Accounting and inventory management software is a digital tool that helps businesses handle their finances and keep track of what products they have in stock. On the accounting side, it manages tasks such as recording transactions, tracking income and expenses, handling invoices, and generating financial reports. With inventory, it monitors the quantity and movement of products, including stock levels, orders, and deliveries, so businesses always know what they have on hand, what’s running low, and what needs restocking.

This software combines financial and inventory data in one place, which makes it easier to understand the business’s overall health. It’s especially useful for avoiding errors, staying organised, and making better decisions about spending, sales, and inventory needs. The global inventory management software market was estimated to be worth $3.43 billion in 2023 and is expected to continue growing at a compound annual growth rate of 6.7% from 2024 to 2030.

Below, we’ll discuss what small businesses should know about using accounting and inventory management software, including how it works, what features to look for, and how to recoup their investments.

What’s in this article?

• How does accounting and inventory management software work?
  
• Why do small businesses need accounting and inventory management software?
  
• What features should you look for in combined accounting and inventory software?
  
• What are the best accounting and inventory management tools for small businesses?
  
• What are the costs and ROI of accounting and inventory software?
  

How does accounting and inventory management software work?

Accounting and inventory management software unifies your finances and inventory tracking in one easy-to-use system. Here’s how it works.

Input and updates

You start by inputting details such as sales, purchases, and expenses. The software keeps track of how many products you have, what’s been sold, and what’s coming in. If your business uses barcode scanners in store or sells online, the software automatically updates your numbers as sales happen.

Skilled tracking

• Accounting: Every sale, expense, or payment is recorded. The system monitors your income, spending, and overall finances.

• Inventory: If a product sells, the stock count decreases. And as new stock arrives, the count increases. The system constantly adjusts these numbers so you always know what’s on hand.

Time-saving automation

Much of the work happens automatically, including creating invoices, tracking payments, and reminding you when stock is low, so you don’t have to update spreadsheets and do calculations by hand.

Smart alerts

The software’s monitoring capabilities will also notify you when something needs your attention, including when:

• You’re running low on a popular item

• A client’s payment is overdue

• It’s time to reorder supplies

Easy-to-understand reports

The software also turns all this data into simple reports that show you which products are selling best, where you’re spending the most money, how much profit you’re making, and more.

All your tools, connected

If you use other tools, such as an online storefront, payment apps, or a point-of-sale (POS) system, the software can connect with those, too. This ensures all your tools stay in sync without extra effort.

Why do small businesses need accounting and inventory management software?

Managing finances and inventory by hand might seem feasible when you’re just starting out. But as your business grows, one mistake or oversight can have serious repercussions. Here’s a closer look at why accounting and inventory management software is so valuable for small businesses.

You can’t manage what you don’t measure

It’s easy to lose sight of the big picture when you’re juggling day-to-day tasks. This software puts your financial and inventory data in one place so you can see:

• Which products are selling quickly (and which ones aren’t)

• How much cash is coming in versus how much is going out

• Whether you have enough stock to meet demand without overbuying

This insight is instant and accurate, and there is no need to dig through spreadsheets or receipts to find answers. The software provides a clear view of your business’s health and eliminates the need for guesswork.

Small errors have big consequences

In a small business, even a minor mistake, such as forgetting to restock or miscalculating your expenses, can compound and affect your core operations. This software prevents these issues before they happen by:

• Automatically updating your inventory when sales occur

• Reminding you when stock is running low or when a bill is overdue

• Handling calculations and recordkeeping so you don’t have to worry about errors that could cost you customers or money

Cash flow

Cash flow can make or break a small business. Accounting software helps you keep it steady and predictable. Here’s how:

• You know who still owes you money so you can follow up before an overdue payment becomes a bigger problem.

• It helps you avoid tying up cash in too much stock that isn’t moving.

• Real-time reports show you whether you’re making a profit or breaking even.

• It gives you the clarity you need to make forward-looking decisions about how to run your business.

