The Best Accounting and Invoice-Generating Software

When looking for accounting software, you have dozens of options. However, the market is dominated by one platform: QuickBooks. Recent market share data shows QuickBooks and QuickBooks Online have a combined 58% market share. 

While QuickBooks has a stranglehold on the market, the other market share leaders are also quality options. Xero, FreshBooks, Aptitude and Sage Intacct round out the top six, according to Datanyze. 

The differences between most business accounting programs are their features, customer service accessibility, pricing and ease of use. Some popular programs are cloud-based, while others are installed locally on your computer.  

Your business bookkeeping differs from your personal accounting for several reasons. When you're managing your business finances, your goal is to track revenue, expenses, debt and assets of your company. You analyze your business's financial statements, which helps you determine which loans to apply for and how to file your taxes. Your personal finances require simpler  management, like budgeting. The features of accounting software for your business should match the needs of your company, while programs for individual use lack features like inventory tracking and cater to personal finance needs. 

There are many aspects of accounting software that make it a useful tool. Most online accounting programs offer accounts receivable, accounts payable, banking and reporting features. Some even include tools for inventory management, project management, time tracking and payroll. Here are some core elements of accounting software you should look for.

Bank Feed

This feature allows you to connect to your business bank and credit card accounts to receive a daily update of your transactions. This saves you the time it would take to manually upload statements into the system, and it gives you a daily overview of your accounts. This also assists with reconciliation, making it a small daily task rather than a monthly ordeal. 

Dashboard

When you log in to your account, you'll be greeted by a dashboard with an overview of your account activity and key metrics, such as cash flow, profit and loss, account balances, expenses, accounts payable and receivable, and sales. Some allow you to customize what you see first by rearranging the information. 

Online Invoicing

If your business sends invoices, the ability to email them and accept online payments helps you get paid faster. Some accounting programs integrate with third-party payment processors, while other vendors require you to use their in-house processing services. 

Recurring Invoices

With this feature, you can schedule the system to automatically generate and send invoices for recurring charges, such as subscriptions. You can choose how frequently the invoices are sent – daily, weekly, monthly or annually – and indicate whether there's an end date to the billing. Many accounting software providers don't include recurring invoice functionality.

Automatic Payment Reminders

This feature reminds your customers about upcoming and past-due payments. Some have sample email text you can use as is or customize. You can then choose when you want the reminders to be sent. Some programs also give you the option of sending thank-you emails to customers after you receive their payments.  

Bank Reconciliation

Smart reconciliation tools identify potential matches between your bank transactions and the bills and invoices you've entered into the software, saving you the hours it would take to sift through records for this information. You can then approve or deny the suggested matches. The best products we reviewed suggest potential matches as you reconcile your accounts, and a few also include a reconciliation feature on their mobile apps. 

Financial Reporting

Every accounting program can generate financial reports, but some are more basic than others, and some require you to subscribe to a higher plan for advanced reporting. If you need specific types of financial reports, make sure they're included in the program and plan you choose. Detailed reports can help you interpret your financial data to make informed business decisions.

Mobile Apps

Not every accounting and invoicing program has mobile apps, but the best ones do. There is, however, quite a bit of variance in app capabilities. Some can only capture receipts for expense tracking; several also allow you to create and send invoices, and others have almost every feature the web-based software does. As mobile work becomes increasingly convenient, it's worth noting if a company offers a mobile app with its software.

Integrations 

The ability to connect your accounting software to the other business programs you use saves you the time of manually transferring data from one system to another. Payroll, payment processing, POS systems and CRM software are some popular types of integrations you may want to look for. Integration with systems you already use also cuts down on training time for employees who need to use the new software.  

Tracking for Billable Hours 

If you're a consultant or your business is an agency that bills its clients by the hour, you want accounting software that allows you to track and bill your time or integrates with the time-tracking program you already use. This is an especially important feature for freelancers. 

Inventory Management 

If you have a retail or distribution business, you'll want accounting software that tracks inventory and helps with purchase ordering. You may need to subscribe to a top-tier plan to get this feature. If you need more advanced inventory features, look for software that integrates with a dedicated inventory management system. 

