Minding your business. (accounting software)(includes related articles) (Buyers Guide)
by Kathy Yakal

It should be simple. By all expectations, accounting and computers should be perfect partners.

But for many reasons, the evolution and acceptance of accounting software has been slow and troubled. The earliest products available could be divided into two general categories: * Expensive (often several thousand dollars)

high-end packages designed

for users with the accounting knowledge

of a CPA * Inexpensive (a few hundred dollars)

low-end packages designed for users

with the accounting knowledge

of a CPA

While these programs were functionally sound, their operation required knowledge of accounting principles and terminology that many users--even in business settings--didn't necessarily have. Simpler, friendlier user interfaces would've helped, but the fact is that many people preferred to retain their old style of bookkeeping, generally a ledger book for figures and a shoebox or filing cabinet for receipts.

Over the last couple of years, accounting software has changed more dramatically in a shorter period of time than any other type of software. User interfaces have improved, prices have dropped, and people are actually understanding and using the accounting software they buy.

Though many other software vendors have contributed to this move toward inexpensive, understandable accounting software, we can thank two software vendors in particular for this shift: Microsoft, for developing Windows, an operating environment that lends itself to accounting operation, and Intuit, for its revolutionary financial program Quicken.

Operations in a Friendly Environment

In the late 1980s, the price of many high-end accounting packages started to drop rapidly, sometimes by thousands of dollars overnight. At the same time, some leaders emerged in the low end of the market offering high-powered software products that could be used by individuals or small businesses with some accounting knowledge, packages like DacEasy Accounting and One-Write Plus.

Quicken, a simple single-entry accounting package, was originally introduced in 1984, but it didn't hit its stride until about 1989. Users liked it because it matched their bookkeeping style more closely than most other programs. Quicken is based on a checkbook metaphor. It doesn't require its users to know any more about accounting than how to write checks and fill out a checkbook register. Later versions of Quicken added more powerful features like asset and liability management, investment tracking, and sophisticated reporting.

The introduction of Microsoft Windows 3.0 provided the groundwork for? even more positive changes in accounting software. Since the process of bookkeeping often requires fast access to figures that may be stored in many different places, three capabilities of the Windows operating environment offered application developers new and powerful tools.

These three tools--multitasking, the Multiple Document Interface (MDI), and Object Linking and Embedding (OLE--have not yet been fully implemented by most software vendors. However, they offer tremendous potential to accounting software. Financial information stored in any module of a Windows accounting program (and any Windows application with the required capabilities) can be accessed in a few seconds, automatically updated everywhere necessary, and merged easily.

Quicken for Windows retains the checkbook metaphor that made its DOS version such a hit, and it includes enhanced features for visual input and output, including an icon bar and access to fonts for printing customized reports and checks. Dynamic Data Exchange (DDE) makes it possible to link Quicken data with Windows spreadsheets like 1-2-3 and Excel, and its other import and export capabilities are generous.

While Quicken has had tremendous success basing accounting on a new metaphor, most accounting products retain the double-entry accounting system, along with its terminology and methods. In tandem with Windows, they offer an alternative for users who prefer a graphical user interface. M.Y.O.B., based on a Macintosh product, offers seven main modules (General Ledger, Checkbook, Sales and Receivables, Purchases and Payables, Inventory, Card File, and Administration) for $249 suggested retail.

The strength of both the Windows and DOS version of Access to Platinum lies in their ease of use and their ability to simplify accounting for the beginner while incorporating features that normally require more bookkeeping knowledge. Suggested retail price is $249 for the Windows version and $169 for the DOS version.

Microsoft Money is often compared head to head with Quicken for Windows, and with good reason: Its check-book-based user interface is similar to Quicken's, as are its features and suggested retail price ($69.95).

DOS Isn't Dead

Revolutionary as it is, Quicken has two limitations that have kept many businesses from installing it. First, the program has no automatic invoicing capability (though data can be exported into a word processor and invoices generated that way). Second, its account and transaction limits are not sufficient for many bigger companies.

Intuit's QuickBooks is a more serious contender for businesses that need more power. For a suggested retail price of $139.95 ($49.95 upgrade charge for current Quicken users), the product was designed--like its forebears--to be used by nonaccountants. Accounting data is entered on familiar forms like check blanks and invoices, and then automatically posted in the appropriate areas.

