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Sourcing of Accounting Software

Last Updated : 05 Apr, 2023
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Accounting software sourcing is an essential component of a computerised accounting system. All the transactions of a company are recorded with the help of software that is specifically designed for it.  

Accounting software is required in two situations:

  •  when computerised accounting is introduced to replace the manual system or
  •  when the current computerised system must be replaced by a replacement one insight of adjusting requirements.

Accounting Software:

Every computerised accounting system is designed to perform accounting activities (such as recording and storing accounting data) and generate reports based on the needs of the user. From this point of view, Accounting software is classified into the following groups:

  1. Ready-to-use
  2. Customised
  3. Tailored

Each of these categories has distinct characteristics. The accounting software would be chosen based on its suitability to the organisation, particularly in terms of accounting requirements.

1. Ready-to-use:

Accounting software that is easy to use is ideal for organisations that run small/conventional businesses with a low frequency or volume of accounting transactions. This is due to the low value of installation and the limited number of users.

Ready-to-use software is easier to find, and the adaptability of other people (accountants) is extremely high. This also implies that the level of secrecy is relatively low, making the software vulnerable to data fraud. The training requirements are straightforward, and the seller (supplier of software) may occasionally provide free software training. However, there is limited scope for linking to other information systems with this software.

2. Customised:

Accounting software can also be customised to meet the specific needs of the user. Standardised accounting software on the market may not suit or meet the needs of the user. However, if the user wants the inventory status to be updated immediately after entering a sales voucher and a report to be printed, the software must be customised.

Customized software is installed in large and medium-sized businesses and can be linked to other information systems. The cost of installation and maintenance is relatively high because the seller charges a premium for customisation. Knowledge and software secrecy are frequently better maintained in customised software. Because the need to coach software users is critical, training costs are high.

3. Tailored:

Accounting software is typically designed for large business organisations with multiple users and geographically dispersed locations. Users will need specialised training to use this software. The tailored software is intended to meet the specific needs of the users and is an important component of the organisational MIS.

The secrecy and authenticity checks in such software are robust, allowing for a high degree of flexibility in terms of the number of users. To summarise, the following table compares the various types of accounting software:





Nature of the business

Small, traditional business

Large and medium-sized businesses

Large, typical company

Installation and maintenance costs


Relatively High


Training requirements






Significantly high


Expected Level of Secrecy


Relatively High 


Linkage to another information system




Generic Considerations before Sourcing an Accounting Software:


Explanation about consideration

Flexibility Flexibility is the most important factor to consider when looking for accounting software. Accounting software should be adaptable in terms of data entry, data retrieval, and report generation. The software should be able to run on a variety of computers with varying operating systems and configurations. It should allow its users some flexibility. It should also allow for simple switching between users, operating systems, and hardware.
Cost of Installation and Maintenance: Accounting software selection is heavily influenced by the cost to the organisation. Accounting software costs include the installation of related components and hardware, maintenance and modification costs, staff training costs, and data recovery costs in the event of software failure. An organisation must weigh the benefits of software against its costs. Based on its evaluation, an organisation will implement the software if the benefits outweigh the costs and it is within the organisation’s budget.
Size of Organisation  The size of an organisation influences the choice of accounting software. Small-sized businesses with a low volume of business transactions typically choose simple, single-user-oriented software. Large-scale organisations, on the other hand, where the volume of business transactions is very high, select the most recent and sophisticated software to meet the multi-user requirements.
Training requirements Training requirements are another factor that influences software selection. Accounting software that requires less training and is more user-friendly is available. There is also complicated software that necessitates ongoing and thorough training.
Level of Secrecy One of the most important considerations for an organisation when sourcing accounting software is the level of expected security. Software should be capable of preventing unauthorised data access and manipulation. It should have security features built in. In tailored software, for example, user rights may be restricted based on their work or responsibility criteria.
Exchanging Data Facility Another important factor to consider when selecting accounting software is its ability to transfer data. During database migration, the accounting software must allow for the easy and safe transfer of data from one system to another.
Utilities/MIS Reports Another factor that influences software selection is the use of MIS reports in the organisation.
Vendor Reputation and Capability The vendor’s competence influences software selection. It is determined by the vendor’s market reputation, user reviews of comparable software, the extent of post-sales support services provided by the vendor, and so on.

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