Must-Have Accounting Software for Businesses

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Must-Have Accounting Software for Businesses

CFO Tech Outlook | Friday, October 29, 2021

Accounting software provides the ability to keep tabs on a company's financial well-being.

FREMONT, CA: Accounting software gathers data and reports on a business's financial soundness. This software is crucial to an organization's proper administration. Before choosing a software package, it's critical to understand the many types of accounting software and when each should be utilized. The following table summarizes the broad categories of accounting software.

Spreadsheets

Quite a tiny business can be handled entirely on electronic spreadsheets. The spreadsheet software is affordable, and the system is entirely customizable. On the other hand, spreadsheets are prone to inaccuracy, as data may be put in an improper location, erroneously, or not at all, resulting in inaccurate financial statements. As a result, spreadsheets are often employed by firms with a very modest volume of transactions.

Commercially Available software

Commercial off-the-shelf (COTS) software is the most widely used accounting software worldwide. It is moderately adjustable to a business's needs, includes numerous layers of error detection to avoid entering inaccurate data, and generates standard reports that may typically be customized to the user's specifications. There are COTS products that are industry-specific, with additional functionality to meet the needs of their target markets. COTS software installation may require the assistance of consultants and may entail a lengthy installation process and on-site workers to maintain the program. A variation on this notion is accounting software provided as an online service, requiring users to log onto the vendor's website. Rather than an upfront purchase of the program, the latter model needs a monthly payment of a per-user fee.

Software for Enterprise Resource Planning (ERP)

ERP software unifies data from several departments inside a firm into a single database. This technique avoids the issues associated with department-specific software that does not share data. It is, however, prohibitively expensive and may take more than a year to deploy. Typically, only the largest and most complicated enterprises require this software.

Accounting Software on a Custom Basis

This software was designed specifically for an organization. This method is often employed only when an entity's requirements are so unique that they cannot be addressed by a commercial off-the-shelf (COTS) or enterprise resource planning (ERP) product. This is a rare option, as homemade software is frequently problematic and takes more maintenance than commercially available packages.

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