create In 2020, if you want your accounting business to succeed, you should make your own accounting software. It may become one of the key decisions that will eventually get you better financial performance, better equip your staff, and make them enjoy working for you. Most companies don’t feel comfortable investing money in an accounting software project. But this investment will be just as fruitful as training your employees to become more efficient and productive.
Before you start moving towards automating your financial operations, let’s first try to answer the question of how to create an accounting software program that will put you on the path to your success.
How accounting software works
Accounting software is often described as a tool used to keep track of sales, profits, cash flow, cash reserves, credit allocation, and payment information.
Just like financial management software, accounting software is designed to provide a way for individuals and organizations to keep track of the information they have, such as money, property, or stock. While there are different ways of calculating these different values, most accounting software programs have a database of these assets. These databases are extremely useful for financial management professionals. Even though not all organizations can afford this level of technological sophistication, the investment is likely to be repaid a hundredfold.
There is a possibility to find or create accounting software for both small and large businesses that will support business operations a given company relies on. These financial operations include:
- Tracking cash flows
- Log analysis automation
- Transaction management
- Customer data monitoring
- Financial statement preparation
- Payroll processing
- Invoices processing
- Tax reporting
Besides, there are other huge benefits of using accounting custom software for cash flow management. The best accounting software integrates all aspects of cash flow management for you, reducing the complexity of cash management, thereby increasing the overall efficiency.
Steps to develop an accounting software application
When resolved to get your own accounting software, you should consider different options you have. It is important to choose the right solution that will comply with all your requirements and befit your business characteristics, such as the size, scale, and complexity of your business. Thus, you can choose a ready-made business accounting software program or build one.
Off-the-shelf accounting systems
There are both free accounting software programs and those you have to pay for. Normally, an off-the-shelf accounting system is a ready-made product that usually comes with pre-configured features and might come with a setup wizard. This solution is perfect for companies that don’t want to expend their internal resources on building software from scratch. This solution is provided by a third party and is capable of meeting the majority (but not all) of your business requirements.
The advantages of buying an off-the-rack accounting solution include:
- No need to expend the resources on designing, developing, testing, and supporting the software
- A software vendor maintains servers and supporting hardware
- A software provider usually incorporates minimum functionality necessary
- Mostly free updates – ranging from full new features, bug fixes, and enhancements, to additions and improvements to existing functionality
On the other hand, the disadvantages of buying a ready-made accounting business software solution cover the following aspects:
- You won’t directly control the feature set, including changes made to the software with each new release
- You won’t be able to decide when to make software updates
- No flexibility in catching up with the market trends
- The feature set is uniform, so you won’t be able to win a competitive advantage over your rivals
Custom accounting software
If the above pros and cons tell somewhat against purchasing an off-the-shelf solution, then it’s time to initiate your own accounting software development process. So, how to build accounting software? This process will consist of four steps.
As accounting custom software is built to solve the problems and deal with the challenges that a particular business encounters, the software development process has to start with the in-depth research phase. Here, a software development vendor has to collect the background information on the client, get a comprehensive explanation of the customer’s needs and priorities.
During this phase, the project team should focus on the software development methodology, business issues and challenges that the client struggles with, the typical solution roadmap and alternatives, the company’s current needs and objectives, the market trends and future development plans of its customers.
At the stage of prototype development, you should answer the question of how to design accounting software.
So, you have an idea of what your custom accounting solution should be like. But before you get down to coding for your accounting software, you must take your time to design a prototype of a product. Here, you create a model of a future product and validate the ideas that you’re coming up with at this stage and decide how effectively they can solve customer’s problems. This stage involves close cooperation between the client and the development team, as the latter must rely on the feedback of the former regarding the software design, give their recommendations, and express their wishes. In doing so, the project team not only ideates, but it also negotiates the development plan modifying the model of a product at hand.
When the prototype of your bookkeeping software program is ready, accounting software developers start working on it. The design that was collaboratively created step by step is becoming a functioning system. One of the critical decisions to be made is where to host the software.
- On-premises solutions. This type of hosting is very popular but requires additional costs and infrastructure for managing the software. When choosing on-premises hosting, consider that many on-premises solutions are more expensive and harder to upgrade than cloud-based solutions. On-premises solutions also risk exposing unsecured databases to the outside world. That’s why many potential IT partners consider this option less attractive than cloud-based solutions and will opt to go with the latter.
- Web-based accounting software. It means there are web hosts providing space on a server owned or leased for use by other companies. The software must be distributed on the remote server, and the hosting company offers billing services for it. Web-based accounting software, however, gives clients more flexibility than software hosted on-premises, allowing it to be configured more freely and keeping it up-to-date more readily.
