Many aspects of accounting software help make it a useful tool. As a small business owner, it’s important to know what features to look for. Most online accounting software offers accounts receivable, accounts payable, banking, and reporting features. Some programs include inventory management, project management, time tracking, and payroll tools.
Here are some of the top features to look for in accounting software:
This feature connects the software to your bank and credit card accounts to receive a daily update of your transactions. This saves you time because you won’t have to upload transactions manually. It also gives you a daily, rather than monthly, overview of your accounts. A real-time bank feed feature can help with reconciliation, allowing you to make it a small daily task rather than a monthly ordeal.
When you log into your account, you are greeted by a dashboard that shows you an overview of your account activity and key metrics, such as cash flow, profit and loss, account balances, expenses, accounts payable and receivable, and sales. . Some accounting programs allow you to customize what you see first by rearranging information.
If your business sends invoices, the ability to email them and accept payments online helps you get paid faster. Some accounting programs integrate with third-party payment processors; others require you to use their in-house processing services. It is a plus for accounting software to also serve as an invoice generator.
With this feature, you can program the system to automatically generate and send invoices for recurring charges, such as subscriptions. You can choose the frequency of sending invoices – daily, weekly, monthly or yearly – and indicate if there is an end date for invoicing.
Automatic payment reminders
This feature helps you remind customers about upcoming and overdue payments. Some have sample email text that you can use as is or customize. You can then choose when you want the reminders to be sent. Some programs give you the option to send thank you emails to customers after receiving their payments.
Smart reconciliation tools identify potential matches between your bank transactions and the invoices you entered into the accounting software, saving you the hours it would otherwise take to sift through your bank account for this information. You can then approve or decline the suggested matches. The best apps suggest potential matches when you reconcile your accounts, and a few include a reconciliation tool in their mobile apps.
Every accounting program can generate financial reports. But some are more basic than others, and some require you to sign up for a more expensive plan for advanced reports. If you need specific types of financial reports, you should make sure they are included with the software application and plan you choose. Detailed reports can help you interpret your financial data to make informed business decisions.
Not all accounting and invoicing programs have mobile apps, but the best ones do. However, there is a whole range of features in mobile apps. Some can only capture receipts for expense tracking, some let you create and send invoices, and others have nearly all the functionality of web-based software. It’s worth checking to see if the software you’re considering offers a mobile app, and if so, what features are included in the app that will help you run your business when you’re away from the office.
The ability to connect your accounting software to other business programs you use saves you valuable time because you don’t have to manually transfer data from one system to another. Payroll, payment processing, point-of-sale (POS) systems, and customer relationship management (CRM) software are just a few of the popular types of integrations available with accounting software. Integration with the systems you already use also reduces training time for employees who will use the software.
Track billable hours
If you’re a consultant or your business bills clients by the hour, you need software that lets you track and bill your time or that integrates with the time tracking program you already use. This is an important feature for freelancers.
If you have a retail, e-commerce, or distribution business, you need an app that makes inventory tracking and purchase orders easy. You may need to upgrade to a higher tier plan to get this feature. If you need more advanced inventory features, look for software that integrates with a dedicated inventory management system.
Billing per project
Companies, freelancers, and consultants who work with clients on projects or jobs should look for accounting software that helps them track their project tasks and budgets. The software should allow you to bill clients for tracked time and bill them for project expenses.
Support for multiple companies
Several programs we’ve reviewed allow you to add more than one company to your account, although some companies charge additional fees for this convenience. Additionally, the types of accounting tools that are important to you will depend on your specific business needs. For example, if you run a small freelance business, billing per project might be the most important feature on your list. Or, if you plan to work on your mobile device, a full-featured mobile app might be high on your list.