Accounting software is a set of codes that recognises basic accounting principles when items are entered into the interface that is provided by the developer of the software. Sage accounting software for instance uses what is called nominal code to identify line items in such a way that you don’t have to understand the basics of double entry before you can use it.
The importance of accounting software lies in the accuracy, efficiency and speed of processing and preparing accounting information. No one wants to ever do any mundane accounting job manually when it can be done better when automated. This could be a standalone unit or cloud based accounting software.
The problem however is that a lot of accounting software developers tend to charge lots of money in order for you to be given the right to use the automated tool in keeping track of your business activities. This cost when factored into other administrative costs would amount to large amount of money.
One way to go around this problem is to get free accounting software for your accounting services. Wave accounting is one of such free tools out there that you can use to create quality financial statements and other business reports. Some people even buy spreadsheet templates that have the capability of processing data just like a full fledge accounting program.
The issue now is, should accountants be encouraging the use of free accounting software? In order to answer this question correctly, certain factors need to be considered; both financial and non financial factors.
TEN (10) THINGS TO CONSIDER BEFORE USING FREE ACCOUNTING SOFTWARE
Before making the decision to use any free tool out there, make sure you do your home work first. The points listed below are examples of factors that must be considered before deciding whether to go for paid or free accounting software.
- Security implications of the application: one of the most important things that all businesses now have to deal with is the security of financial data. Companies never recover easily from the damage caused by data breach (privacy risk) irrespective of the size and nature of the company in question.
- Troubleshooting and support available: no system is free from technical glitches here and there. Management should consider the quality and quantity of supports that would be available to it just in case the unlikely happens.
- Long term existence of the vendor: it will be a waste of time and other useful resources looking for software programmers to work around a source code –if any, in case free accounting software goes underground. If you are doing something serious, you may want to get the opinion of an expert in the going concern of a softwares company before using any of its products.
- Scalability of the software: nothing comes and stays the same is a popular saying. Change is a living and ever occurring process that makes this a better place for us all. The robustness and scalability of free accounting software should be given serious thought during the planning process of acquiring new accounting software- free or paid type.
- Know how of the staff members: an important question that needs to be asked before deploying any tool that would be used at the work place is, do our workforce have the technical knowhow to effectively use this new technology? If no, can training be obtained within budget?
- Ease of use: users feedback should be gathered during the testing phase of the acquisition to see if the free accounting software should be deployed or not.
- Features of the software: management during their due diligence and feasibility study should evaluate the features of the free accounting software it intends to use to ensure that it has the capability to perform basic functions like producing crystal reports.
- Legal requirement: some countries require organizations to make their annual filing online using the XBRL format, if you operate in such countries, you may want to consider the ability of the proposed free accounting in producing report in the required format.
- Business requirement: the needs of the company should be a major guide as to whether to implement any new tool or not. There will no sense in bringing in a tool that cannot efficiently solve a problem facing an organization. One of the fundamental principles of getting value for investment in IT is to ensure that the company’s objective is closely aligned with the capability of the IT infrastructure to be purchased.
- Non financial implications: a lot of people still believe that there is no such thing as free lunch. These group of people would tend not to take your business seriously (large or small business) if they notice that you use free accounting software. If your organization is willing to carter for the reputational risk that comes with using free tools, then by all means go for it.
The above factors should be considered in the light of specific circumstance of a company. A small business that does not anticipate quantum growth for instance can patronise some free accounting software knowing that there might not be the problem of migrating data to another platform.