Are you looking to purchase accounting software for your business, but feeling overwhelmed by the options? With the sheer number of categories, sub-categories, specific modules and specializations that make up all the types of accounting software, it’s hard to know where to begin.

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This guide is here to help break everything down and make the software buying process that much simpler. We’ll go over five of the most common types of accounting software, and our picks for the best of each.

The 5 Key Types

General Accounting Software

If you’re looking for something to handle the fundamentals of tracking and balancing accounts, general accounting software (also known as core accounting software) might be the solution for you. These platforms automate and track essential data, sharing them between different modules to ensure no information is lost in the process. Many modern accounting software systems also use AI and machine learning.

The major functions of accounting software are the general ledger, accounts payable and accounts receivable.

• The general ledger is a complete record of all of a business’s transactions. A general accounting software solution allows you to automatically send data to the ledger every time a transaction is performed, rather than recording the figures manually.
• Accounts payable is a record of the short-term debts a business owes to suppliers and other creditors. Incorporating software into this part of the accounting process automates payments to be sent when they’re due, keeping your debts balanced and paid on time.
• Accounts receivable is the opposite of accounts payable — it’s a record of debts a business’s customers owe them for goods and services. The software can automatically collect payments from your customers and apply them to pending balances.

ERP Software

ERP software — short for “enterprise resource planning” — is built for business owners who want to manage their assets alongside their finances. Alongside core accounting capabilities, ERP software tracks and manages personnel, materials and production in real time. ERP software does require a little time for benefits to appear; however, in the long run, it’s proven to be effective for larger enterprises when deployed properly.

Payroll Software

For businesses that need to keep track of employee paychecks and taxes, payroll software is built to handle just that. This solution ensures wages are paid to employees on time, calculating taxes and bonuses without much need for human input. If you’re managing employees in different countries, payroll software can handle currency conversions as well.

Inventory Management Software

For product-focused businesses, inventory management software can help keep track of stock in real time, sorting it by product size, color and other physical characteristics. This solution can also track purchase orders and demand. And in the case of perishable items, it alerts you when stock in storage is close to expiration. Utilizing this software can realistically cut errors in inventory management to 0%.

Invoicing Software

Often working hand in hand with accounts receivable, invoicing software makes it easy to write and send professional invoices with minimal design effort and automatic data transfer. This software is especially useful for service companies, ensuring timely billing and payment for services rendered.

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The Best Accounting Software By Type

The best accounting software for your company depends on your unique needs, as well as what industry you’re in. To give you a starting point for your software search, here are our top picks for the five most common types of accounting software.

The Best General Accounting Software: QuickBooks Online

An old standard that’s evolved to incorporate cloud technology, it’s hard to argue against QuickBooks’ industry pedigree. It’s best suited for small businesses in any industry, and offers simple interfaces, easily readable data visualizations and automation options for repeated processes.

Track income, expenses, profit and loss all from a single dashboard.

Top Rated Modules

• Asset Management – 100
• Banking Management – 100
• Financial Statements – 100
• Inventory Management – 100
• Tax Management – 100

Top Benefits

• Streamline Processes: Easily input, revise, deliver and transfer financial data.
• Establish Permissions: Use role-based access to protect sensitive information.
• Reduce Errors: Eliminate typos and other manual errors with automation tools, improving workflow efficiency.
• Collaborate Effectively: Automatically save changes to files in the cloud, with modified versions updated for all users with access.

Primary Features

• Income and Expense Tracking: Import transaction data and link it directly to expenses.
• Estimations: Convert estimates into invoices and modify them to suit business requirements.
• Reporting: Create any necessary financial reports and translate visualizations into actionable data.
• Transaction Management: Keep records of expense transactions in a single location.
• Inventory Tracking: Monitor products and costs, identify popular items and forecast purchasing trends.

Limitations

• Cost of software can be high for small businesses.

Modules Not Natively Supported

• Budgetary control framework — not supported
• Scenario modeling — requires partner integration
• Point-of-sale sync — requires partner integration
• Automated reimbursements — requires partner integration
• Wire transfer automation — requires partner integration

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The Best ERP Software: Acumatica

Ideal for small to medium-sized companies, Acumatica offers a highly customizable interface and powerful interconnectivity between apps. It includes powerful automation capabilities, centralized transactions, and real-time monitoring to enable full visibility of every financial aspect of a business.

Acumatica enables users to track and view detailed summaries of their accounts and budgets.

Top Rated Modules

• Banking Management – 100
• Financial Statements – 100
• Payroll Management – 100
• Project Accounting – 100
• Tax Management – 100

Top Benefits

• Increase Productivity: Automate data entry and accounting tasks to focus on strategic planning.
• Centralize Data: Personalize dashboards and monitor in real-time from a single location.
• Support Multiple Currencies: Maintain compliance internationally and conduct business throughout the world.
• Manage Multiple Sites: Segment or centralize accounting according to your company’s structure.
• Streamline Compliance: Account for taxes without any extra human effort.

Primary Features

• General Ledger: Track transactions, create statements, and organize by accounts and subaccounts.
• Accounts Payable: Manage requests and apply prepayments automatically.
• Accounts Receivable: Create and send invoices and handle refunds.
• Cash Management: Update balances and store transactions.
• Currency Management: Calculate realized gains and losses and adjust unrealized ones.