It scales with you

When your small business starts to grow, it might be tempting to keep using the Excel spreadsheets you’ve always used for accounting and inventory. That might work for a while, but growth can make it unsustainable. The software gives you a system early on, so when you do grow, you’re ready. When you add new products, the software tracks them. If you hire an accountant, they can pull data from the system without starting from scratch or studying your physical ledgers. If your goal is to launch an online store to complement your physical store, everything will sync between sales streams.

Your energy is better spent elsewhere

When you run a small business, you need to build relationships with customers, test out new ideas, and stay agile in the face of whatever comes your way. The software handles the behind-the-scenes admin work so you can focus on the parts of the business only you can do.

Example

Imagine a local coffee shop. Without this software, the owner might not notice that the store is out of a popular syrup until it’s too late. As a result, they have to pull their most popular latte off the weekend menu and their two busiest days don’t make enough to cover the bill from their supplier. If the owner uses the software, the outcome could be very different:

• They see an alert that syrup stock is low before it’s a problem.

• Payments are tracked, invoices are sent, and overdue bills are automatically flagged.

• A quick glance at their dashboard shows they’re making good money but also spending too much on a slow-moving pastry line.

What features should you look for in combined accounting and inventory software?

The best combined software should feel like a natural fit for your business. It keeps your finances and inventory in sync, gives you clear insight, and saves you from manual headaches – all while scaling with you. If it’s doing its job, you’ll spend less time on administration and more time running your business. Here are the features you should look for in your software.

Real-time inventory tracking

The software should automatically update stock levels when you make a sale, process a return, or restock. Some types of software support barcode scanning or integrate with your online store.

Automatic financial updates

Every transaction should update your accounting records instantly so you don’t have to worry about lag time or incorrect numbers.

Alerts and reminders

Look for features that send notifications when stock is low, invoices are overdue, or bills need to be paid.

Reporting and insight

You’ll want software that can deliver simple reports that show sales trends, profits and losses, inventory performance, and cash flow at a glance.

Smart integrations

Ensure your software can connect with the tools you already use, such as payment processors (e.g. Stripe) and e-commerce platforms (e.g. Shopify, WooCommerce).

Invoicing and payment tracking

It should let you create invoices, track payments, and follow up on overdue bills without switching between apps.

Reordering

Look for a feature that alerts you when stock hits a certain level and can even generate purchase orders for suppliers so you’ll never run out of your most popular offerings.

Scalability

Your needs will grow as your business does. Choose software that can handle more products, transactions, and users as you expand.

User-friendly interface

The software should be easy to navigate, even if you’re not a tech expert. A clean, intuitive dashboard makes your system more usable, which can make it that much more effective.

Mobile access

If you’re on the move, seek out software with mobile features that allow you to check inventory, track sales, or send invoices from your phone.

What are the best accounting and inventory management tools for small businesses?

If you have a small business and you already use Stripe as your payments service provider, look for accounting and inventory solutions that can tie your payments, inventory, and accounting together without requiring manual work. Tools such as Xero, QuickBooks, Zoho Books, and Cin7 Core give small businesses the confidence that their systems are connected and their records are accurate. Here are some top tools that integrate with Stripe.

Xero (Accounting)

Xero is a user-friendly accounting platform built for small businesses that integrates smoothly with Stripe.

• Stripe integration: Stripe payments flow directly into Xero and automatically reconcile transactions to keep your books up-to-date. Xero also lets you accept Stripe-powered payments on Xero invoices.

• Standout features: Xero provides real-time financial dashboards, simple invoice creation, and tax preparation tools.

• Why it works: Xero keeps your finances organised while handling the Stripe payments you’re already processing.

QuickBooks Online (Accounting)

QuickBooks Online is a go-to accounting tool for small businesses, and its features work well with Stripe.

• Stripe integration: Payments processed by Stripe are automatically pulled into QuickBooks so you don’t have to manually input or reconcile transactions.

• Standout features: QuickBooks generates profit and loss reports, tracks expenses, and makes invoicing easier with Stripe-powered payment links.

• Why it works: QuickBooks offers financial clarity while accounting for every single Stripe transaction you process.

Zoho Books (Accounting and inventory)

A flexible accounting tool that also offers inventory management, Zoho Books works well for businesses that want to meet their needs in both areas with one platform.

