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Hey everybody, this is Gene Marks and welcome to my weekly podcast for the Hartford Small Biz Ahead. This week, I’d like to talk to you about accounting systems. Now, please don’t stop listening. This is an important topic because if you’re running a small business, at some point, you’re gonna be needing an accounting system, right? I mean, okay, maybe you’re a startup and you’re doing your accounting manually on a spreadsheet or maybe you’ve already got an accounting system but you can’t really use it to manage your orders and your inventory, or it can’t keep up with your needs, you’re growing, it’s not scalable. Maybe you’re using like a bookkeeping system, but you want something that’s more specialized for your industry, all these different things, or these are all reasons why people either buy or replace or upgrade their existing accounting system.
Did you know that the accounting software market, it’s projected to be as big as $20 billion by 2026? So, you know, a lot of people out there in the market to buy accounting systems. And there are a lot of great accounting systems that are out there. I’m gonna name a few coming up. But I’d like to share with you some thoughts on whether you’re gonna buy a new accounting system. You’ve never had one before, or even if you’re gonna replace your existing accounting system. I do have some thoughts for you. So here we go. Thought number one, if you’re gonna get at an accounting system, it needs to be a cloud based accounting system. Now this can be an accounting system that is fully online, or it can even be one that you just in get installed on managed services servers.
You know, that they can host it for you, but it’s gotta be in the cloud. I mean, back in the day, I know you people ran their accounting applications on their desktop computers or their servers, but in the cloud, I mean, come on, everyone who has permissions can access the data. That’s including you, if you’re the owner and you can access it wherever you are and from whatever device that you’re using. So you really wanna make sure that you’re giving yourself that ability because people are trying to do stuff while they’re on the run. They want to send out invoices on their phone. They want to check their receivables on their iPad. You really will have a much easier time doing that, if it’s a cloud based system. Now you might say, hey, I’m not sure if it’s so secure, it’s less secure, more secure than if I hosted it.
Trust me when I tell you it’s gonna be more secure than hosting it yourself. I mean, no offense on your IT people, but the cloud-based accounting providers, the managed services providers that are out there, these people are investing hundreds of millions of dollars and the latest tools and resource and security over there, it’s their business model. So I would trust in them to make sure that you are, your system is secure. Again, I think it’ll be a lot more secure than if you’re hosting it yourself. And remember if it’s in the cloud, it’s way more integrable with other cloud based systems. So if you’ve got an accounting system and you don’t want to integrate it with a service based system or something specialized online ordering system or your eCommerce site, having something in the cloud will make it a lot more easier to do than if you have something just locally on your server or on your desktop.
And one final thing about cloud based systems, they are more easily upgraded. You don’t have to like download files and go through an upgrade process. The vendors just do it while you’re sleeping. And secondly, it’s way easier to be supported by your software vendors and your accountant can get access to it as well. The accounts that I talk to, they prefer that their clients have cloud based systems so they can get that remote access. By the way, if it’s in the cloud and your company goes down, you have an electrical problem or a storm or whatever, it’s backed up, it’s safe. You can go to a Starbucks or some other location. You can still conduct your business, your whole thing isn’t down.
So, have I made my case? Get a cloud based accounting system, that’s number one. Number two, I want you to evaluate the company, not just the software. I mean, people get wrapped up in the features of an accounting product and let’s just be clear, in 2022, these accounting applications, they’re pretty mature, most are already cloud based. And they’re constantly comparing themselves and upgrading their products to stay competitive. So, all of your features are important. They’re not as important as the long term viability of the company, providing the software. You wanna make sure that you are moving forward with an accounting software company that is gonna be around five years or 10 years from now. So, dig into their financials, ask ’em for it, get referrals as well. Take a day, cough up a few bucks, go to their user conference where you can meet other customers and tech people from their company. Evaluate their partners that they use and the products that they offer and ask about their future goals and plans.
