Accounting software is application software that records and processes accounting transactions within functional modules such as accounts payable, accounts receivable, payroll, and trial balance. It functions as an accounting information system. It may be developed in-house by the company or organization using it, may be purchased from a third party, or may be a combination of a third-party application software package with local modifications. It varies greatly in its complexity and cost.

The market has been undergoing considerable consolidation since the mid 1990s, with many suppliers ceasing to trade or being bought by larger groups.

Modules

Accounting software is typically composed of various modules, different sections dealing with particular areas of accounting. Among the most common are:

Core Modules

• Accounts receivable—where the company enters money received
• Accounts payable—where the company enters its bills and pays money it owes
• General ledger—the company's "books"
• Billing—where the company produces invoices to clients/customers
• Stock/Inventory—where the company keeps control of its inventory
• Purchase Order—where the company orders inventory
• Sales Order—where the company records customer orders for the supply of inventory

Non Core Modules

• Debt Collection—where the company tracks attempts to collect overdue bills (sometimes part of accounts receivable)
• Electronic payment processing
• Expense—where employee business-related expenses are entered
• Inquiries—where the company looks up information on screen without any edits or additions
• Payroll—where the company tracks salary, wages, and related taxes
• Reports—where the company prints out data
• Timesheet—where professionals (such as attorneys and consultants) record time worked so that it can be billed to clients
• Purchase Requisition—where requests for purchase orders are made, approved and tracked

(Different vendors will use different names for these modules)

Implementations

In many cases, implementation can be a bigger consideration than the actual software chosen when it comes down to the total cost of ownership for the business. Most midmarket and larger applications are sold exclusively through resellers, developers and consultants. Those organizations generally pass on a license fee to the software vendor and then charge the client for installation, customization and support services. Clients can normally count on paying roughly 50-200% of the price of the software in implementation and consulting fees.

Other organizations sell to, consult with and support clients directly, eliminating the reseller.