Project-Based Billing 

Firms, freelancers, and consultants who work with clients on projects or jobs should look for accounting software that helps them track the projects' tasks and budgets. The software should allow you to invoice customers for tracked time and rebill them for project expenses. 

Support for Multiple Businesses 

Several programs we reviewed allow you to add more than one business to your account, though some of them charge extra for this convenience.

Properly managing your business's finances is no small task. The right accounting software offers a number of benefits, helping you balance your books, run reports to better analyze your business, and manage customer invoices. It keeps your business finances organized, examines your business transactions and helps you comply with tax laws. 

If you want to manage your accounting and financial information online and by yourself, you should look into accounting software. Not only is it cost-efficient, but its automated features give you immediate digital access to your information, along with features that allow you to manage your data with ease. 

If you are worried about your own capabilities, using an accountant will help ease that concern. Accountants are trained to manage finances and know how to do it correctly. Although accounting software helps you save time, you still have to operate it. If you don't have the time at all, using an accountant is the better choice, as they would do the work for you. 

How do you know which invoice generator software is right for your business?

The right invoice generator depends on your business structure and how much time and money you're trying to save. An invoice generator makes your invoice look more branded and professional. You can also use invoice software to accept online payments, which makes it easier for clients to pay you with a credit or debit card. Invoice software allows you to track your payments and reuse templates. Invoice generator software does the outline for you, which saves you resources and structures information so you can keep track of unpaid invoices. If you don't have your own invoice templates, an invoice generator can help you out. 

What is accounting software?

Accounting software is a digital system that helps you manage your money. Overseeing your business finances is very different from managing your own and requires different actions. This tool records and analyzes your company's financial data. It also tracks transactions, generates reports, manages customer and vendor contacts, creates purchase orders, tracks inventory levels, bills customers, and monitors account balances. Accounting software helps you put your financial data into a structured system and understand where your company is heading.  

Who can benefit from using accounting software?

Any company looking for help managing their finances should use an accounting tool. Especially for small business owners, it makes managing your finances easier, because it automates tasks and reduces human error in your data entry. Not only does it keep all your sensitive information in one place, but it keeps your finances organized. Accounting software also keeps you compliant with local, state and federal tax laws. 

This software is useful for businesses looking to save time or set up a bookkeeping or accounting system. Accounting software lays the groundwork for that. It also helps manage your tax filing and business taxes.  

Why should you use accounting software?

Accounting software is an efficient system that saves time and protects against human error. It automates accounting software functions, which eliminates the problem of inefficient and inaccurate data entry. You can also connect the software to your business bank or credit card accounts.  

Important reports and financial statements, like profit and loss statements and balance sheets, can be created from accounting programs. This is helpful when you're seeking funding from an investor. Not only does accounting software help you manage your cash flow, but it streamlines financial tasks and puts everything you need to do in one place. This reduces confusion and keeps you abreast of how your company is doing. 

Is online accounting software secure?

The best online accounting software uses bank-grade data encryption to protect your account. Further, it should either require or allow you to opt in to two-factor authentication, giving you another layer of security. Because the software is in the cloud, your data is safe even if your computer is stolen or destroyed.  

If you have employees or an accountant accessing your accounting program, you can control the information they see by setting user permissions. The best accounting programs also include a detailed history or audit log that shows what changes were made to your records, on what date, and at what time by which user, giving you additional insight and control over any changes or entries made in your accounting program.  

What is the easiest accounting software to learn when just starting out?

All of our best picks – QuickBooks Online, Xero, FreshBooks, Zoho Books and Wave Financial – are easy to use and have tips and hints within the software, plus online support resources designed for new business owners who don't necessarily have accounting experience, such as getting-started guides, video tutorials, webinars and how-to articles with step-by-step instructions.  

Many of these companies offer free trials. You shouldn't buy an accounting solution without first testing it to see how it works. Some companies even include hypothetical data for testing, which makes it easier to play with the program and see all the different features. We recommend exploring each platform you're considering to get a feel for how it works before paying. 

Should I get accounting and payroll software?

