How to Stand Out in Your Category: Buyer Insights for Accounting Software

Tools buyers are replacing with accounting software

When our advisors asked buyers what methods they were currently using to handle their day-to-day accounting practices, 37% said they use third-party tools, such as bookkeeping and tax preparation software. Meanwhile, 15% said they rely on manual methods, such as spreadsheets. Only 10% of buyers said they do not have any system in place.

While manual methods of tracking invoices can work for small businesses, they can lead to inaccurate recording and inefficiencies as the business scales and the accounting function becomes more complex. 

Likewise, using third-party software might result in misaligned accounting practices, as it may offer limited features to track tasks and receive reminders about outstanding payments. Using third-party software also requires investment in multiple licenses, subscriptions, and integrations, consequently leading to higher costs.

A dedicated accounting solution can help centralize and automate several tasks, such as data entry, expense management, income, transaction categorization, and account management. The software also helps with reporting and forecasting, enhancing data security and improving overall efficiency.

→  Pro tip

Identify your buyers' pain points and demonstrate how your accounting software provides dedicated features that will lead to better business outcomes. In addition, make sure you highlight your product's industry-specific functionalities, customization opportunities, and integration options.

It's important to clarify that despite requiring more upfront investment and time to implement, an accounting software solution will improve efficiency and reduce costs in the long run.

Why buyers switch to accounting software

Our advisors spoke with buyers currently using either manual methods or third-party software and seeking a switch to accounting software. These discussions shed light on organizations' real-life pain points—inefficiency (32%), limited functionality (25%) and unaffordability (15%).

• Inefficiency: Managing financial data across multiple platforms or manually through spreadsheets and paper can be time-consuming and prone to error. This fragmented approach often requires repetitive data entry and manual reconciliation, leading to delays and increased workload for accounting teams. Plus, the lack of integration between disparate third-party systems can result in data silos, making it difficult to obtain a comprehensive and real-time view of the organization's financial health.
• Limited functionality: While specialized bookkeeping or tax preparation software might excel in their specific areas, they often lack the comprehensive features of integrated accounting software. This limitation can restrict the ability to perform various financial tasks. For example, specialized software or spreadsheets may not support advanced financial reporting, automated invoicing, or real-time analytics. As a result, businesses may struggle to gain deeper insights into their financial performance and miss out on opportunities for optimization and growth.
• Unaffordability: While some third-party software solutions may appear cost-effective initially, the cumulative expense of subscribing to multiple specialized tools can add up quickly. The hidden costs associated with manual methods, such as the time spent on data entry, error correction, and administrative overhead, can also be substantial. In contrast, an all-in-one accounting software solution can offer a more cost-effective and scalable option in the long run by providing a full suite of features within a single platform.

Compared to the existing methods used by accounting professionals, a dedicated accounting software solution offers the following benefits:

• Better financial insights: Dedicated accounting software provides comprehensive features enabling the real-time tracking and analysis of financial data. Such software also lets businesses automate detailed financial reports like profit and loss statements, balance sheets, and cash flow statements, eliminating the need for manual reporting and ensuring accuracy. Moreover, advanced analytics and visualization features help identify trends and forecast future financial performance, facilitating informed decision-making. By having instant access to updated and accurate financial information, businesses can better understand their financial health, identify areas for improvement, and strategically plan for growth and investment opportunities. 
• Improved accounting efficiency and compliance: Accounting software's automation features reduce the time and effort required for routine tasks such as data entry, invoice generation, and reconciliation. This minimizes human error and frees up valuable time for accountants to focus on more strategic activities. Additionally, accounting software helps comply with the latest financial regulations and standards. This reduces the risk of non-compliance penalties and audits, providing peace of mind that the business is adhering to legal and regulatory requirements.
• Enhanced security: Unlike traditional methods, many accounting software tools employ advanced encryption technologies to safeguard data from unauthorized access and cyber threats. Features such as user authentication, access controls, and regular security updates ensure that only authorized personnel can access and modify financial information. Additionally, many accounting software solutions provide secure cloud storage options, making sure that data is backed up and recoverable in case of hardware failure or other disasters. This level of security helps businesses maintain confidentiality, integrity, and secure access to their financial data.

→  Pro tip

Ensure your sales team can gather specific requirements from prospects and offer product demonstrations tailored to their unique needs.

Complement demos with customer success stories that validate how your software improves productivity by offering advanced and reliable functionalities. Client testimonials will help you build trust with prospects.

What accounting software features are valued the most

When analyzing accounting functionality preferences, our findings reveal one feature is essential for both buyers (67%) and users (29%): financial reporting. 

The financial reporting feature provides real-time insights into an organization's financial health, enabling informed decision-making. More specifically, it automates the generation of financial statements such as balance sheets, and income and cash flow statements to reduce the risk of human error and ensure compliance with regulatory standards. 

