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 items 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 making sure you bill customers for all labor and expenses that have been paid and assigned to their accounts.
• Accept short payment from customers: There might be times where 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 have an automated feature for reconciling transactions between your books and your bank statements to avoid the problems that come with manual reconciliation.
• View outstanding transactions: You should have the ability to see outstanding checks and uncleared transactions in your bank account.

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

Usually offered as an inclusive module or a separate add-on, fixed asset management is an important feature for monitoring equipment and vehicles. While most accounting systems don’t have full-fledged fixed asset management features, they should at least be able to record a fixed asset purchase. Additionally, they should offer basic features for managing and tracking fixed assets, depreciation calculation, cost records, audit history, and resource allocation.

Below is the complete list of all features evaluated in this category:

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 time 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 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 easily add inventory to invoices and bills 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:

We evaluate price based on the monthly cost for five users. Software with a monthly cost of $40 or less received the highest score while software that does not disclose their pricing on their website received the lowest score.

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.