Many aspects of accounting software make it a useful tool. If you’re 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 key features to look for in accounting software:
| Bank feed | The accounting software connects with your bank so that all your bank transactions appear in your online ledger. |
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| Dashboard | The best accounting software platforms have organized, customizable dashboards with clear data visualization and organizational features. |
| Online invoicing | You can create and send invoices entirely from most accounting software – no printing or mailing required. |
| Recurring invoices | Accounting software platforms often include automation features that you can use to set up the same invoice to be sent at the same time each month. |
| Automatic payment reminders | Many accounting software platforms regularly and automatically remind your customers or clients to pay outstanding invoices. |
| Reconciliation of banks | All accounting software should have no problem reconciling your bank transactions with invoices, receipts, purchase orders, expenses, and the like. |
| Financial reporting | You can use accounting software to generate basic forms such as profit and loss statements or advanced business status reports. |
| Mobile applications | Almost all accounting software platforms offer iOS and Android mobile apps — some of which include almost all the features available through a browser or desktop. |
| Integrations | The best accounting software platforms integrate with POS systems, payroll services, HR platforms, CRM software and more. |
| Tracking billable hours | Many platforms include features for tracking time spent per task or project, or integrate with your third-party time tracking platform. |
| Inventory management | Some accounting software includes tools for tracking your inventory, creating purchase orders, and maintaining your warehouse. |
| Billing based on the project | With this feature, you can bill your clients based on time spent per project or task and hourly rate. |
| Support for multiple companies | Some accounting software platforms allow you to use the same set of tools for more than one company. |
Bank Feed
This feature connects the software with your business bank and credit card accounts to update your transactions daily. This saves time as you won’t have to load transactions manually. It also gives you a daily, rather than a 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 chore.
Dashboard
When you log into your account, you’ll be greeted with a dashboard that shows you an overview of your account activity and key metrics, such as cash flow, profit and loss, account balances, expenses, payables and receivables, and sales. Some accounting programs allow you to customize what you see first by rearranging the information.
Online invoicing
If your business sends out invoices, the ability to email them and accept online payments helps you get paid faster. Most accounting software integrates with third-party payment processors; others require you to use their internal processing services. The advantage is that the accounting software also serves as an invoice generator.
Recurring invoices
With this feature, you can schedule the system to automatically generate and send invoices for recurring expenses, such as subscriptions. You can choose how often invoices are sent – daily, weekly, monthly or annually – and indicate whether there is a billing end date.
Automatic payment reminders
This feature helps you remind your 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 ability to send thank you emails to customers after you receive their payments.
Reconciliation of banks
Smart reconciliation tools identify potential matches between your bank transactions and the bills and invoices you’ve entered into your accounting software, saving you the hours you’d otherwise spend searching your bank account for this information. You can then approve or reject the suggested matches. The best apps suggest potential matches as you reconcile your accounts, and several include a matching tool in their mobile apps.
Financial reporting
Any accounting program can generate financial reports. But some are simpler than others, and some require you to subscribe to a more expensive plan for advanced reporting. If you need certain types of financial reports, make sure they are included in the software application and plan you choose. Detailed reports can help you interpret financial data to make informed business decisions.
Mobile applications
Not all accounting and invoicing programs have mobile apps, but the best ones do. However, there is a fairly large range of mobile application capabilities. Some can only record invoices to track expenses, some allow you to create and send invoices, and others have almost all the features offered by web-based software. It’s worth checking whether the software you’re considering offers a mobile app and, if so, what features are included in the app to help you manage your business while away from the office.
The best mobile accounting software apps include all the features of the browser version, essentially like this smartphone-sized version.
Integrations
The ability to connect your accounting software with other business programs you use saves you valuable time by not having to manually transfer data from one system to another. Payroll, payment processing, the best point-of-sale (POS) systems, and the best 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.
Tracking billable hours
If you’re a consultant or your business charges clients by the hour, you need accounting software that allows you to track and bill your time, or that integrates with the time tracking program you already use. This is an important feature for freelancers.
Inventory management
If you have a retail, e-commerce, or distribution business, you need an app that helps you track inventory and purchase orders. You may need to subscribe to the highest level plan to get this feature, unless you use ZarMoney. If you need more advanced inventory features, look for software that integrates with a dedicated inventory management system.
Project-based billing
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 invoice customers for tracked time and invoice project costs.
Support for multiple companies
Several of the programs we reviewed allow you to add more than one company to your account, although some companies charge extra for the convenience. Also, the types of accounting tools that are important to you will depend on the specific needs of your business. For example, if you run a small sole proprietorship, project-based billing might be the most important feature on your list. Or, if you plan to do something on your mobile device, a full-featured mobile app might be at the top of your list.