Every accounts system has to be able to create invoices, credit notes, payments, receipts, refunds & payments on account (though there is a story about Sage Financials…). Additionally you want some way to manage credit chasing, payments by BACS, aged debtor & credit reports for credit management and retrospective aged debtors & creditors for audit purposes.

Explore how easy this is, and if you have large numbers of transactions, make sure the system is productive enough to work for you.

Bank reconciliation is a requirement for auditing, but the modern bank reconciliation is much more than that, providing a way to rapidly & reliably enter data into your accounting system.

Automated bank feeds on the other hand are a nice-to-have feature, but not essential provided there is a bank CSV import available. Event with the market dominators, not all banks are supported, so check first!

Sage Financials never cracked this correctly as they did not enforce, nor could they control, reconciliation of all bank transactions.

Salesforce reports are great for dashboards and management reporting, but don’t work for traditional financial reports such as Balance sheet, PnL and Account statements because the drill-down is not right and they cannot handle running totals.

Some systems will allow you to configure these standard reports, but with Sage Financials that was a double-edged sword as it was really easy to break them and end up with a balance sheet that did not balance. Other systems have limited or no capability to customise these reports, so make sure the system can produce the reports you require in the layout you can live with:

• Balance Sheet
• Profit & loss
• Trial Balance
• Aged Creditors & Debtors  (aged by days)
• Retrospective Aged Creditor & Debtors (required for auditing)

And check the necessary management reports can be produced (ask to see examples) and/or that you can customise them in the way you need.

Also remember you can use tools such as Tableau or Power BI to get dashboards on steroids if this is critical.

If you are trading in foreign currencies, multi-currency support could be a help. (Though for the odd fx trade you can fudge it and keep things simple). Multi-currency support allows you to record transaction in the foreign currency, but to represent them on your ‘base’ currency for reporting. If you buy at one exchange rate, and get paid at another, you will incur currency exchange gains or losses, and this should be handled automatically in your accounting system.

As well as the ‘realised’ currency gains/losses. For unpaid invoices, and foreign exchange bank balances you may need to consider unrealized gains/losses. For many companies this is not significant, but if you have $1m outstanding invoice and you want to record you end-of-month position accurately, you should revalue it to the end of month exchange rate, along with your dollar bank balance.

Note that as we learnt with Sage Financials, you need to be able to revalue retrospectively – to the position and exchange rate at the month end, rather than just ‘todays’ position.

Bank Reconciliation may also need to be more nuanced. If you have a Euro or Dollar bank account you will need to reconcile using the fx amount, whereas if you are using a GBP bank account you will need some way to handle fx receipts & payment, along with related bank charges. There are different way to do this, but make sure you know what the process is, and are happy with the way it works.

Multi-company features are what separates the ‘Market Dominators’ from the more expensive systems. Xero & QuickBooks do not handle multi-company in a single instance. (Though you can have multiple instances and consolidate exported data in a spread-sheet!)

Multi-company enables you to manage subsidiary companies in the same instance and then consolidate them for reporting purposes. However consolidation is more than just adding up all the ledger postings: intra-company trades (one company charging another company for services) need to be excluded from the consolidated PnL and this was an aspect Sage Financials never handled.

Check how easy it is to consolidate, and make sure it’s clear which company you are in when processing invoices! Make sure multiple open tabs are managed as this was a real bane of Sage Financials – it could look like you were in one company, but were actually in another.

Finally watch out for VAT as some organisations have different trading companies, but submit VAT jointly, whereas others submit VAT separately. Make sure your choice can do what is needed.

This is related to multi-company, but is where you have subsidiary companies trading in other countries. If you trade in France, you need to be able to submit VAT returns to the French authorities. If you trade in the USA you need to be able to calculate tax using their complex tax regulation.

This was one area where Sage Financials was blazing a trail. They certainly had the ambition to support multi-legislation, just delivery was rather disappointing.

To be able to calculate VAT in EU countries you must have the values recorded in Euros as a starting point. Then different countries enforce different legislative requirements. Like the UK insists on MTD, but Germany requires you cannot unpost transactions, and all ledger postings must record the contra-posting.

