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Category Compare: Accounting vs. Financial Management Software

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By Shephalii Kapoor

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In this report, we define and compare accounting and financial management software to help you decide which one aligns with your business goals.

Accounting and finance management are two integral business processes that require persistent efforts from accounting and finance professionals and an eye for detail. Both of these processes involve multiple challenges that might include incorrect revenue estimation, improper reporting, and poor tax and regulatory compliance. While an accounting or financial management tool can help you handle these issues with ease, how do you know which one to choose? 

The confusion surrounding these two software solutions can make it difficult to select the best tool for your business. While accounting software reports an organization’s finances, financial management software is used to manage the current assets of the organization and make informed financial decisions. Understanding the differences between the two platforms will help you finalize the right product for your needs. 

In this article, we'll talk about the similarities and differences between accounting and financial management software categories. We have also alphabetically listed the top five products for each category, based on verified software reviews. Read more.

Searching for an accounting firm to hire for your business? We’ve got you covered. Check out our list of companies in the following areas:

What is accounting software?

Accounting software assists accounting professionals in their day-to-day accounting and financial operations, such as record keeping, financial reporting, billing, and invoicing. 

The software stores a business’s financial data and allows managerial accountants to assess the financial health of the organization through tools like purchase orders, stock management, and general ledgers. 

Accounting tools automate accounting tasks for users, thereby reducing the time and effort required in performing these tasks and allowing for better decision-making through timely updates.

Key features of accounting software

The primary features of accounting software include:

  • Accounts payable: Tracks the amount that your business owes to external parties, such as suppliers, contractors, and customers. 

  • Accounts receivable: Automates the accounts receivable process, which includes invoicing and tracking outstanding invoices. 

  • Bank reconciliation: Prepares a summary of all financial activities, including bank deposits, withdrawals, receivables, and payments received. It also compares and matches financial records with their corresponding bank statements. 

  • Financial reporting: Generates financial statements, including income statements and balance sheets to gauge the financial position of the business. 

  • General ledger: Creates and maintains an online version of a general ledger/trial balance sheet to track financial data, such as equity, assets, liabilities, and expenses.

Top 5 accounting software

These five products are listed in alphabetical order (see the end of this piece for the full methodology for how these products were chosen).

Trial/Free Version

  • Free Trial
  • Free Version

Device compatibility

* Analysis accurate as of February 2023

Trial/Free Version

  • Free Trial
  • Free Version

Device compatibility

* Analysis accurate as of February 2023

Trial/Free Version

  • Free Trial
  • Free Version

Device compatibility

* Analysis accurate as of February 2023

Trial/Free Version

  • Free Trial
  • Free Version

Device compatibility

* Analysis accurate as of February 2023

Trial/Free Version

  • Free Trial
  • Free Version

Device compatibility

* Analysis accurate as of February 2023

What is financial management software?

Financial management software helps a finance manager track and analyze the financial stability of a business and make predictions about its future financial performance. The tool automates financial processes for users and assists them with functions, such as maintaining audit trails, delivering finance reports, ensuring compliance with accounting standards, and financial planning. 

Financial management tool can be a part of an organization’s enterprise resource planning (ERP) platform that gathers operational and financial data to provide teams with a comprehensive view of the business operations.

Key features of financial management software

The primary features of financial management software include:

  • Data visualization: Facilitates visual representation of financial data, including balance sheet and cash flow statement via graphs and charts. 

  • Financial analysis: Evaluates projects, budgets, and other finance-related data to gauge their performance and potential risk.

  • Financial reporting: Tracks and analyzes business income and expenses. The system also generates statements, such as balance sheets and cash flow statements to help you assess the financial health of the organization. 

  • Accounting: Offers built-in accounting tools or integration with third-party accounting applications to manage day-to-day accounting tasks, such as record keeping, reconciliation, and invoicing.

  • Bank reconciliation: Reconciles the business’s bank account with its financial record to identify errors or fraud in financial transactions.

Top 5 financial management software

These five products are listed in alphabetical order (see the end of this piece for the full methodology for how these products were chosen).

Trial/Free Version

  • Free Trial
  • Free Version

Device compatibility

* Analysis accurate as of February 2023

Trial/Free Version

  • Free Trial
  • Free Version

Device compatibility

* Analysis accurate as of February 2023

Trial/Free Version

  • Free Trial
  • Free Version

Device compatibility

* Analysis accurate as of February 2023

Trial/Free Version

  • Free Trial
  • Free Version

Device compatibility

* Analysis accurate as of February 2023

Trial/Free Version

  • Free Trial
  • Free Version

Device compatibility

* Analysis accurate as of February 2023

What do they have in common?

Since both accounting and financial management software have a lot in common, the two software solutions are often used interchangeably. Talking about the similarities between these two platforms, both these tools:

  • streamline the management, reporting, and distribution of financial information within an organization. 

  • help business leaders understand the historical, current, and future financial standings of the organization.

