Many businesses that are just starting out will be cost-conscious when it comes to managing their financials. Their goal is to maximize ROI any way possible, and one way includes finding a low-cost software that can simply “get the job done”.
This could include recording financials via spreadsheets or picking one of the many advertised small business accounting software solutions on the market. Admittedly these solutions are attractive to new business because of their cost.
But are they good long-term fits?
There are many ways automation can help save your company money, and utilizing software to automate your accounting processes is the first step.
When you decide on what software you want, do you pick something more popular with a large install base, or do you pick something more industry specific?
Sure, software with a large install base has its advantages. Given the popularity of the program, any new staff you hire may have experience with the software, which could eliminate training costs.
You also may find comfort in the number of reviews and public opinion of the software, allowing you to get a good grasp as to the advantages and disadvantages before buying.
Common accounting software components include core accounting, payroll, billing & invoicing, fixed asset management, and inventory. But what if your needs extend beyond that? Do you try to handle this additional need manually? Do you find a secondary software to work alongside your existing accounting solution?
If you had an industry-specific solution to begin with, you may have been able to avoid needing a new solution altogether.
Modules Designed For Your Industry
A major benefit of having an industry-specific software solution is functionality modules that are relevant to your industry. This is because almost all businesses will need the core accounting offered in any accounting software (accounts payable, accounts receivable, and a general ledger), but typically will fall short when it comes to industry-specific needs.
What are these industry-specific functionalities?
- Construction: Job costing and estimating
- Manufacturing: MRP
- Nonprofit: Fund Accounting
A construction company will want to determine exactly how much their costs are (labor, materials, equipment) when completing a job.
This information paired with their estimates will help improve their bottom line and increase profits (by charging for their work at an appropriate level, or by knowing where their costs could be cut).
A lot of small business software may include inventory in its core package, but it won’t be optimized for a manufacturing company.
One piece of information that greatly affect a manufacturer’s production levels is purchasing planning and demand forecasting. This is information that an MRP (or material resource planning) module will give you.
For-profit software works great for commercial operations, but often using one for a nonprofit is like fitting a square peg through a round hole.
The software will talk about sales, profit, revenue… all things that a nonprofit doesn’t necessarily deal with. One module specific to the world of nonprofits is fund accounting, which improves allocation management of resources which have been designated for specific uses.
Simply put, most small business software is created to appease the masses. They don’t have the resources in order to create custom versions of their software to suit every industries needs. If they did, they would likely need to charge more for their software, and it would lose its primary appeal in the first place.
Most businesses starting out can “get by” on the basic functionality an industry-neutral software offers, but will notice quickly they won’t be able to take that extra step without being hyper-focused.
Vendors Know Your Industry
With a great software system comes a great vendor behind it. This vendor is typically the person that sells you the software and also provides support when needed.
Software that is marketed as a small business solution for all industries will meet basic needs but may struggle to offer support on an issue that is relevant only to your company.
Most representatives of an industry-specific solution are going to have a great understanding of the day to day functions of your business and know what specific features will benefit your business best.
If you’re a retail business, wouldn’t you rather have a relationship with a software vendor that only works with other retail businesses?
They’ll have past-experience implementing their software to a business just like yours and can foresee common issues that companies of similar stature have dealt with before.
Ability To Grow Properly
As mentioned before, many small businesses will want to start with a basic software that is tried and true in many industries. But when it times come to grow as a company, you’ll be looking to expand on what your current software can offer you. This may mean adding users, adding functionality, or better reporting.
Generic software is best used by smaller businesses that don’t really have the ability to invest in software or have the adequate resources available for a proper implementation.
Usually, these companies may hire outside accounting firms, and these firms will suggest these more generic solutions due to their accounting staff having familiarity with them.
While this makes the work they do for you easier, it only keeps their own interests at heart.
An industry-specific software will offer everything you need in one program, and it will be offered by a single company. You may purchase it only needing basic accounting, but realize in a few months you have a need to add on some functionalities.
The industry-specific software will allow you to do so, while a generic software will likely force you to purchase a 3rd-party add-on, or a completely different software altogether.
For example, as a small manufacturing company, you may have a generic accounting software, but a desire to add on better inventory management that can really break down the production scheduling via proper forecasting via an MRP.
You can always purchase a stand-alone option to meet that need, but you could deal with integration issues. If you can’t transfer data properly from one system to the other, which company do you contact for support?
Will your generic accounting software provider know the answer to a very specific question you may have about manufacturing management?
One could argue that it’s far easier (and less of a headache) to grow as a company by expanding functionalities with a scalable software that allows you the option to add-on as you go.
Summary
What are the benefits of industry specific software?
- Modules designed for your industry
- Vendors know your industry
- Ability to scale
Author Bio: Russ Davidson is a Digital Marketing Specialist at Software Connect, a company that provides free software and application recommendations based in Milwaukee, WI. Since 1996, they’ve helped thousands of companies find the best solution for their needs by understanding software requirements and pointing them in the right direction.