In many cases it may be simpler to use a local accounting system, and simply import transactions to a mirror company in your main accounts.

A typical example of expense recognition is your council rates, where you receive and invoice in April, but the costs should really be reconciled over a 12 month period. Similarly with revenue, such as , a 6 month control, paid in advance, should be recognised over the 6 months. Its important to distinguish recognition (which is an accounting adjustment) from phased payments (which is a credit issue). Rates can be paid over 10 months, but should be reconciled over 12.

Many systems, including Sage Financials, can handle this simple recognition by generating a reconciliation schedule for each invoice. This can be data hungry is you do this a lot, and I believe there are better ways to handle this.

With professional services or annuity contracts, you are likely to require something more sophisticated. The revenue to be recognised over the life of a project is rarely uniform, perhaps Billing milestones trigger both the invoicing and the recognition. Or if you record time worked, you might want to recognise this work-in-progress as a pre-payment or accrual.

As with stock control, if you are serious about professional services you probably want to look at a 3rd party system. Krow for example is a Salesforce Appexchange plugin with a wide range of features, scheduling, Gannt diagrams, time-recoding, milestones, invoicing & recognition etc.

This is one area where the ‘Market dominators’ shine – they both have integrated payroll systems (at a cost). For the other systems there may be integrations available, but this is often not necessary.

Managing payroll is much more than just banging in hours worked and printing payslips, which is why many companies outsource payroll altogether. There are different ways to account for salary costs, the simplest is where the payroll bureau simply provided you with the totals you need to post each month.

It does get mor complicated if you want to allocate costs to departments etc, but the main thing is to ensure your bureau can provide the data in a format that can be imported into your financial accounts.

Fixed assets systems allow you to record your fixed assets, and apply appropriate depreciation costs and handle disposals correctly. However, many companies do not have significant Fixed Assets and it is more of any end of year tax issue.

In manufacturing and some other sectors with high value assets, depreciation makes a significant impact on your PnL and you will need to record this on a monthly basis. And you can get more sophisticated, with different depreciation models for different assets (computers typically depreciating much faster than industrial plant). In these cases a Fixed Assets system would be a big help.

Simple stock control such as Sage Financials provided is suitable for distributors who were buying and selling things, rather than manufacturers or value-added resellers where a more sophisticated system is needed. Simple stock control can save loads of time by automatically adjusting stock levels as you raise sales invoices, and conversely increasing stock levels and you raise purchase invoices. If you are purchasing many components to create a single product, you need something more sophisticated.

And this is where the power of the cloud comes in, as there a 3rd party systems that can provide that sophistication, and integrate in with whatever financial accounting solution you use.

Sage Financials had a simple Purchase Order system, using the Salesforce approvals process to manage this. If you have complex procurement needs you may find them built into the accounting solution or you may be able to integrate with a 3rd party.

Though standard invoice/statement/remittance advice may work for your business, some companies, particularly exporters, require a wider range of documentation. Make sure you are clear what you need.

Storing budgets as well as actuals in your financial accounting application enables you to quickly report on progress. The key for a good budgeting tools is the easy of editing the budgets. Either a simple export and import from Excel, and/or a spread-sheet like interface is a minimum.

You may also want ‘forecast’ figures (actual to date, budget to eoy) so a simple way to transpose actuals to forecast is also a benefit.

And if you need to define budgets by department then the budget tool must cope with this.

Make sure your supplier provides an estimate of your data requirements over 5 – 10 years. Otherwise you may have an unbelievably painful shock form Salesforce. And related to this is to ask what is their archiving solution.

And make sure you are clear about the license costs as you grow.

As we the accounting systems get more and more advanced, we may soon reach a point where you can virtually eliminate data entry. With Salesforce native applications this is already possible with integration for Expensify for expenses, AutoPost for purchase invoices, SmarterPay for direct debit collection.

Xero has some very cleaver integration if both customer and supplier use Xero, and a button to allow payment of your sales invoices by card may be appropriate for some businesses.