Limitations

• Third party support isn’t very responsive.
• Implementation takes a long time.
• Software can have bugs.

Modules Not Natively Supported

• Estimate tracking – not supported
• Rolling forecast – requires partner integration
• Scenario modeling – requires partner integration

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The Best Payroll Management Software: Microsoft Dynamics 365 Finance

Dynamics 365’s accounting platform comes with Payroll 365, a powerful solution that’s easy to configure for use in any region. The rest of Dynamics 365’s accounting suite handles everything from automation to analytics, ensuring that all your financial needs are covered.

Use robust dashboards to view all your data at once.

Top Rated Modules

• Budget Management – 100
• Financial Statements – 100
• Payroll Management – 100
• Tax Management – 100

Top Benefits

• Strategize Better: Use AI-driven data to anticipate financial trends, and AI tools to automatically calculate payroll and taxes.
• Reduce Risks: Easily adjust financials to new tax rates, raises and bonuses.
• Budget Effectively: Keep finances in check with comprehensive transaction records.

Primary Features

• Reporting: Get a full-spectrum view of the business’s finances.
• Machine Learning: Drive growth with hands-off, predictive analytics.
• Role-based Workspaces: Ensure data security and restrict visibility where applicable.
• Compliances: Adjust to compliance standards in 37 countries.
• Financial Planning: Automate budget control and financial processing.

Limitations

• Limited storage space.
• Occasionally lags when loading information.

Modules Not Natively Supported

• Bill transaction approval – not supported
• Mobile time tracking – requires partner integration

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The Best Inventory Management Software: Zoho Books

Designed to handle small businesses’ needs, Zoho Books enables users to govern finances from any connected device. Zoho’s accounting capabilities also help users collaborate between departments and manage projects effectively, and come with mobile capabilities to increase accessibility.

Zoho Books makes invoicing as simple as filling out a form.

Top Rated Modules

• Banking Management – 100
• Financial Statements – 100
• Inventory Management – 100
• Tax Management – 100

Top Benefits

• Invoice Efficiently: Personalize invoices and receive payments in various currencies.
• Estimate Accurately: Add customer information and send estimates in real time.
• Communicate with Clients: Make bulk payments in one click and receive estimate approvals faster.
• Upkeep Expenses: Keep track of business expenses and manage and organize employee and customer expenditures.
• Maintain Bills: Initiate recurring bills and attach landed costs to statements.

Primary Features

• Sales Orders: Customize and send sales orders from approved estimates.
• Purchase Orders: Manage all items purchased and mutual prices set by vendors.
• Online Payments: Select from several payment portals to handle transactions.
• Reporting: Evaluate KPIs and obtain important reports from the reporting dashboard.
• Automation: Deliver instant payment reminders and save client information for future billing.

Limitations

• Doesn’t automatically add dates and names.
• Unwieldy interface.

Modules Not Natively Supported

• Budgetary control framework – not supported
• Rolling forecast – not supported
• Scenario modeling – not supported
• Expense amortization templates – not supported
• Point-of-sale sync – requires partner integration

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The Best Invoicing Software: Freshbooks

Small business invoices are Freshbooks’ specialty. With cloud deployment and automation capabilities, it’s easy to manage from any connected device. It can handle routine tasks, like sending and processing invoices and scanning receipts, with minimal human involvement. With a low cost of entry, it’s perfect for companies just starting out.

Make invoicing easy with a clean, easy-to-read interface.

Top Rated Modules

• Banking Management – 100
• Project Accounting – 100

Top Benefits

• Improve Efficiency: Automate invoicing, data entry and payment collection tasks.
• Strategize Better: Define KPIs, generate reports and examine data in multiple formats.
• Expedite Payments: Receive and process payments online, and send automatic reminders of payments due.
• Increase Convenience: Allow customers to confirm proposals and estimates online.

Primary Features

• Invoicing: Create professional and personalized purchase invoices.
• Expense Management: Link payment methods directly to the app.
• Time Tracking: Accurately manage project and task duration.
• Project Management: Share files and allocate deadlines.
• Estimates: Outline proposals and produce accurate price and time estimates.

Limitations

• Some users have trouble customizing invoices.
• Slow load times.

Modules Not Natively Supported

• Budgetary control framework – not supported
• Scenario modeling – not supported
• Expense amortization templates – not supported
• Reorder alerts – not supported
• Revenue contract creation – not supported

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How We Choose Products

Our team of writers and analysts at SelectHub is committed to giving you the best recommendations based on our data. To make our list, products had to meet two criteria:

1. Closely match the topic
2. Earn a top-5 analyst score in our selection platform

Our analyst scores are based on an in-depth research process using primary and secondary sources. This includes SelectHub Analyst Briefings, direct communication with vendors, and reviewing materials such as user reviews, product brochures, specification sheets, case studies, user manuals, and technical documentation.

Our platform’s Scoring Engine processes the research and computes the analyst score. The score also factors in platform settings such as industry and company size.

Learn more about our research methodology and editorial standards

Conclusion

We hope this guide helps you on your accounting software search. Though there are many more categories, modules and types of accounting software out there, these five categories and products are a good place to start.

Ready for the next step? Try our comparison report to gain more insight into top accounting software leaders.

What types of accounting software are you looking for? Which options have worked best for you in the past? Let us know below.