Does your company need to deploy enterprise accounting software? It's an important question, given that accounting is one of the most important business functions. Choosing the right program to meet the company's requirements, both today and into the future, means the difference between having a well-run accounting operation and dealing with a financial mess.
The software market offers a variety of products that range from relatively simple accounting applications to major accounting platforms that integrate with multiple business processes.
For example, at the low end are reliable but comparatively unsophisticated accounting software packages that are typically suitable for SMBs but not adequate for large enterprises. At the high end are full-on ERP systems that come with accounting software modules as a key component.
Then, there's a middle ground, a sweet spot for many organizations, including growing SMBs and small and midsize enterprises. These are stand-alone financial management suites or enterprise accounting software packages. They can handle relatively complex accounting; however, they stop short of full-on ERP functionality.
Determining factors when choosing accounting software
What kind of enterprise accounting software is best? Often, geographic concerns are the main determining factors. Does the company have global operations, including international subsidiaries, customers, workforce and contractors, or other business partners?
A company with global operations and customer base must have accounting software for enterprise and international considerations. This platform must support multiple languages, currencies, tax laws and regulations. That way, the company can conduct business, including e-commerce, around the world without issues cropping up because of currency differences, language barriers, regulatory limitations and other challenges.
Tax rules, compliance and inventory
Every country has its own tax rules and reporting requirements, and the accounting software must be capable of taking these factors into consideration and keeping up with any changes. Regulations are also constantly changing in different regions, and enterprise accounting software needs to consider that as well.
For example, the General Data Protection Regulation, a set of rules to protect the data of individuals within the European Union, affects any company that handles data for individuals within the coverage area, including accounting data. The fines for noncompliance are steep.
In addition to international operations, inventory processes can determine enterprise accounting software needs. Specifically, does the company have distributed inventories, including warehouses in multiple regions or countries?
Inventory management capabilities in software platforms help companies maintain the correct inventory levels to optimize profits, avoid overspending and control the costs associated with inventory depreciation. These systems keep inventory data up to date by tracking product levels, orders, sales and shipments.
Generally accepted accounting principles, an accounting standard adopted by the U.S. Securities and Exchange Commission, outlines specific ways companies should account for inventory to ensure correct reporting of the value of inventory that has depreciated or undergone other changes.
Accounting software featuring inventory management capabilities can do this. But it's important to note that, in some cases, companies will need to upgrade from a stand-alone accounting software package to a full ERP platform or buy separate inventory management software to gain those capabilities.
Divisions and subsidiaries
Yet another factor that will determine if your company needs an enterprise-grade accounting software package is whether the company operates multiple divisions, either in the same country or in multiple nations.
More robust accounting systems have the ability to support multiple divisions or subsidiaries within the same company, including interdivisional or intercompany transactions.
Even some smaller businesses operate multiple divisions or under separate business names, so the accounting software for enterprise customers should enable access to each division or entity as a user and not as a separate business. That way, the company can operate multiple businesses or divisions within the same system and manage as part of the same account.
Enterprise accounting software price and ROI
Of course, price is also a major consideration, as well as ROI. Quantifying the benefits of accounting software can be a challenge, especially for a fast-growing company or one that operates in a highly dynamic market. Considerations, explored in more detail below, include time savings from software's automation features and error reductions, as well as the costs associated with potential noncompliance issues. In addition, though not part of a formal ROI calculation, improved employee satisfaction with the new software is a major consideration. As with any other major IT purchase, you'll want to create a business case for deploying enterprise accounting software.
Benefits of accounting software
Companies can expect to see a number of benefits of accounting software for enterprise customers.
Benefits of accounting software include more reliable financial records and reporting. With older or more limited accounting software -- and certainly with manual accounting practices -- companies run the risk of errors leading to inaccurate financial figures and reports. That, in turn, can lead to auditing, legal and regulatory issues and fines, as well as disputes with customers, suppliers and other business partners.
Many vendors provide sophisticated, role-based reporting features that enable managers to easily view records, such as orders and payments, in real time. Accountants, administrators, inventory managers, procurement managers and others are able to quickly review relevant financial records.
Another benefit of accounting software is improved overall visibility. Having visibility into all accounting transactions and other financial data is vital to running an efficient and profitable business.
Enterprise accounting software platforms provide full visibility across an organization so authorized managers and executives can access and review financial information. In some packages, access is based on preconfigured roles, and business intelligence metrics are displayed graphically on dashboards. Having this level of visibility into accounting data is critical for meeting regulatory compliance requirements.
Visibility also extends into the area of business performance. Accounting software enables companies to measure financial performance against a variety of metrics and to present this data for review by executives.
Users can track metrics, like revenue, customer loyalty and retention, procurement costs and payroll, over time to determine how the company is performing. Other metrics might include working capital ratios or sales by product, region or channel.
Improved forecasting is yet another benefit. Companies can use the applications for financial planning and analysis, based in part on data from accounting records, such as a general ledger, accounts receivable and accounts payable.
Finally, enterprise accounting software provides automation for all the major accounting functions organizations require. With less advanced accounting systems or manual processes, it takes far too long to complete tasks such as closing the books. That can be a major problem for meeting tax and other reporting deadlines.
Automation capabilities for reporting, consolidation, payments, cash management and other areas also mean fewer errors in calculations, estimates and other financial functions essential to accounting.
Enterprise accounting software, despite the name, is not just for large enterprises. Midsize and even small but growing businesses need to optimize their accounting processes in order to operate as efficiently as possible.
The benefits of accounting software can be compelling, so if your company meets any of the determinant factors, it makes sense to explore the options in the market.
Using extensive research into the enterprise accounting software market, TechTarget editors focused on vendors that offer 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.