What’s coming up, what new releases, what are they working on? You have to make sure that this product is gonna grow with you. I mean, I know that selecting an accounting software is really a pain in the neck. So, your goal is to try and minimize the chance you’ll ever have to do this again. So make sure the company will grow with you. It’s a very, very important thing to do. Next step has to do with demonstrations. Okay. I mean, ultimately you’re gonna have to get a demo from the accounting software company. You should plan for multiple demonstrations, more than one, probably 3, 4, 5. I mean, you wanna see this software in action. You’re gonna wanna do this multiple times. You’re gonna wanna involve other people from your company who are gonna be impacted by the system. You’re gonna wanna send sample data to the accounting vendor and have them incorporated into their demonstrations.
You wanna look at what the outputs are, what does the invoice look like? The order or the reports are coming out of the system. So they meet your approval. You want the software person from the software company to run through every process in your business from taking an order to making a payment. I mean you wanna get access to a fully functioning system in advance so that you and your team can practice on your own. You don’t settle for an answer. You want the demonstrator to show you, beat them up. This is what you do to your accounting software people. I know that sounds harsh, but let’s not forget they’re gonna be with you and you’re gonna be with them theoretically for many years. So now is the time to ask those questions.
Don’t just believe it, see it. Don’t just trust, but verify. That is my advice to you in getting demos. Don’t limit it to just one by some salesperson. Let’s talk about some products. You should consider the size of your company when you’re evaluating products. If you’re very small, there’s simple invoicing applications like Invoice2go, Square and PayPal. If you’re like a typical small business, five employees to 50 employees, few million dollars a year in revenues but could be even bigger. There’s a bunch of great horizontal mainstream applications. Like of course, QuickBooks, Xero with an x, Zoho Books, FreshBooks and Wave. Those are all really good. Now, as you get bigger, you might wanna consider some of the more enterprise systems that are made by Sage, Microsoft Dynamics, SAP Business One and NetSuite.
I’m not a big fan of industry specific applications for CRM, Customer Relationship Management, but for accounting, I think you should consider an industry specific package. Procore and Vista are really good for construction and Epicor and SYSPRO are very good for manufacturing and Revel and Toast are good for retail and restaurants. By the way, I’m mentioning some of these names, there’s a lot more that’s out there. Okay. So you don’t gonna have to do your research. But these are some of the leading ones and the ones that I see my clients using more often than not. Just be aware of some of the players that are more niche. I mean, while there might be more specific functionality, those companies are generally smaller and they may not have the resources or the community that some of the larger customers do.
And even if it’s not critical now, getting a solution that’s made for your industry or integrates with other industry applications that could really serve your company’s needs going forward in the future as you grow. So, we talked about going cloud, we talked about planning for multiple demonstrations. We talked about evaluating the company and not the software, we talked about considering some of the software options, as well as some industry applications. One final thing before I let you go, okay, involve a partner. I mean, no offense, you don’t do this for a living. Hopefully this is the last time in your life that you’ll ever have to implement an accounting application. So, this is it. So you wanna get an expert involved and yeah, these guys are gonna charge. I mean, you might pay somebody a hundred to $300 an hour to implement your system.
That means evaluating it, getting it set up, customizing it, integrating it with other applications, migrating data over, training you and supporting you. It’s a job that could be 50 hours. It could be 500 hours. I mean, I get it. But I can’t stress enough, the importance of having a partner that’s expert in the system, work with you. And if you are working with a good accounting software, they usually have a good partner channel. These people go through certifications and testing and they know their products. So you really wanna have a good partner involved with you. It will save you a lot of time and make sure that you get set up the exact right way. So those are my thoughts about getting an accounting system. I’m curious to hear your thoughts. Feel free to get back to me. If you want other advice, if you wanna leave a comment, you wanna listen to some of my other podcasts, particularly my podcast with Jon, by all means, please go to Sba.thehartford.com. That’s the place for Small Biz Ahead, where all of our podcasts are, and a lot of other great content to help you run your business. My name is Gene Marks. Thank you so much for listening to me today. I’ll be back next week with some more advice to help you run your business. Take care.
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