How Fit Small Business Evaluates Accounting Software: A Case Study

It’s very easy for a business to lose track of bills, so your new accounting software should help you track how much money you owe to your suppliers and vendors. The best accounting system allows you to record new bills and pay the money online with the click of a button to help you reduce the time spent on processing checks and making bank deposits.

Some programs take it a step further by allowing you to set up recurring payments, which is a useful feature for businesses that pay vendors on a regular basis. We also assessed how the software handles purchases, from creating simple purchase orders to processing quotes to purchase and payment.

Our criteria for evaluating A/P focus on the following features:

• Record an expense without paying: Good accounting software should allow you to record an expense when an invoice is received rather than having to wait until it’s paid.
• Record a credit from a vendor: There are some instances where a vendor owes you money, whether it’s a refund or return of items. Your accounting program should allow you to enter a vendor credit to record that refund or return.
• Ability to short-pay an invoice: If you don’t want to pay the entire amount due for any reason, such as for items that aren’t yet completely delivered by the vendor, you need to be able to make a partial payment of the invoice.

Below is the complete list of features involved in our assessment of A/P:

In addition to tracking what you owe, your accounting software should also track who owes you money, how much they owe you, and when to expect payment. We evaluated the software across this category based on invoicing capability, from creating and customizing invoices to adding billable labor, inventory, and expenses. A robust accounting software program should also be capable of setting up and sending recurring invoices. We also examined the software’s ability to produce A/R reports, such as outstanding balances by customers.

We also scrutinized the following essential features:

• Create a new customer: You should be able to set up a customer in your accounting software so that you can streamline and track your transactions with them. One important feature is a “quick-create” option for creating new customer accounts when billing a customer for the first time.
• Add unbilled labor and expenses to an invoice: This feature is useful for ensuring you bill customers for all labor and expenses that have been paid and assigned to their accounts.
• Accept short payments from customers: There might be times when customers opt not to pay the full amount of an invoice. Your accounting software should have a streamlined procedure for managing short-paid invoices to keep your accounting records accurate.

We explored all the following features in our assessment of A/R:

At the very least, your accounting system should provide an option to connect your bank account, allowing you to import real-time data from your bank into the system and make direct payments. Some software will also accept QuickBooks Online files, which enables you to download files without connecting the software to your bank. If you like to pay bills by check, your system needs to be able to print and process checks as well as provide options for voiding and deleting duplicate checks.

Other major features we evaluated include:

• Bank and credit card reconciliation: Reconciliation is one of the pillars of good accounting. A great accounting solution should be able to reconcile your check register to your bank statements even when there are timing differences like outstanding checks and deposits in transit.
• Group checks into a single deposit: You should be able to group checks into a single deposit amount so that your check register will match your bank statement.

Our assessment of banking and cash management covers all the following features:

Most accounting programs don’t have full features adapted to project contracting businesses, but some programs have basic functionality for estimating and tracking project-related costs, including labor, materials, and equipment. After creating the project, you should also be able to assign costs and actual labor and add new transactions, such as inventory, expenses, and invoices. Project managers should be able to compare actual project costs with their budgets by period.

We assessed project accounting based on the following features:

An accounting system doesn’t have to replace your tax software, but your accounting program should be able to track sales tax collected and submitted by tax jurisdiction. We consider the software’s ability to set up sales tax items with the correct requirements, depending on the tax rules in your region.

An all-inclusive accounting program also generates reports for tax liabilities and tracks taxes owed for different periods. The ability to pay sales tax liability and file tax returns are the strongest features we consider across this category. The most important income-tax-related feature is the ability to track payments that must be included on Form 1099 to subcontractors.

Here’s the complete list of features evaluated in this category:

Inventory accounting varies from vendor to vendor. While most programs allow you to record inventory in an asset account, the ability to calculate the cost of goods sold (COGS) automatically is rarer but an essential function for retailers and wholesalers.

Overall, the best accounting software must include features for tracking inventory on hand, creating inventory items, and making adjustments to increase or decrease the quantity and cost of stocks. It should also be able to add inventory to invoices and bills easily while adjusting stock levels for the sale or purchase automatically.

Our assessment of inventory accounting includes the following features:

At the very least, the best accounting software generates fundamental reports, including profit and loss (P&L) statements, cash flow statements, and balance sheets. Besides the number of features available, we also looked into the software’s flexibility in terms of creating report categories. Some programs offer basic reports while more advanced solutions can run reports by category, such as class and location.

We attempted to generate the following types of reports:

Most accounting software claims to have responsive support, but we wouldn’t know how efficient they are without actually testing them. We tested each software’s support options and placed our highest scores on phone and live chat support. The most reliable customer support allows you to initiate the call and is quick to pick up the phone. If phone support isn’t available, then you should be able to seek assistance at least through email or a chatbot. Accounting programs, including free software, should also provide self-help resources that users can browse at their own pace.

We tested if the software provider offers the following types of customer service:

Each mobile app provides different levels of functionality depending on the vendor. We evaluated each app based on its ability to perform important accounting functions, such as sending invoices and recording bills on the go. A powerful mobile app doesn’t need to have all the features of the desktop interface, but you should essentially be able to enter and receive payments, capture expense receipts, and view financial reports.

The best mobile app should be able to perform the following features:

Accounting software should serve as the central hub for all of your business information. Integrations allow all of your business programs to communicate with your accounting software seamlessly with minimal effort from you. We focused our evaluation on whether the accounting software provided the following four vital integrations:

• Payroll
• Time tracking
• Receive e-payments from customers
• Make e-payments to vendors

Moving to a new accounting software is usually a painful process. We evaluate ease of setup based on the tools and resources available to new users for making this one-time adjustment to the new system. In addition to the specific items listed below, we did a subjective evaluation of the ease of use and looked for user reviews specifically targeting ease of use.

Specifically, we look to see if new users can:

• Import a chart of accounts and beginning account balances
• Import customers and vendors
• Import service items to use on invoices
• Access live onboarding support

Ease of use is the difficulty of using the program daily once the original onboarding is complete. Our ease of use score is subjective, but we look for key features that generally tend to make software easier to use:

• Easy-to-read, customizable dashboard
• Cloud-based software versus desktop
• General user interface design
• One-click transaction creation

We evaluate price based on the monthly cost for one, three, or five users. Some accounting software is very affordable for one seat but becomes expensive when additional users are needed. To receive full points, the software must be below a certain cost for the given number of users:

• Less than $30 per month for one user
• Less than $45 per month for three users
• Less than $75 per month for five users

We also awarded additional pricing points for software that provided a free trial, offered monthly plans, and gave new customers a deep discount.

We evaluate user reviews by referencing websites dedicated to collecting user reviews, such as G2, Software Advice, and Capterra. More weight is given to the websites that collect the largest number of reviews.