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How to choose Right Accounting Software
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In this article, the following are the take away:
1. Choose the right Accounting Software for your business
2. Configure the system as per business nature and model
It is the most common misconception among the businesses that Accounting & Bookkeeping Services is an extra cost to the company since the business is running fine without maintaining proper books of accounts. This is exactly resembling the scenario of Titanic, a huge machine when hit by a small ice burg sank in its entirety. Accounting and Bookkeeping have a critical role for the business, it can pop up anytime like the Ice burg if not taken care of from inception.
The second most widely lived misconception is that accounting & bookkeeping is just data entry, any free resource can manage it internally. Let us clarify here, maintaining accounting and bookkeeping needs expert knowledge similar to the role of a lawyer or engineer. There are many Accounting and Bookkeeping firms in Dubai that can help businesses to understand & handle the subject better.
The third most common misconception is, accounting can be done on a spreadsheet or on a register. Here we ask few questions, what is your year-on-year sales growth, what is your gross profit on a particular line of service/product, what is your rolling cash flow, will the business be able to honor PDCs. The list goes long, none of such questions can be answered by a spreadsheet accounting.
What to consider?
Choosing the right software for your business is a critical & important business decision, At the same time, it requires expert knowledge to understand the proposed system in terms of business requirements, its nature, and business model. Following are key guidelines to choose an appropriate accounting software:
1. The system should have all the basic accounting modules e.g. Sales / Purchase / Invoices / Suppliers /Customers /Banking and inventory.
2. Most of the accounting software does not support Payroll & WPS processing, if it does, it will be an added advantage.
3. The system must be able to maintain accounting project-wise, if it can cater to brand and services/product level accounting, that will make it a great system.
4. The system must handle multiple currencies and multiple bank accounts.
5. The system must be able to handle multiple entities and branches.
6. If the system can communicate with other business support systems in the market, that will make the system flexible to upgrade anytime if a need arises. For Example, link with POS, link with advance inventory management, or with CRM.
7. Integration with the banking system must be a feature of the system. It helps in data entry, accuracy, control, approval, and bank reconciliations.
8. How good reporting a system produces makes the system great. No matter all mentioned features are embedded in the system but if it does not have in-depth reporting features, the system and data in it will remain useless.
9. The system must have controls and checks, separate logins, and logs of activities to ensure accuracy and data integrity.
In GCC/UAE business environments, your Bookkeeping firm or Vat Consultants in Dubai can help you identify the right accounting software for your business. It is highly recommended to avail their expert opinion versus investing in the wrong software.
Accounting Software options (ERP)
There are many options in the market, we would categorize as follows:
1. Small and Medium size businesses can go for Zoho Books, Xero, Quick Books, Tally, or Sage50ME/Sage Business.
2. Medium of high-level Businesses can choose among Focus, Sage 100 or MS Suite, Oracle Suite, or SAP Suite.
3. Large organizations can go for MS Dynamics, Oracle, SAP or Sage 300, or Sage X.
Accounting Software Platform- Resident or Cloud-Based
Apart from choosing the right software, it is critically important to decide between resident systems or cloud-based systems. Historically, businesses prefer to have a resident system (onetime purchase, configured locally on their own servers) and keep updating the software as and when basis.
On the other hand, the recent technological developments shifted the trend from resident software to cloud-based systems. It made the system accessible from anywhere, at the same time cost-effective. Here we would like to mention that Outsourced Accounting in Dubai is majorly shifted to Cloud-based Accounting, broadly called locally as Cloud-Based Accounting and Bookkeeping Services in Dubai. The widest recommendation for small and medium-sized businesses is to choose a cloud-based system.
Getting advice versus Wasting of Resources
We intentionally captioned this section as getting the advice versus wasting resources, the reason behind this is on-ground realities we witnessed in the past years while serving various businesses across industries. It goes even beyond, a wrongly chosen software will not only waste resources but also will not serve the purpose, hence it’s a waste of dollars, time, and other resources, it will be back to square one position.
We highly recommend, to have in-depth discussions with your accounting firm to guide you in choosing the right software and platform.
Configuration of Accounting & Bookkeeping System
While setting up your accounting system, your Accounting & Bookkeeping Services firm should consider the following key points:
1. The system must accommodate the nature of the business transactions.
2. The tax and other regulatory requirements are fully met.
3. Compliance with local and international standards is configured.
4. Required control and governance checks are configured.
5. Relevant departments, GL, and categorizations are set up. This is also known as the chart of accounts. A chart of accounts is a listing of all the accounts required to record financial transactions of the business.
6. Basic usage training should be provided to relevant resources.
7. Continuous improvements, maintenance, and upgrades are doable.
How to set up a chart of accounts?
This article is to cover comprehensively how to choose the right accounting software, however, we are slightly touching on how to set up a chart of accounts.
1. Define Accounts classification, for example, assets, liabilities, expenses, cost of sales, and sales revenue. If the nature of business is manufacturing, the chart of accounts must cater to manufacturing accounts e.g. raw material, work in progress, finished goods, and various cost centers.
2. Make necessary subsidiary accounts as per requirements of business and management, here the Bookkeeping Consultants must play a role to extend the right guidance.
3. Care should be taken to not create an account for each and every minor nature of the business transaction, for example, there are many small transactions that can be recorded under Office Cost.
4. The list does not end here, however, the consultant will assess the need and configure the system accordingly.
The chart of accounts is very important to the overall effectiveness and accuracy of your bookkeeping, so if you don't feel you understand it enough, then you should discuss it with your accounting firm before you set up your bookkeeping records.
Not really, Bens Chartered Accountants would like to work closely with you to make the changes exactly as per the revised law to make sure 100% compliance and adherence to local laws and required. Feel free to drop a note or give us a call.
It is our duty to ensure compliance, completeness and provide insights to make quality decisions.
You relax and focus on your core business, we will take care of the details and make it happen for you!