  • enable users to make informed decisions concerning their purchases, expenses, and budgets. 

Common features of accounting and financial management software include financial reporting, bank reconciliation, fixed assets management, and budgeting/forecasting.

Which software is right for your business?

The most simple answer to this is selecting a tool that best aligns with your business’s financial needs. For instance, if you need a system merely to record, measure, and report on the organization’s finances, accounting software would be an ideal choice for you. But, if you need a tool to track and manage the assets and liabilities of your organization and plan for future growth, you would require a financial management platform to do the work for you. 

Likewise, if you are looking to understand the history and current financial information of your business, investing in an accounting tool would be a better choice. However, if the intent is to generate wealth and earn good returns through effective management of assets, you would require a finance management tool for your business. 

As compared to accounting, financial management software caters to a broader market comprising accounting, cash management, and compliance management. While an accounting system is well-suited for roles including managerial accountants, auditors, and analysts, financial management software caters majorly to shareholders, business owners, and finance professionals, such as a financial analyst or a chief financial officer. 

Once you’ve decided which software to use, head to our accounting software and financial management software category pages where you can find a sortable list of products and software reviews from verified users. If you're interested in hiring a service provider, check out our list of top accounting firms.

If you want to narrow down your search to only the most popular and highest-rated solutions, visit Capterra’s Shortlist reports for the top accounting software and financial management software tools—our reports are based on an analysis of thousands of user reviews.

How to choose the right accounting or finance management software for your business

Shortlisting the best accounting or finance management software can be time-consuming and challenging, especially with so many available options on the market. Here are some considerations that you can keep in mind while evaluating potential platforms for your needs.

  • Assess the asset management features: Whether you need an accounting tool or a financial management software solution for your business, make sure that the software allows you to monitor asset movement, schedule, and track asset maintenance, calculate depreciation, and generate asset status reports. The tool should also feature a centralized dashboard to help you track necessary details about your fixed assets.

  • Look for bank reconciliation features: Your shortlisted accounting or financial management tool should be able to connect with your bank accounts so that you can access your bank statements directly from the system. The software should also be able to automatically match your general ledger data with the bank statements and report inconsistencies if any. This will not only help you maintain up-to-date financials for your small business but also prepare for the tax filing season.

  • Evaluate the accounting and financial reporting capabilities: Reporting is an essential feature of both accounting and financial management platforms. Before you invest in a tool, make sure that the software allows you to generate necessary financial accounting reports, such as balance sheets, income statements, cash flow statements, and owner’s equity statements. In addition, the tool should also offer other basic reports, such as expense, budget, tax summary, payment, item sales, and profit and loss reports to help you gauge the operational efficiency of the organization.

Common questions to ask while selecting the best software for your business

Here are some questions that you can ask the vendors before finalizing the best accounting or financial management software for your business.

Does the software offer an activity dashboard?

An activity dashboard provides you with an overview of all accounting and finance-related activities in a single place. Before you finalize a tool for yourself, make sure to ask the vendor whether the system features an activity dashboard to help you visualize important financial/operational metrics and reports, all at the same place or not.

What are the data visualization options?

Along with necessary reports to showcase key financial metrics, your shortlisted tool should also offer multiple data visualization options, such as graphs, charts, tables, and widgets to help you comprehend the data easily.

What are the available integration options?

An accounting or financial management platform should integrate well with your existing and other third-party applications to streamline financial workflows. At the most basic, your shortlisted tool should integrate with billing, budgeting, payment processing, payroll management, customer relationship management (CRM), and expense management tools.


Methodology

We highlight the top five products from each category—those with the highest average user ratings. In addition, to be included in this list, the products must:

  • Have at least 20 unique product reviews published on Capterra, with an average rating of 3.0 or higher (as of February 10, 2023).

  • Meet our software market definition for accounting and financial management software:

    • Accounting: “Accounting software automates an organization's financial functions and transactions with modules including accounts payable, accounts receivable, payroll, billing and general ledger.”

    • Financial management: “Financial management software is used for tracking and analyzing financial stability of organizations as well as making predictions about their future financial performance.”

Note: Reviews and ratings data in the product cards is as of February 10, 2023. New reviews may have been added since the publication of this article, so the reviews data in this piece may not reflect current conditions.

Disclaimer: The products in the category comparison images are examples to show a feature in context and are not intended as endorsements or recommendations by Capterra. They have been obtained from sources believed to be reliable at the time of publication.


Looking for Accounting software? Check out Capterra's list of the best Accounting software solutions.

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About the Author

Shephalii Kapoor profile picture

Shephalii Kapoor is a writer at Capterra. She helps small businesses identify the right software for their needs by analyzing user reviews for top-rated software products. Prior to Capterra, she worked as an assistant content manager at InfoEdge India Ltd. She has also worked in company law, aviation, and real estate. She is a published author and has contributed to various magazines and websites. During her free time, she enjoys reading.

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