But many accounting professionals simply aren't comfortable working outside the traditional double-entry accounting system. And the majority of PC owners do not use Windows as their sole operating environment. There are many inexpensive DOS-based accounting products that use terminology and processes similar to today's standard bookkeeping methods.

Pacioli 2000, named for the monk who invented double-entry accounting, was written by the same designer responsible for the popular DacEasy accounting product. It stunned the market when it appeared at a suggested retail price of $49.95 in 1990, and it's an excellent double-entry accounting package, especially considering the price. It contains eight standard accounting modules and requires some understanding of accounting principles, but the company offers a brief primer and excellent technical support to help the beginner along.

M-USA, the publisher of Pacioli 2000, also offers Cash Biz ($49.95), a cash-based accounting system that lets the user choose between operating it as a double- or single-entry system. It, too, is targeted at users who need sophisticated capabilities despite the fact that they are not necessarily experts in accounting.

DacEasy Accounting has been the best-known name in small business accounting for a long time. It's a solid all-around accounting product especially well suited to manufacturing and other inventory-based businesses. Online help and technical support are available for users less familiar with accounting applications. Easy integration of the modules further simplifies use. Suggested retail price is $149.95.

Money Counts 7.0 Personal ($49) is a brand-new release from Parsons Technology, one of the leaders in high-value, low-cost software. This financial-management program for home and small business features a checkbook metaphor. Soon after you read this, Money Counts 7.0 Business will be available, including modules such as general ledger, accounts receivable, and accounts payable. Parsons offers free technical support (you have to pay for the long-distance call to Hiawatha, Iowa, though).

Hooper International offers Takin' Care of Business in several versions intended for small business and personal use. The Business Kit costs $149.95 and features general ledger, accounts receivable, accounts payable, bank reconciliation, and a financial utilities calculator. Support is free for the first 90 days. After 90 days, you call a 900 number and are charged on a per-call basis. However, Hooper International also offers unlimited free fax and BBS support. A slightly heftier LAN version of Takin' Care of Business costs $399.95 and has all the same modules plus payroll, inventory, and point of sale. The LAN version is a real bargain despite its higher price because there is no site license required and you can have as many users as you want.

Teknon has a unique entry in this field. Teknon Accounting is a DOS-based product that looks like a Windows product--or, more precisely, a Macintosh product. It was ported over to DOS from the popular Mac accounting package At Once!. Teknon Accounting is a double-entry accounting system with four integrated modules (General Ledger, Accounts Payable, Accounts Receivable, and Payroll) that's exceptionally easy to use. The suggested retail price is $249.95.

Let the Buyer Be Aware

The features chart accompanying this article is not comprehensive. It provides information on some of the inexpensive accounting products available at this writing; you can expect to see more introduced this year, as well as upgrades of existing programs. Once you've narrowed your choices to a few that offer the kind of solution you're looking for, try to see a demo, or at least get a more detailed list of the software's capabilities and limitations.

Don't fire your CPA. Include him or her in the process of automating your accounting practices. While accounting software will help you track your financial progress more closely, there will still be times when you'll need to call on a professional.

As you switch to computerized accounting, take the opportunity to make a fresh financial start. Don't look at accounting software simply as a new, flashier way to organize the same old information. Combine the best of your current bookkeeping methods with the simple power of the microprocessor. Be willing to look at things in new ways--you may find solutions to problems you didn't know you had.

Before Looking at Accounting Packages You should take the time to ask yourself these ten important questions before you even start looking for an accounting software package.

1. Are you willing to make a commitment

to using a computer regularly

for tracking your individual or business

finances? If your current noncomputerized

system is working

well, don't make the move yet unless

you know what improvements

you expect from automation.

2. Exactly why are you considering accounting

software? Be very clear

about this, or you'll be overwhelmed

by products offering solutions

for problems you may or

may not have.

3. Are you willing to change your present

bookkeeping methods if the

software requires it? You may find

a product that will wrap itself well

around your money-tracking methods,

but you may also discover a

more efficient way to do things.

