Accounting software
From Wikipedia, the free encyclopedia
Accounting software is computer software that records and processes accounting transactions within functional modules such as accounts payable, accounts receivable, payroll and trial balance. It functions as an accounting information system. It may be developed in-house by the company or organization using it, may be purchased from a third party, or may be a combination of a third-party application software package with local modifications. It varies greatly in its complexity and cost.
Since the mid 1990s, the market has been undergoing considerable consolidation, with many suppliers ceasing to trade or being bought by larger groups.
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Modules
Accounting software is typically composed of various modules, different sections dealing with particular areas of accounting. Among the most common are:
Core Modules
- Accounts receivable—where the company enters money received
- Accounts payable—where the company enters its bills and pays money it owes
- General ledger—the company's "books"
- Billing—where the company produces invoices to clients/customers
- Stock/Inventory—where the company keeps control of its inventory
- Purchase Orders—where the company orders inventory
- Sales Orders—where the company records customer order for the supply of inventory
Non Core Modules
- Debt Collection—where the company tracks attempts to collect overdue bills (sometimes part of accounts receivable)
- Expense—where employee business-related expenses are entered
- Inquiries—where the company looks up information on screen without any edits or additions
- Payroll—where the company tracks salary, wages, and related taxes
- Reports—where the company prints out data
- Timesheet—where professionals (such as attorneys and consultants) record time worked so that it can be billed to clients
(Different vendors will use different names for these modules)
Implementations
See the article Comparison of accounting software.
Categories
Personal Accounting
Mainly for home users that use accounts payable type accounting transactions, managing budgets and simple account reconciliation at the inexpensive end of the market suppliers include:
Low End
At the low end of the business markets, inexpensive applications software allows most general business accounting functions to be performed. Suppliers frequently serve a single national market, while larger suppliers offer separate solutions in each national market.
Many of the low end products are characterized by being "single-entry" products, as opposed to double-entry systems seen in many businesses. Some products have considerable functionality but are not considered GAAP or FASB compliant. Some low-end systems do not have adequate security nor audit trails.
Mid Market
The mid-market covers a wide range of business software that may be capable of serving the needs of multiple national accountancy standards and allow accounting in multiple currencies.
In addition to general accounting functions, the software may include integrated or add-on management information systems, and may be oriented towards one or more markets, for example with integrated or add-on project accounting modules.
Software applications in this market typically include the following features:
- Industry-standard robust databases (eg Microsoft SQL, Oracle, Pervasive)
- Industry-standard reporting tools (eg Cognos, Crystal)
- Tools for configuring or extending the application (eg an SDK, access to program code, the ability to be controlled via Visual Basic for Applications (VBA))
High End
The most complex and expensive business accounting software is frequently part of an extensive suite of software often known as Enterprise resource planning or ERP software.
These applications typically have a very long implementation period, often greater than six months. In many cases, these applications are simply a set of functions which require significant integration, configuration and customisation to even begin to resemble an accounting system.
The advantage of a high-end solution is that these systems are designed to support individual company specific processes, as they are highly customisable and can be tailored to exact business requirements. This usually comes at a significant cost in terms of money and implementation time.
Vertical Market
Some business accounting software is designed for specific business types. It will include features that are specific to that industry.
The choice of whether to purchase an industry-specific application or a general-purpose application is often very difficult. Concerns over a custom-build application or one designed for a specific industry include:
- Smaller development team
- Increased risk of vendor business failing
- Reduced availability of support
This can be weighed up against:
- Less requirement for customisation
- Reduced implementation costs
- Reduced end-user training time and costs
Some important types of vertical accounting software are:
- Banking
- Construction
- Medical
- Point of Sale (Retail)
Use by Non Accountants
With the increasing dominance of having financial accounts prepared with Accounting Software, as well as some suppliers claims that anyone can prepare their own books, accounting software can be considered at risk of not providing appropriate information as non-accountants prepare accounting information. As recording and interpretation is left to software and expert systems, the necessity to have a Systems Accountant overseeing the accountancy system becomes ever more important. The set up of the processes and the end result must be vigorously checked and maintained on a regular basis in order to develop and maintain the integrity of the data and the processes that manage these data.
Online Resources
The World Wide Web provides accountants with valuable resources for researching, selecting, and implementing accounting software. With the vast array of software products available, accountants can be overwhelmed by all the choices and options offered. Consequently, they have been turning to the web to search for solutions, to connect with each other, and to share best practices techniques for selecting software. This trend is likely to continue as the software market becomes more saturated and as accountants further embrace online resources.
See also
- Comparison of accounting software
- Accounting, and List of accounting topics
- Double-entry bookkeeping system
- Application software
- Finance software
- Construction Software
- Enterprise Resource Planning
Categories: Accounting software | Business software