of mistakes. Additionally, audit trails and security measures help larger companies ensure the integrity of accounts maintained by many different employees.
Based on the industry
Tax codes, regulations, and best practices vary across industries. As a result, buyers will need to determine whether a product specializing in meeting their industry standards is the best solution or one versatile enough to be customized to their needs. This may apply to companies of all sizes, from small businesses to large corporations.
Accounting products vary in complexity and functionality; many solutions are optimized for use by companies of a certain size. Depending on the scale of the product, accounting software can include features for payroll processing, invoicing, reconciliation, bill and expense management, and financial reporting. Additionally, some accounting solutions include industry-specific features such as project accounting for professional services companies or fund accounting for nonprofit organizations.
Accounting can also be a module of, or integrated with, business ERP systems. Integration with point solutions for accounting—such as AP automation, budgeting, and forecasting or cash management—is also essential. Finally, accounting software exchanges data with payment solutions or banking software.
To qualify for inclusion in the Accounting category, a product must:
- Maintain a company’s general ledger and chart of accounts
- Offer features for automating accounts receivable and invoicing
- Automate accounts payable workflows for payment processing and purchase orders
- Allow users to create journal entries to adjust transactions and account balances
- Track costs and revenues, as well as determine the profitability of the products and services sold by the company
- Manage cash, bank accounts, and payment methods (check, credit card, ACH, etc.)
- Assist users with the financial close process at the end of each accounting period
- Deliver standard reports such as financial statements and dashboards to track financial KPIs.
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