Published by Andrew Marder, August 26 2015
The lifeblood of any small business is cash. You have to have it to keep the lights on, to market yourself, and to employ anyone – even if you’re self-employed. For something that’s so integral to success, it’s shocking how little attention many business pay to tracking their finances.
Accounting software is often the solution to cash flow problems. I would be surprised if anyone could find a successful business that didn’t use accounting software. It’s what keeps an eye on your money, helps you get ready for taxes, and keeps you to that budget you set at the beginning of the year.
To help you make better decisions about your next accounting software purchase, Capterra surveyed over 500 businesses about their accounting software solutions. This accounting software research report explains what we found.
More surprising – on first glance – is the lack of FreshBooks representation. In our Top 20 Most Popular Accounting Software list, FreshBooks comes in at a solid second place, while here it’s only showing a 1% market share.
This is an international issue. FreshBooks is a Canadian firm and is strongest outside of the US. Our survey focused almost exclusively on US businesses, so FreshBooks fell to the wayside.
Other strong showings came from Microsoft Dynamics and Oracle Financials, both geared toward larger businesses. In our results, businesses using these two options were, on average, bringing in between $1 million and $10 million in annual revenue.
The move to the cloud is real, and companies are taking their accounting software with them. 61% of respondents still use a local accounting package, but 39% are now out in the aether.Accounting software is still mostly installed; just 39% of businesses use a cloud installation.Tweet This
There was no meaningful revenue split between businesses with web-based accounting and those with locally installed packages. Businesses are just coming around to the value of an accounting system that can be interacted with at all times, from anywhere.
By putting your information in the cloud, you increase the ease of collaboration, you put your users in touch with it even if they’re on the road (hello, travel receipts), and it gives you built-in protection from local data failures and other catastrophes.
It’s easy to assume that accounting software is a requirement, but it’s less clear as to why it’s so important. How about this – 54% of users saw a decrease in financial errors by adopting accounting software.
Companies are also saving time on entering data, reconciling accounts, and paying employees. Accounting software, apart from just protecting your business from mistakes and IRS audits, can actually help your business grow. Having more cash when you need it and being able to plan for rich and poor spells can really give a business the boost it needs to move to the next level.
Companies largely knew what they wanted going into the accounting software purchasing process. Only 23% of businesses did more than two demos, with a full 19% doing zero demos. Nada.
On top of the low demo count, only 39% of respondents took more than three months to find the software they were looking for. It may be that the strict comparison of features – we’ll see how important functionality is momentarily – makes it easy to find the right software. Or companies may be working with accountants that have strong personal preferences.
It may also be that strong brands like QuickBooks simply dominate the discussion, giving businesses little reason to seek out alternatives.
Once the package is chosen, respondents got their software up and running quickly. 52% were able to get everything installed within a month. More than half of accounting software implementations take less than a month.Tweet This
We are all about features. Functionality was the most popularly cited consideration when businesses were picking their accounting software. On top of that, 52% of businesses that switched software did so because their previous option lacked features.
Ease of use and price came in second and third as considerations before making a purchase. But it’s clear that having software that works the way businesses demand is driving the conversation with CFOs and decision makers.
Among features users wanted, businesses were most excited about mobile apps. From there, companies divide based on specific industry needs. Multi-currency, fixed-asset management, collections, and inventory tracking all came in very close to each other.
Of course, the most used features came with a host of expected, day-to-day winners. More than half of respondents were using accounts payable, general ledger, and accounts receivable features. As those are the features that make a business function, there shouldn’t be much of a surprise here.
On average, locally installed software cost between $500 and $1,000 as a one-time payment. Monthly payers were dropping between $6 and $15 per month, on average.
While software cost wasn’t the most important deciding factor in purchasing an accounting system, it did have some impact. Overall, companies ranked price as the third most important consideration in making a purchase decision. Of switchers, 19% of respondents said they left their previous software because it was too expensive.
It seems like accounting software companies have done well keeping businesses happy. Only 5% Only 5% of accounting software users are dissatisfied with their system.Tweet This of respondents said they were dissatisfied or very dissatisfied with their accounting products. On average, people were satisfied with the programs they used.
Satisfaction was largely unaffected by the size of the business, whether the software was in the cloud or in-house, the length of ownership, or even the number of demos done before purchasing.
The few dissatisfied respondents were – surprise – unhappy primarily with the features of their software packages rather than cost – 43% said they were missing features. A small chunk was unhappy with the support they received and a few folks thought the software was too hard to use.
The incredibly high satisfaction rate seen across the entire spectrum is probably due to one of two factors. First, it could be that expectations of accounting software are low. Businesses may be happy just to have all of their information in one place, and to generally know what’s happening to their finances.
The flipside of that coin is where everyone’s happy because the software out there is generally awesome. Just looking at some of the bigger packages, it’s hard to think of things they can’t do. Either way, users are largely happy with the products they’re using.
As to the future, accounting software is likely to be headed into the cloud. Most of the surveys that we’ve run here at Capterra have shown more and more businesses moving their software off-premises. Accounting software is one of the few standouts that still has a large chunk of users working on local installations.
Some of that is going to be down to trust, some of it is likely the difficulty of finding services that have the right mix of security features, and some is just going to come down to familiarity. As more Millennials enter the accounting world, I expect things in the cloud to really light up.
With such high satisfaction results, it actually feels like there’s some room for a shake-up in accounting software. We’ve reached complacency, which many see as opportunity. I wouldn’t be surprised to see some new names start to shoot up in popularity over the next few years.
Regardless of what comes next, we’ll be keeping an eye on the changes. Come on over to the Capterra finance blog, when you get a chance, and we can watch this space together.
Capterra surveyed over 500 US businesses using accounting software. We asked a series of 22 questions focused on getting at how they made their purchases, how much they paid for their accounting software, and what features they focused on. The survey was run in June 2015.
Andrew is a content writer with Capterra. In previous lives, he has been a financial writer, project manager, and banker. He picked up his BA from SUNY Potsdam and his MA from Virginia Tech. He loves his wife and kid. Follow him on Twitter @CapterraFinance.