Flexible accounting software: how to ensure your system will keep up with your needs

You’ve found an accounting software package that seems to match your needs. But will it still be the right match as your organisation grows and changes?

Flexibility is a requirement that’s easily left off your wish list when you’re shopping for software, but it is tremendously important. It’s worth examining whether any system you choose is ready to evolve with your organisation. 

What kind of flexibility should you build in?

Businesses and non-profits alike can change in shape, size and complexity – and all this can happen much quicker than you might have expected.

You should consider whether you need a system with the flexibility to accommodate any of the following:

Additional legal entities. Your organisation could expand by organic growth or acquisition. For a business, this can mean adding new companies to the structure. For a non-profit, it can mean setting up trading and commercial arms. All this requires extra legal entities to be added into the system.

Different accounting periods. You could acquire entities whose financial reporting periods differ from those of your current organisation. Or there could be circumstances in which you choose to change your existing accounting calendar – for instance one with 4-4-5 accounting periods.

Different currencies and tax regimes. You might begin trading in new territories abroad, with the need to accommodate the local currencies – and their VAT or other taxes – into your system.

Different rates of VAT. Your system may need to handle different rates of VAT. That could be because of overseas trade. In the case of non-profits, different VAT rates can apply because you have a commercial trading operation, requiring you to deal with the complexity of partial VAT.

Integration with other systems. You could require your finance software to link with other business systems – for customer relations management (CRM), invoicing, expenses or timesheets, for example. These could be systems you already use or those you might adopt later.

Variety of transactional documents. For many organisations, there is not just one type of invoice. You may need to generate different kinds of bills for different customers, with different conditions attached to them – but they all need to feed into the same system.

How to assess flexible accounting software

When you’re presented with an accounting system that’s new to you, there are some tests you can apply to tell whether it has the flexibility you will need.

Does it limit the number of dimensions? Dimensions can be thought of as tags, fields or just bits of information. They are the means by which you arrange and sort data as you add it. The more dimensions you’re allowed, the more flexible your reporting will be. Some systems place a low limit on them (e.g. Xero has two dimensions), while the best offer unlimited dimensions.

Does it limit legal entities? Growth will prove expensive if your software won’t accommodate those extra entities, or if you’ll be charged a lot by your provider for adding them. And once they’re added, you’ll want to see a clear overall picture of the finances for the whole group, as well as being able to drill down into the detail for any part of it.

Can it accommodate different accounting periods? If different parts of a group have differing period-end dates, you need the software to bend to your needs, not the other way around.

Can it accommodate more currencies and tax jurisdictions? If you need to factor other currencies and tax jurisdictions into your accounting, you don’t want to spend a lot of time referring to conversion rates and making calculations in spreadsheets. Flexible software can plug into live exchange rates for as many currencies as are required and handle this for you.

Can it handle many transactional document types? The requirements of the organisation can change in this respect. Again, see whether you’re looking at something with limits.

The key question: How configurable is it?

When it comes to flexibility in accounting software, all the key tests boil down to this single question: How configurable is the system?

You need to be confident that adapting your finance system to your changing requirements will not be excessively costly, over-complicated or just plain impossible.

Learn more

iplicit is highly flexible accounting software: it can offer an unlimited number of dimensions, currencies, legal entities and document types, keeping pace with your organisation as it grows and changes over the years. Contact the team for a demonstration or take a quick tour to see for yourself.