Integrating payroll with your accounting software can save you time, but you don't necessarily have to get both systems from the same company. Many accounting software applications offer integrations with a variety of payroll services. If you prefer to use the same company for both, check out QuickBooks Online and Wave, which offer payroll as an add-on service to their accounting software.  

Should accounting software also serve as invoice generator software?

It's not necessarily a deal-breaker if your accounting software doesn't generate invoices. However, for some companies, it is a necessity. If you're a freelancer or a small business that expects to regularly send invoices to clients, it's a good idea to look for accounting software that includes an invoice generator. The ability to quickly create invoices and automatically send them to clients can save your business important time. 

Do you need online bookkeeping software instead of accounting software?

The term "online bookkeeping software" is frequently used interchangeably with "online accounting software" in the small business market. The best online accounting software applications have features for keeping the books and analyzing your business's financial health. There is a difference, however, between a bookkeeper and an accountant. For our reviews, we focused on solutions that offer the ability to analyze financial data, rather than the solutions with just the basic bookkeeping options.

When is the best time to switch accounting software?

The ideal time to switch your accounting software is at the beginning of the year, because that's when the fiscal year comes to a close. Making a change at the start of the year allows you to wrap up the reports from that time period and start the year reporting on new financial information, which makes the transition seamless and less complicated. 

If you can't wait until the start of the year to make a change, the next best time is at the end of a fiscal quarter.

Is there free accounting software?

Yes, some accounting software providers offer their services for free. Wave Financial is a quality example of free accounting software, as it provides an array of key features to manage your financial data. Wave has no hidden fees or trials, and you can access its invoicing, accounting and receipt scanning functions for as long as you want at no charge. Instead of simply offering free trials, companies like Wave provide all the essentials for free.

While free accounting software is available, it's important to find a program that gives you what you're looking for at the standard your company requires. Free doesn't always mean faulty, but some free services and software lack in sophistication or efficiency. 

What are the features of accounting software?

Features abound with accounting software, making it easy for small business owners to run their businesses. Here are some of the more popular features found in accounting software:

• Bank feed: This connects your business bank and credit card accounts to the accounting software.
  
  
• Dashboard: This is the central point where you access your account and view account activity.
  
  
• Online invoicing: You'll use this feature to send invoices and accept payments.
  
  
• Recurring invoices: With this timesaving feature, you can set up the software to automatically send invoices to subscription customers.
  
  
• Automatic payment reminders: You can set up the software to automatically email customers, reminding them that their payment is due or past due.
  
  
• Bank reconciliation tools: This feature simplifies the reconciliation process by matching bank transactions with invoices.
  
  
• Financial reporting: You can run different reports that help you analyze your business's financials.
  
  
• Integrations: These allow your accounting system to share data with the other business applications you use.

What are the current accounting software trends?

With the continued economic impact of COVID-19 (and state lockdowns), small business owners will continue to expect more from their accounting software as they use these solutions to find cost-cutting opportunities and closely track revenue and expenses.

We at business.com expect that vendors will release new features to support small businesses. They will also integrate further applications of artificial intelligence and machine learning into their platforms that can provide increased analysis and recommendations, including suggestions where a business owner can reduce their costs. We also expect that vendors will offer more discounts and deals in the early months of the new year until the pandemic is contained.

As someone who knows the accounting industry quite well, Candace Galiffa, founder of NewWay Accounting, recommends QuickBooks Online for business owners and accountants.  

Part of what Galiffa appreciates most about the program is its amazing customer service and invoicing platform. She says it's a good program if you want all your standard and ideal features in one spot, she said.  

"It's affordable for the standard business owner's needs and has connection capabilities with just about every bank," Galiffa told business.com. 

Katie Thomas, founder and CFO of Diamond J Accounting, is a fan of  FreshBooks because of its bank reconciliation process. She recommends finding accounting software that allows you to connect with credit unions and banks across the country. 

This feature of FreshBooks stood out to Thomas because it allows business owners to receive automatic transaction updates. It's also a timesaver because, instead of manually uploading statements, you will receive a digital overview of pertinent transaction information.  

