Counting the beans correctly is essential to running a successful company efficiently, and any mistakes could land enterprises in big trouble. This makes accounting a vital function, and enterprise accounting software has become one of the more important pieces of the IT infrastructure at any organization.
True to its name, accounting departments use accounting software to manage accounts and perform a variety of financial operations within an organization, including accounts receivable (AR), accounts payable (AP), general ledger (GL), payroll and other functions.
Within businesses, accountants use the accounting software and the data generated for internal and external audits, required reports and financial analyses, often to meet legal, regulatory or internal requirements.
Enterprise-class accounting software
As part of a business strategy, accounting software brings a level of automation that drives efficiency and productivity.
Without these applications, accounting staff would have to perform tasks manually. By automating such tasks, the software can bring down the costs of accounting and provide much more accurate and timely reporting.
With accounting software, it's not a matter of one size fits all, and the applications come in a number of variations. Which is best for a particular organization depends on company size and other factors.
For example, large enterprises in need of lots of features, scalability and integration with other business processes might want to deploy enterprise accounting software modules in ERP systems. Through ERP systems, enterprises can tie accounting data and functionality to CRM, business intelligence and human capital management systems, as well as inventory.
For small and midsize companies with more limited budgets, there are less costly options, such as basic SMB systems available via off-the-shelf -- or, more often, ready-to-download -- packages. These products support many of the basic accounting functions that smaller companies need to run their businesses. While some SMBs can get by with a Microsoft Excel spreadsheet, popular SMB accounting software options include Intuit QuickBooks and Sage 50cloud Premium Accounting.
Filling the large gap between both are the stand-alone accounting software options, which some vendors brand as financial management suites, enterprise-class accounting software or small to midsize enterprise accounting software.
Companies in this class have outgrown simple SMB accounting software, often because of a growing global customer base, multiple locations and distributed inventories. Both Sage and Intuit also offer enterprise-class accounting software with their Sage 300cloud and QuickBooks Desktop Enterprise options, respectively.
As with other types of business applications, enterprise accounting software is available in on-premises platforms, as well as in the cloud.
What's driving accounting software adoption?
Demand for accounting software for enterprise customers is on the rise worldwide, according to industry research. A 2017 report by Technavio Research predicted that the global business accounting software market will grow at a compound annual growth rate of 6% between 2017 and 2021, reaching $4.1 billion by 2021.
One of the main drivers of market growth is the rising demand for modernization of finance operations. Companies need to gather and analyze growing volumes of data from sources such as online loan applications, bank transactions, online and in-store sales, social media sites and stock and commodities trading.
The top three emerging trends impacting the global market are the emergence of business accounting mobile applications, the introduction of optical character recognition (OCR) and the increasing integration of business accounting software with big data.
Access to enterprise accounting software from mobile devices gives organizations greater flexibility by enabling staff to handle accounting tasks regardless of time or location. As the Technavio report noted, mobile accounting apps streamline processes such as sending invoices, accepting payments, logging expenses, tracking receipts and planning budgets.
Most of the mobile accounting apps offer basic features, such as invoicing and expense tracking, while advanced features include bill reminders, mobile wallets and bank transfers.
Through OCR, the software can convert images into readable and editable text, and currently, many businesses are implementing the technology into their accounting processes, Technavio said. The technology has eliminated the need for handwritten forms, checks or printed receipts, uploading all handwritten receipts onto an online accounting platform and extracting relevant text and data at the same time.
And the adoption of big data infrastructure is increasing among companies, which helps them to get timely insights to retain customers and strengthen their market position by collecting and storing information such as customer purchase preferences
Big data systems also play a key role in the business development of organizations through the deployment of cloud-based business accounting software to enhance business efficiency. This has simplified the account management process and automated import transactions, digital receipts tracking, payroll automation and tax tracking.
AR and AP
Enterprise accounting software can include a number of core modules and functions to support the basic financial processes that are necessary to run a business.
One is AR, which is the money owed to a company from outside entities, such as customers. This includes payments for goods or services and is usually in the form of invoices generated by the company and sent to customers. AR is included in balance sheets as an asset.
Software enhances the AR process by automatically tracking the money owed to a business. When a company invoices a customer or receives a payment, the application records the transaction. The software enables companies to automate AR workflows, such as creating estimates, sales orders and invoices; recording payments from customers; and depositing payments in a bank. Keeping accurate records of AR transactions is key to creating financial reports for tax purposes.
Another module is AP, which is the money companies owe to outside entities, such as suppliers and service providers. The software shows this as a liability on a company's balance sheet.
Accounting software for enterprise customers automates the processes involved in AP, including approving invoices received from suppliers, recording the data in the invoices and making payments. As with AR, software automates AP workflows, such as creating purchase orders, receiving inventory from a supplier, entering bills against inventory and paying the bills.
The GL is another standard accounting function made easier via software. The GL includes all the accounts of transactions related to a company's assets, liabilities, equity, revenue and expenses. It serves as the backbone of the accounting system.
The GL serves as a central repository for accounting data from all modules, such as AP, AR, cash management, fixed assets and purchasing. In some accounting packages, reports or dashboards highlight financial performance across a combination of metrics, so managers can quickly get the information they need to make the right decisions.
Payroll is yet another key accounting function that accounting software can enhance. Payroll is an organization's list of employees, as well as data about each employee's salary, bonuses and tax withholding. The term can also refer to the total amount of money paid to employees. Accurately tracking payroll is vital because it typically has an outsized impact on the net income of the organization, which must also comply with a number of regulations related to payroll.
Accounting software for enterprise customers helps them manage payroll and pay employees accurately and in a timely manner, while withholding the correct amount of taxes. The payroll module also helps calculate paychecks and payroll taxes accurately and automatically, and set up parameters such as pay rates and direct deposit processing. It is often paired with modules for tracking employee time off and providing healthcare and retirement benefits.
These are just a few key examples of how enterprise accounting software can help companies enhance financial processes. Other areas covered by these software programs include purchase orders, bookkeeping, and budgeting and forecasting.
Given the importance of all these functions to a business and ensuring the accuracy of related data, it's easy to see why selecting the right accounting software should be a high priority.
Using extensive research into the enterprise accounting software market, TechTarget editors focused on vendors that offered enterprise-class, stand-alone accounting software, distinct from complex ERP systems and off-the-shelf SMB accounting software. Our research included data from TechTarget surveys, as well as reports from other respected research firms, including Gartner.