- Cloud hosting. This choice better meets the requirements of small businesses with few or no on-premises environments. Thus, hosted software is provided as a service to end-users, and thereby companies eliminate the need for expensive infrastructure investments in overheads. SaaS accounting software for small businesses can provide much better scalability and flexibility for the running of accounting programs. Besides, working on the cloud-bases software, a development team won’t be limited by rigid pre-configured processes.
When a type of hosting is chosen, coding for accounting software continues. The team writes the code, performs tests, and prepares the program for a general release.
To get quality accounting custom software at a reasonable price, consider outsourcing software development to Ukraine, as this destination has a number of benefits to offer.
4. Release and maintain
After the first accounting software release, it is essential to monitor the market for any failure indicators and for emerging industry trends in order to facilitate future maintenance releases.
Moving your project from small-scale custom software development to the market and into industrial usage is challenging. However, having attained the commitment and trust of your software development services provider, you will get a partner capable of maintaining the system and keeping it up to date with the evolving requirements.
Related:- Top 10 new medical technologies of 2019
Types of accounting software
Generally, all kinds of custom accounting software can be divided into two groups: commercial and non-profit.
Examples of commercial accounting software
Commercial off-the-shelf accounting software is represented by cloud-based Xero and FreshBooks, on-premises/cloud-based QuickBooks, desktop accounting software called TurboCASH and others. It is used by single individuals and for-profit organizations: from small- and mid-sized companies to large enterprises.
Commercial accounting software systems are industry’s best offerings, as they are easy to use, have a broad range of features, and include all the critical features required for providing value in the finance and accounting world. Commercial off-the-shelf software is designed by a third party to be used for accounting needs. You won’t need your own team of tech specialists who will build or fine-tune the software for you. Commercially available software is not at all, a little, or moderately configurable to the business needs of a client, and you will be able to easily install it or reach it online all by yourself.
Bookkeeping software for nonprofit organizations
This type of accounting software is tailor-made specifically for non-profit organizations. Running an organization, no matter whether it’s for- or non-profit, is difficult. However, if this organization is aimed at doing charitable work, the accounting will be its critical part with a lot of nuances.
Most probably, nonprofits will handle accounting in a different way, not as a regular business. Grant tracking, changing compliance rules, and cybersecurity are all extremely important for them. That’s why such organizations should choose accounting software configured to serve these purposes. Examples of the best accounting software for nonprofit organizations include cloud-based Wild Apricot, the Raiser’s Edge, MemberClicks, etc.
Other types of accounting software
Among other types of accounting software, we may single out software for enterprises. What makes this type so different from the other two is its ability to manage and process large amounts of data successfully. In addition to accounting services, there may also be such perks as workflow management, project planning, or BI. FinancialForce, Solver BI360, Vena, and Board are some of the big names on the market.
Why should a company use accounting software?
Different kinds of companies can benefit in a lot of ways from adopting accounting software. The following advantages of utilizing and managing web-based accounting solutions feature how they can improve your income statement, cash flow reporting, and asset inventory management, and better ensure you’re optimizing your financial operations:
1. An easier information retrieval process. Since the source of all financial information is part of the overall accounting system, by using custom accounting systems, one can easily link any data that is going to be generated in the future. So, developing online accounting software will help to prevent situations when the business can’t find the necessary information on their own and contribute to maintaining a high standard of accuracy of income statements. The process is thus much faster than traditional paper-based methods.
2. Financial statement coverage and revenue visibility. Adding a static and graphical data source to the custom accounting system will help enable a more accurate financial statement coverage that can be transferred into income statements. A visible accounting system allows users to collaborate on a new level of productivity achieving common financial goals. Users are provided with more information, they have visibility into the data and therefore can control the data flow.
3. Faster response time and automation. It is one of the most significant automated accounting systems’ advantages that can come from embracing processes automation and, as a result, improve internal efficiency and promote more precise timings of various processes. Automation saves time but to achieve this, accounting software developers must be up to date with the latest technologies. Being up to date with IT tools, make sure that you stay ahead of the competition and make the most of the new technologies to enhance the efficiency of your business. Then, a company will be able to do more with less.
4. Human error elimination. Although you will need a team of tech professionals to set up a cash flow management system for you, almost no specialist skills are required to successfully handle it. When your accounting software development process is over, the best-case scenario is that the system will be able to eliminate or at least significantly reduce your company’s chance of error-related losses. Calculations accuracy, for instance, can be substantially improved as a result of the full-service in-house accounting software development.
5. Reduced costs. Businesses’ accounting costs may be significantly reduced by utilizing web-based accounting software. Web-based systems not only allow for greater efficiencies in document processing and reconciliation, but they can also eliminate paper filing and eliminate accounts payable and accrual processing costs, which can result in significant savings. This is mostly due to the harmonization of responsibilities. Having a unified accounting business software solution means making things well-organized and solving one of the biggest of today’s problems — being overwhelmed continuously with an uncertain flow of information from multiple entities.