However, Thomas did note that some, especially accounting professionals, may find FreshBooks too limited. As an accounting professional, she said it's important for software to be customizable, allowing you to modify reports, so you can operate the system with ease and little error.  

Thomas also believes Xero to be a quality option. The features that stand out to her are its open API and project management software integrations, which help users create a more organized and streamlined system.

After asking experts and accountants what they look for in accounting software and the solutions they recommend, we searched online for the best small business accounting systems on the market. We read accounting software reviews and articles to find new programs to add to our existing list, which included accounting software we were already familiar with and programs vendors had previously pitched to us.  

We then narrowed down the list based on different use cases and criteria such as price, features, and number of supported users. We scoured each company's website to learn about the software, checking out blogs, guides and knowledgebases to find product details. We watched how-to videos or feature demos (where available) and read user reviews.  

After that, we signed up for trial accounts and began our hands-on testing. We created customer and vendor profiles, entered inventory into the systems, and customized invoice templates. We created estimates, invoices and purchase orders. We tracked expenses and ran reports. Along the way, we noted how user-friendly the software is, how easy it is to find key features and how capable each program is at accomplishing basic tasks.  

As part of our testing to come to our final best picks, we contacted customer service teams, posing as small business owners looking for accounting software. We asked a variety of questions to measure the quality of customer support and clarify any issues or concerns we encountered in our research and testing.  

Our list started with over 50 accounting software products. In addition to our best picks, Sage, FreeAgent, OneUp and Kashoo made it to our shortlist. 

Accounting software is a competitive market. Companies add value to their products by taking them to the cloud to give you on-demand access to your financial data, automating repetitive tasks, and reducing redundant data entry by integrating with other business programs.  

Although desktop accounting software is still available and its proponents tout richer features, this distinction is disappearing as more companies move their programs online and improve them. In addition to the convenience of accessing your financial data from just about any device with a browser, many accounting systems offer mobile apps. Some even have apps for smartwatches.  

Automated features that eliminate or simplify repetitive tasks are increasingly popular in accounting software. For example, many systems allow you to schedule recurring invoices, automatically send payment reminders as a due date approaches or when an invoice is past due, and send thank-you emails to acknowledge received payments. Having an invoice generator as part of your accounting software can be convenient for businesses. 

Some systems offer smart bank reconciliation tools that suggest transaction matches for you to approve, and they increase in accuracy the more you use the software. Others can be set up to automatically send purchase orders when your inventory falls below a threshold you set.

In addition to syncing with your business bank accounts, many accounting systems offer integrations with other business programs that use or generate the data you need in your accounting program, saving you the time of manually entering or transferring information from sales and other activities. Some accounting applications natively include ancillary features such as time tracking and project management.

WHAT TO EXPECT FROM ACCOUNTING SOFTWARE IN 2021

The accounting software market is poised to continue its growth trajectory as more businesses adopt cloud-based accounting programs in 2021. The COVID-19 pandemic forced scores of companies to shift to a remote work environment, which hurt their ability to prepare financial statements on time and forced them to overhaul their finance plans. That issue is increasing the interest in technology that automates accounting processes.

Business owners are considering accounting software to reduce accounting headaches as working at home becomes the norm. According to market research firm Gartner, worldwide information technology spending is forecast to hit $3.8 trillion in 2021, up 4% from 2020. Enterprise software is projected to enjoy 7.2% growth, and that includes cloud accounting applications.

Like many other areas of financial technology, the accounting software space has many players that cater to small business owners, making competition fierce. That should continue in 2021, which is good news for small business owners, who will gain access to more tools and functionality. Expect additional features to speed up processes, save time and boost productivity.

Artificial intelligence and machine learning gained popularity last year, with many accounting applications turning to these advanced technologies to reduce manual data entry and automate redundant tasks. Those AI and machine learning advances are expected to continue in 2021. Consider accounting automation software company BlackLine as evidence: It spent $150 million in October to acquire Rimilia, a U.K. SaaS startup that uses AI and machine learning to simplify cash flow and cash collection.

COVID-19 is still a huge issue for business owners as we head into 2021. If the economy and small businesses take more hits, accounting software providers will likely step up again with deals and discounts to cushion the blow.