There are many aspects of accounting software that make it a useful tool. Most online accounting programs offer A/R, A/P, banking and reporting features. Some even include tools for inventory management, project management, time tracking and payroll. Here are some core elements of accounting software you should look for.
This feature allows you to connect to your business bank and credit card accounts to receive a daily update of your transactions. This saves you the time it would take to manually upload statements into the system and it gives you a daily overview of your accounts. This feature also assists with reconciliation, making it a small daily task rather than a monthly ordeal.
When you log in to your account, you’ll be greeted by a dashboard with an overview of your account activity and key metrics, such as cash flow, P&L, account balances, expenses, A/P, A/R and sales. Some software lets you customize what you see first by rearranging the information.
If your business sends invoices, the ability to email them and accept online payments can help you get paid faster. Some accounting programs integrate with third-party payment processors while other vendors require you to use their in-house processing services.
With this feature, you can schedule the software to generate and send invoices for recurring charges automatically, such as subscriptions. You can choose how frequently invoices are sent ― daily, weekly, monthly or annually ― and indicate whether there’s an end date to the billing. Many accounting software providers don’t have recurring invoice functionality (we’ve noted in our reviews which ones do).
Automatic Payment Reminders
This feature reminds your customers about upcoming and past-due payments. Some have sample email text you can use as is or customize. You can then choose when you want the reminders to be sent. Some programs also give you the option of sending thank-you emails to customers after you receive their payments.
Smart reconciliation tools identify potential matches between your bank transactions and the bills and invoices you’ve entered into the software, saving you the hours it would take to sift through records. You can then approve or deny the suggested matches. The best products we reviewed suggest potential matches as you reconcile your accounts and a few also include a reconciliation feature on their mobile apps.
Every accounting program generates financial reports. Some are more basic than others and some require you to subscribe to a higher plan for advanced reporting. If you need specific types of financial reports, make sure they’re included in the program and plan you choose. Detailed reports can help you interpret your financial data to make informed business decisions.
Not every accounting and invoicing program has mobile apps, but the best ones do. However, there is quite a bit of variance in app capabilities. Some can capture receipts for expense tracking only, several allow you to create and send invoices and others have almost every feature the web-based software does. As mobile work becomes increasingly convenient, it’s worth verifying that a company offers a mobile app with its software.
The ability to connect your accounting software to the other business programs you use saves you the time of manually transferring data from one system to another. Highly rated payroll services, payment processing platforms, top point-of-sale systems and customer relationship management software are some popular types of integrations you may want to look for. Integration with systems you already use also cuts down on training time for employees.
Tracking for Billable Hours
If you’re a consultant or your business is an agency that bills clients by the hour, you want accounting software that allows you to track and bill your time or integrates with the time-tracking program you already use. This is an especially important feature for freelancers.
If you have a retail or distribution business, you’ll want accounting software that tracks inventory and helps with purchase ordering. You may need to subscribe to a top-tier plan to get this feature. If you need more advanced inventory features, the best inventory software options feature a dedicated inventory management system.
Firms, freelancers and consultants who work with clients on projects or jobs should look for accounting software that helps them track tasks and budgets. The software should allow you to invoice customers for tracked time and rebill them for project expenses.
Support for Multiple Businesses
Several programs we reviewed allow you to add more than one business to your account, though some of them charge extra for this convenience.
Many accounting software solutions are beginning to include artificial intellgence into its platform, either natively or via integrations. AI is being used to help detect errors, flag cash flow issues, make quicker decisions and speed up communication with collaborators.