Can you adapt?

4. Can you afford to purchase additional

hardware if the software you

choose requires it?

5. Does your CPA support one particular

product, or a group of them?

Ask your accountant what he or she

recommends and whether a different

package would be acceptable.

Most packages can import and export

data in different formats.

6. How flexible and knowledgeable

are any staff members who would

have to understand and use the

software? If you don't know, include

them in your planning and

purchasing process.

7. How much time do you have to devote

to this project? If you have a

fairly uncomplicated financial structure,

it may not require too many extra

hours. But if it does, can you

spare them?

8. Do you trust technology? Some people

are wary of computerizing information

as sensitive as financial data

and will never be quite able to

let go of their paper systems.

9. Can you be honest about what you

don't know, as well as what you

do? You may have to ask for help

and admit a lack of knowledge in

fundamental areas of accounting

principles.

10. Are you willing to assign a high priority

to the process of choosing

and implementing software? While

you'll likely see time savings and productivity

gains down the road, the

first few months of computerizing

your bookkeeping functions may actually

demand more of your time

and attention. In return, though,

you'll have a much clearer idea of

where you are and where you're going

financially.

Working Better/Working Smarter

That first step into computerized accounting is a big one for most home and small businesses. Be prepared to spend more time on bookkeeping, especially at first. Remember to make backups religiously and make a printout of any crucial items at least on a monthly basis. Look into an inexpensive tape backup system. Any backup system is less expensive than losing all your data due to a disk crash. There's one indisputable advantage to computerizing your books when your business is small--it would only be that much harder when your business becomes big.

AVERTING DISASTER

Here are five ways to avoid cataclysmic results when you implement a new accounting package. 1. Run paper and computer accounting

systems concurrently until you're confident

of your proficiency. Consult

your CPA if necessary. 2. Back up your data with more care

and regularity than seems necessary.

Businesses have folded as a result of

financial data loss. 3. Read the documentation carefully--all

of it. Use help screens. Don't hesitate

to call technical support if you're

at all unsure of a particular procedure.

If you're careless or if you don't completely

understand how your accounting

package works, it will catch up

with you. 4. Take the threat of viruses seriously.

They're out there. Run scan programs

regularly. 5. If more than one person is allowed to

access and alter accounting data, set

each user's boundaries early on, and

enforce them strictly. Few people intentionally

try to hurt their employers,

but a casual, honest mistake often

can be disastrous.

COMMON ERRORS

No matter how hard you try to evaluate your needs and the capabilities of your accounting software, you're likely to make mistakes. Recognizing these common pitfalls might help you avoid them. Here are five common mistakes people make when choosing accounting soft ware for their personal or business use. 1. They buy much more power than

they'll ever need and spend more

than necessary as a result. 2. They buy software with fewer features

than they require to meet even their

current needs and pay more later to

buy a beefier product. 3. They buy the product that has the

most features for the price, regardless

of whether or not it actually provides

a solution for their problems. Eventually,

they end up purchasing something

else that more closely matches

their specific application. 4. They assume the software will take control

of their finances, not realizing that

they themselves have a great deal of

control over the success of the implementation.

Disappointed, they may

turn their backs on computerized bookkeeping,

thus further delaying their enjoyment

of its benefits. 5. They balk at the thorough setup and

training time often required and implement

the package without really understanding

it. Later, they discover that

the resulting errors and oversights are

costing them time and money.

STREAMLINING

Accounting software can enhance your business. Here's how. 1. Accounting software can save time by

automatically posting a single piece

of financial data in multiple areas. 2. Instead of pawing through boxes and

stacks of check stubs and receipts,

you can compile reports quickly

through standard or user-defined reporting

formats. 3. Windows-based accounting programs

let you look up figures in other financial

files without closing down your immediate

task. 4. Computer-generated reports, invoices,

and other printed materials can be

more attractively designed, using

fonts, graphics, and other layout

tools that can make your small business

look big. 5. Tax preparation will be significantly

easier, both at filing time and throughout

the year when you must run tax-related

reports. 6. Over time, you will feel a growing confidence

in your understanding of your

financial situation that will help you

make overall business decisions more

knowledgeably and competently.