One of the most crucial steps in establishing good accounting practices at a startup is researching bookkeeping systems and adopting the best one for the company’s needs. While not all companies turn to software solutions for their bookkeeping, using technology can be a cost-effective and efficient way of completing necessary accounting processes. A wide range of different products are available to entrepreneurs, whether they work in Africa or other areas of the world. Deciding on a specific product can be difficult, but the following list points to some of the most popular choices and highlights the advantages and disadvantages of each.
Before reviewing this list, however, it’s important for entrepreneurs to consider a few points that will help them identify their particular needs and choose the software solution that works best for them. Startup leaders need to realistically assess their experience with accounting and that of their team, because this will determine what functions are necessary. The complexity of the company’s revenue flow and transactions can also make one software solution more attractive than another. With these considerations in mind, entrepreneurs are in a better position to evaluate the following options.
- Quickbooks: One of the oldest and perhaps the most common option is Quickbooks, an affordable solution that offers an impressive array of features. Several different versions of Quickbooks are available, including desktop variations and a stripped-down, cloud-based option. For startups, the online option may be the best, as it allows the company to start with the basic product and then add functions as they need them. While the basic cloud version does not come with bill-paying or payroll functions, adding these options only slightly increases the monthly subscription rate. In this regard, the solution is very scalable.
Perhaps that most significant downside to Quickbooks is the steep learning curve. People with no exposure to accounting may struggle to use the program and should think about taking a class or hiring an employee with bookkeeping experience. Once people learn to use Quickbooks, they usually agree that it is fairly straightforward, but the software demands a considerable upfront investment in time and energy. On the other hand, the software integrates with a wide range of other applications that a company may already use, which can simplify accounting processes enormously.
- Wave Accounting: Quickly growing in popularity, Wave is a free, cloud-based program that offers straightforward accounting tools that are easy to understand and use. The software provides bookkeeping, double-entry accounting, and journal entries while connecting directly to bank accounts for automatic transaction data-sharing. However, Wave works best for very small organizations that consist of fewer than 10 employees. Thus, it’s excellent for independent contractors or sole proprietors, but startups may need to invest in a different system as their operations grow. Moving from Wave to another solution can also create a number of headaches, so it may make sense to start with a different solution from the very beginning to avoid any need for a transition.
The free version of Wave features advertisements that may annoy some people or disrupt workflow. However, it’s possible to pay to obtain additional features and to remove the ads altogether. Wave also offers direct customer service for additional fees.
- Xero: Another cloud-based solution, Xero has customized its services to match the particular accounting needs of small- to mid-sized businesses. Notably, the company offers an application for smartphones that provides optimal mobility and the ability to capture data in real time. Companies that struggle to keep up with their books may benefit from the product’s intuitive design and easy-to-use features. Despite the fact that it is a relatively new solution, Xero integrates with various third-party payroll, invoicing, and point-of-sale systems, much like Quickbooks, yet has a smaller price tag. In addition, its mobile invoicing capabilities could prove especially important for African entrepreneurs.
Xero also has a significantly smaller learning curve when compared to Quickbooks, largely due to its lean, pared-down interface, but entrepreneurs may lose out on some of the capabilities built into Quickbooks. While these functions may not seem important during the early stages of a business, they could have a major impact on operations later on and might prompt a switch. Of course, Xero may address these shortcomings in future iterations to make the product more versatile. Less than 10 years old, Xero has already emerged as an industry leader and has challenged Quickbooks’ number-one position in some markets.
Other Solutions Available
These three options are far from the only choices available to entrepreneurs. A few other options include FreshBooks, a cloud-based solution available on a smartphone app that caters to non-accountants; and Zoho Books, a full-featured solution designed specifically for small businesses. There’s also Intacct, which offers the ability to generate several types of reports to provide different views into a company’s finances. Startups with larger sales teams should look into Yendo, which combines accounting features with customer relationship management (CRM) functions.