Besides financial reporting,  buyers also prioritize billing and invoicing functionality in an accounting tool. In contrast, based on reviews, actual accounting software users prioritize income and balance sheet functionality.**

→  Pro tip

Understand what businesses prioritize when buying software to adjust your product profile description and features. Highlight key strengths and illustrate how reviewers use your software to solve business needs and challenges. 

You can also promote how your product stacks up against the competition by showcasing earned awards and third-party badges based on ratings and popularity.

Use cases for accounting software

Requested accounting software features may vary depending on the use case and the industry in which the business operates, such as:

• Nonprofits need to manage donations, grants, and fund allocations to ensure that resources are used effectively and transparently. Accounting software helps these organizations track and categorize donations, manage grant funds, and generate detailed financial reports. This ensures compliance with regulatory requirements and fosters transparency with donors, which is crucial for building trust and securing future funding.
• Healthcare and social service organizations need to maintain accurate financial records while managing complex billing and payroll processes. Accounting software assists these organizations by streamlining patient billing, processing insurance claims, and handling payroll. This ensures timely payments and accurate financial reporting, essential for maintaining operational efficiency and financial health in a highly regulated industry.
• Maintenance and field service companies need to track expenses, manage invoices, and streamline payroll to maintain profitability and operational efficiency. Accounting software helps by automating invoicing, tracking expenses, and managing payroll. This improves cash flow management and reduces administrative overhead, allowing companies to focus more on service delivery and customer satisfaction.
• Consulting firms need to manage client billing, project expenses, and financial reporting to ensure adequate financial management and enhance client satisfaction. Accounting software enables these firms to efficiently handle client billing, track project-related expenses, and generate detailed financial reports. This ensures accuracy and helps maintain good client relationships by providing transparent and timely financial information.
• Accounting firms and CPAs need to provide accurate financial services and compliance reporting for their clients. Accounting software streamlines bookkeeping, tax preparation, and financial reporting processes, ensuring compliance with regulatory standards. This saves time, reduces errors, and allows accountants to provide more value-added services to their clients, enhancing client satisfaction and trust. Notably, accounting firms and certified public accountants (CPAs) often operate on a smaller scale compared to larger organizations with cross-functional teams. They may even consist of a single accountant or function as sole proprietorships. Consequently, their budgets are typically less substantial than those in other industries.

Average budgets for accounting software across industries

Organizations across the top five industries are willing to allocate an average budget of between $126 to $219 per user, per month. Additionally, the overall average budget for purchasing accounting software is approximately $208 per user, per month. 

However, the budget for purchasing accounting software varies from one segment to another based on factors such as the number of users, the deployment model preferred, and integration requirements.

→  Pro tip

When determining the pricing for your software, it’s important to consider the industry in which your target buyers operate, as some sectors may have more complex requirements that can drive up costs. To evaluate how you stack up against your competition, you can use the Capterra Shortlist^TM for accounting software.

Rise above your competition with strategic insights

Accounting software marketers face enormous pressure to set their products apart from the competition in a crowded marketplace. But with the right insights, you can better understand the key priorities and pain points of your target audience and address them directly in your product messaging to claim your fair share of buyer attention.

With more than nine million active software buyers on our sites every month, Gartner Digital Markets can equip you with the strategic insights you need to level up your marketing strategy and become a leader in your category.

Log into your Gartner Digital Markets account and optimize your profile to ensure buyers understand how your software meets their evolving needs.

Caroline Hogan

Caroline Hogan is the Senior Director of Vendor Marketing at Gartner Digital Markets, where she manages the marketing strategy for the vendor platform. She has more than 20 years of marketing experience, leading initiatives from brand strategy and demand generation to customer retention and advocacy. Connect with Caroline on LinkedIn.

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Sources

1. The Controller's Playbook for Reducing Errors Using Accounting Technology, Gartner.

Methodology and buyer demographics

*Software buyers analysis 

Findings are based on data from conversations that Gartner Digital Markets’ advisor team has daily with software buyers seeking guidance on purchase decisions. The data used to create this report is based on interactions with small-to-midsize businesses seeking accounting tools. For this report, we analyzed 3,000+ phone interactions from September 1, 2023, to September 1, 2024.

The findings of this report represent buyers who contacted Gartner Digital Markets and may not be indicative of the market as a whole. Data points are rounded to the nearest whole number.

The buyers we interacted with are largely small businesses representing a growing majority of accounting software purchases. Below, you’ll find the demographics of the buyers so you can see the size and type of businesses, from annual revenue to industry.

**User reviews analysis

Feature ratings are based on 1,400+ user reviews from September 1, 2023, to September 1, 2024, categorized on a scale of “low importance” to “critical.”