There are many aspects of accounting software that make it a useful tool. Most online accounting programs offer accounts receivable, accounts receivable, banking, and reporting features. Some even include tools for inventory management, project management, time tracking, and payroll. Here are some essential elements of accounting software you should search.
Bank feed
This feature allows you to connect to your business bank and credit card accounts to receive a daily update of your transactions. Modern banking feed technology now supports connections to thousands of financial institutions around the world, with real-time synchronization becoming the norm. This saves you the time of manually uploading statements into the system and gives you a daily overview of your accounts. This feature also makes reconciliation easier, making it a small daily task rather than a monthly ordeal.
Dashboard
When you log in to your account, you’ll be greeted by a dashboard with an overview of your account activity and key metrics, such as cash flow, income statement, account balances, expenses, accounts receivable, accounts receivable, and sales. Advanced dashboards feature customizable KPI tracking, predictive analytics, and real-time cash flow forecasts powered by machine learning algorithms. Some software lets you customize what you see first by rearranging the information.
Online billing
If your business sends invoices, the ability to email them and accept online payments can help you get paid faster. Businesses that accept online payments get paid faster than those that use traditional payment methods. Some accounting programs integrate with third-party payment processors, while other providers require you to use their in-house processing services.
Recurring invoices
With this feature, you can program the software to automatically generate and send invoices for recurring charges, 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. Automated recurring billing has become especially vital as the subscription economy has become obsolete. 492 billion dollars worldwide in 2024according to Grandview Research. Many accounting software providers don’t have recurring billing functionality (we’ve noted in our reviews which ones do).
Automatic payment reminders
This feature reminds your customers of upcoming and overdue payments. Some contain sample email text that you can use as is or customize. You can then choose when you want the reminders to be sent. Automated payment reminders can reduce late payments, significantly improving cash flow for small businesses. Some programs also give you the option to send thank you emails to customers after receiving their payments.
Bank reconciliation
Intelligent reconciliation tools identify potential matches between your banking transactions and the invoices you entered into the software, saving you the hours it would take to sift through records. AI-powered reconciliation features now achieve accuracy rates of 95% or higher, significantly reducing the time accountants spend on manual reconciliation. You can then approve or decline the suggested matches. The best products we’ve reviewed suggest potential matches when you reconcile your accounts, and a few also include a reconciliation feature on their mobile apps.
Bank reconciliation is a key productivity tool offered by most accounting software. Source: QuickBooks
Financial reports
Every accounting program generates financial reports. Some are more basic than others, and some require you to upgrade to a higher plan for advanced reporting. The most sought-after reports include real-time profit and loss statements, cash flow projections, and customizable financial dashboards that provide instant insights into business performance. If you require specific types of financial reporting, make sure they are included in the program and plan you choose. Detailed reports can help you interpret your financial data to make informed business decisions.
Integrations
The ability to connect your accounting software to other business programs you use saves you time manually transferring data from one system to another. Highly rated payroll services, payment processing platforms, best point of sale systems and customer relationship management software are popular types of integrations you may want to look for. Leading accounting platforms now offer over 1,000 third-party integrations through API connections and dedicated app marketplaces. Integrating with the systems you already use also reduces employee training time.
Tracking billable hours
If you’re a consultant or your business is an agency that bills clients by the hour, you want accounting software that lets you track and bill your time or that integrates with the time tracking program you already use. Time tracking features have evolved to include GPS-based mobile tracking, automatic inactivity detection, and project budget alerts that notify you when you are approaching client budget limits. This is an especially important feature for freelancers.
Inventory management
If you have a retail or distribution business, you’ll need accounting software that tracks inventory and facilitates purchase orders. Advanced inventory features include real-time stock level monitoring, automated reorder points, and multi-location warehouse inventory tracking. You may need to upgrade to a higher tier plan to benefit from this feature. If you need more advanced inventory features, the best inventory software options have a dedicated inventory management system.
Mobile apps
Not all accounting and invoicing programs have mobile apps, but the best ones do. However, there are big differences in the capabilities of the applications. Using mobile accounting apps often includes features like scanning receipts, tracking expenses, and creating invoices. Some can capture receipts just for expense tracking, several let you create and send invoices, and others have almost all the features of web-based software. As mobile working becomes more and more convenient, it’s worth checking whether a company offers a mobile app with its software.
Mobile apps allow you to perform accounting functions on the go. Source: Xéro
Project-based billing
Businesses, freelancers, and consultants who work with clients on projects or jobs should look for accounting software that helps them track tasks and budgets. The software should allow you to bill clients for time tracked and re-invoice them for project expenses. Project accounting features now commonly include Gantt charts, milestone billing, and project profitability analysis, helping businesses identify their most lucrative client relationships.
Support for multiple businesses
Several programs we reviewed allow you to add more than one company to your account, although some of them charge extra for this convenience. With the rise of serial entrepreneurship and portfolio careers, multi-business support has become increasingly important, as many small business owners now operate more than one business.