How Can Personal Finance Software Help Me?

In the good old days, personal finance for most people meant simply balancing their checkbook once a week and making sure they had enough money in the bank to cover the monthly bills. Of course that was long before the days of multiple credit cards, electronic fund transfers, PayPal, and the dozens of other complicated financial transactions made by even the average person on a daily basis. These days, keeping track of person finances can be quite a chore and can often overwhelm you, leading to a less than perfect financial situation.

Modern life has created additional headaches in our daily lives, but fortunately it has also provided new tools to use to control them. Personal finance software is the best option for keeping one’s personal finances organized and up to date.

Personal finance software comes in many varieties, each offering a specific set of financial tools. The simplest forms simply keep track of multiple bank accounts, including credit card accounts. The most complete versions offer tax tracking, investment tracking, budget analysis, electronic banking and a long list of other features. How much you need depends on your situation and how closely you want to track your finances.

Most banks now offer free electronic banking to their customers. Make sure that whichever program you choose, it is capable of taking advantage of electronic banking. The vast majority of programs offer this feature as standard so you shouldn’t have to look hard. With electronic banking, you can easily check your balance, automatically download statements, transfer funds among accounts and have all your information seamlessly transferred into your electronic account register.

The two powerhouses of financial software are Quicken from Intuit Corporation and Microsoft Money. Both companies offer several versions of the program and generally offer the same features. The interfaces are slightly different and one’s preference will likely come down to which one appeals to you most. New editions are released each year to account for changes in banking and tax law and owners of the previous year’s edition will receive discounts to upgrade.

Another option that is growing in popularity is software that is kept entirely online. You never actually download a program to your computer and can access your information from any computer connected to the Internet, including SmartPhones. This is referred to as “cloud computing.” Some websites offer a low monthly fee to use the software and other sites are free and entirely advertising supported. Some people prefer this method for its convenience and other people stay away from these programs due to security fears.

Once you begin to use personal finance software you’ll wonder how you ever managed your finances without it. People become addicted to seeing the computer generated reports of exactly where their money goes each month. They often find this makes it easier to create a budget and stick to it. Even if you simply want to keep your basic checking account up to date, personal finance software is worth the small price.

Accounting Software Considerations

An off-the-shelf mainstream accounting program works well for micro and small businesses. Large companies are much better off with customized enterprise resource planning (ERP) systems that integrate supply chain, customer relationship management, human resources and all other data systems. Whereas a dedicated accounting software is all you need to run your medium-sized business.

Assessing Your Business Needs

Requirements vary by industry so make sure whatever you look at works for your industry! Regaradless, your accounting software must provide income and expense tracking and report generation.

Before you start sending RFPs, take some time to figure out exactly what you want from your accounting system. Products vary from simple checkbooks and cash-accounting systems to more complex financial management, payroll, inventory management, tax accounting and job costing. Many software offerings are modular so you buy what you need now and then add additional functions when needed.

Accounting software should provide the following tools:

  • Generate balance sheets and profit and loss statements
  • Track accounts receivable/payable
  • AR/AP aging
  • Job costing
  • Quarterly tax payment estimates
  • Income tax preparation
  • Sales tax preparation
  • Payroll
  • Quarterly and year-end reports
  • Available inventory
  • Inventory aging
  • Purchase order creation
  • Compute cost of goods sold

Some of these features are standard on all accounting programs. Others are exclusive to ERP systems. Remember, that software created specifically for your industry may be the best solution, especially if you are dealing with complex processes or regulation.

Other Concerns

You may also want to consider other features, such as customizable reports, check printing and electronic invoices, to name a few. A service business will likely require an hourly billing function too. You may wish to consider a Web-based or “hosted” solution, which offers faster implementation, easier upgrading, lower costs and avoids technology infrastructure expenses.

Ease of Use

You should include input from the primary users of your accounting software. This will ensure that you get the right product based on their needs. It will also minimize complaints and buy-in when you make a final decision.

When you give any software a trial run, test the software publisher’s technical support and sales team. The ideal accounting software publisher should be a business partner. If they aren’t willing to go the extra mile for you, then look somewhere else.

Choosing accounting software for your business might just be the most important decision you make. Choose wisely. If you need help, feel free to contact me for help. That’s why I’m here.

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