• Stripe integration: Zoho Books connects directly with Stripe payments to automatically update invoices and accounting records.

• Standout features: It tracks stock levels and product movement, helping you avoid overstocking or running out.

• Why it works: Zoho Books keeps your accounting and inventory in one place while syncing effortlessly with Stripe.

Cin7 Core (Inventory)

Cin7 Core is a powerful cloud-based inventory management solution that integrates with Stripe and popular accounting tools.

• Stripe integration: Stripe payments are recorded instantly in Cin7 Core to update your inventory.

• Standout features: It connects to accounting tools such as QuickBooks and Xero so your payments and stock are always aligned.

• Why it works: Cin7 Core ties together inventory, payments, and accounting systems for businesses with more complex inventory needs.

A2X (Accounting)

A2X is specifically built for e-commerce and supports businesses that sell on platforms such as Shopify and Amazon.

• Stripe integration: With Stripe, A2X makes reconciliation simpler by breaking down payouts into clear categories (e.g. sales, fees, refunds) for platforms such as QuickBooks and Xero.

• Standout features: A2X automatically organises uncategorised payment data from your online sales.

• Why it works: A2X matches Stripe transactions with your financial records without confusion or manual work.

What are the costs and ROI of accounting and inventory software?

The costs and return on investment (ROI) of accounting and inventory management software come down to balancing what you pay for the tool against the time, money, and value it adds to your business.

Costs: What you’re paying for

Software subscription fees

• Most tools charge a monthly or annual fee.

• For small businesses, this fee can range widely, depending on the features, users, and integrations offered.

Add-ons and integrations

Integrating with tools such as Stripe, Shopify, and advanced reporting systems might result in extra costs. Some add-ons are free, while others have small fees.

Setup and training

Getting your new software up and running might require investing time and money up front. This can include:

• Importing data (e.g. past inventory or accounting records)

• Training your team on how to use the software

Hidden costs

Some platforms charge fees for additional users, higher transaction volumes, or premium support. Check first whether any of these apply.

ROI: What you’re getting back

The ROI for this software is evident in the time you save, the mistakes you avoid, and the smarter decisions you’re able to make – all of which can increase your profit.

Time savings

Automating tasks such as invoicing, expense tracking, and stock updates can save hours of labour each week.

• Example: Imagine you save five hours of manual work every week and value your time at £25 per hour. Automation saves you £500 per month.
  

Fewer costly mistakes

Manual errors in your accounting or inventory (e.g. double-ordering, running out of stock, missing an unpaid invoice) can cost you money and customers. Software can minimise these errors.

• Example: Automatically restocking your best-selling item can mean hundreds or thousands of pounds in preserved revenue.
  

Better cash flow

The software helps you follow unpaid invoices, manage faster payments, and avoid having cash tied up in unsold inventory. This keeps your business more liquid and can make it more attractive for financing.

• Example: Improving your cash flow management means fewer overdraft fees and missed supplier discounts.
  

Smarter decisions

Real-time insight about how products are performing and where you’re spending allows you to make more informed decisions.

• Example: Cutting low-performing inventory and focusing on high-margin items can increase your profitability.
  

Low-cost scalability

Software can scale with your business. As your sales increase and operations grow, the system can accommodate added complexity without increasing manual work. The cost of software is often far less than that of hiring someone to manage the same tasks manually.

• Example: Software can handle your accounting and inventory from the earliest days of your business, when you might be making a few sales a month, to your decision to expand and open an e-commerce store for international sales – all while keeping your team lean.
  

A quick cost-benefit example

Imagine the following was true:

• You spend £60 per month on accounting and inventory software.

• It saves you 10 hours of manual work each month at £25 per hour, totalling £250 per month.

• You avoid 1 inventory error that would have cost you £300 in lost sales.

Here’s how you would calculate your ROI:

• Monthly cost: £60

• Monthly benefit: Time Saved + Error Avoided = £250 + £300 = £550

In this case, the software pays for itself almost 10 times over. And that’s before factoring in other benefits such as improved cash flow, happier customers, and potential for long-term growth.