Life after QuickBooks
There are many milestones in the growth of a business, but not all are wonderful moments of celebration. One that often sneaks up on the owner is outgrowing the accounting system. This system, which traditionally encompasses invoicing, payroll, expense tracking, and financial reporting, is at the center of operations any business. Growing beyond its capabilities is inevitable, but often painful.
Operating on a small-scale a program like QuickBooks makes time-consuming critical processes run more smoothly. Millions of small businesses use QuickBooks, Peachtree, MYOB, or similar products to provide the financial infrastructure that facilitates growth.
But at some point the requirements of the business expand, often exponentially. Additional features and performance may be necessities as your processes become more complex and your transaction volume skyrockets.
So how do you know if you need a new financial system?
One of the telling signs is sluggishness. If you are experiencing long delays as you work in the program, or if printing reports becomes slower, your data volume is taxing the system. The software that worked beautifully two years ago was designed to handle a certain size of business. The database performance is limited and the software can be overwhelmed.
Programs designed for small businesses are also limited in security features and controls. It is an unfortunate paradox that as your company grows, protecting data becomes harder, yet is more important than ever. A system that lacks adequate security or audit trails can cause huge problems, especially if your eventual goal is an acquisition or a public stock offering (e.g. IPO). If records can be changed or permanently deleted without your consent, you have a problem.
This brings us to the people (not person) using the system. As you grow you will have more people accessing the system at the same time, a capability which is limited in this tier of products.
And then there is reporting. The information you need to run the business naturally evolves as you set new strategic directions. The system must provide information that helps you pursue your goals, but all too often it can actually become a roadblock.
If you have realized you need to upgrade, what do you do next?
First, you should be prepared to pay for the increased database performance and expanded features. While QuickBooks and similar products typically run in the hundreds of dollars, be ready to budget several thousand dollars for the upgrade. The budget needs to include not just the implementation, but also converting your existing files and training your staff.
You also don’t want to overpay for a product that will far surpass your future needs. Estimate where the company will be in several years, and look for software that will fit your requirements at that point. Don’t buy a product designed for a $300 million company, when in five years you’re going to be at $15 million. You’ll just end up paying for features and capabilities that you will not use, nor do you need.
Think about big changes. Will you be breaking into e-commerce? Are you expanding to multiple locations, or going international? Knowing what features will be helpful to you -- and not just how big the company will be -- will help you make the upgrade successful.
So what are the implementation “must-dos?”
Be realistic and committed. Changing to a more advanced financial system can take months, depending on the size of the project, so be patient. If you need to minimize costs, make sure you do not cut the training budget. Having employees who can use all the system’s features will pay for itself down the road.
Some systems can be used in an application service provider (ASP) or Web-hosted environment, where monthly fees are charged for each user of the system. If you have limited technology staff support, this approach can help you manage a more sophisticated technology environment without having to add staff. This approach can also help you avoid some of the upfront capital costs and license fees, but still requires effort in defining business processes and converting data from your current system. The downside is that you do not own the software and must budget for continued monthly fees.
Getting it right the first time will involve a blend of adjusting your company’s practices to the system and tailoring the software to your practices. Also, know the details of your support and maintenance agreements, which often provide patches for current versions and some add-on products.
Too many companies upgrade their accounting systems only after their business growth has been stifled. By implementing a financial system that can accommodate several years of expansion, you can make sure you have the financial infrastructure to achieve your next set of business milestones.
Lisa Metcalfe is a Regional Practice Leader in the Technology Leadership Practice of Tatum LLC. Tatum is the nation’s largest executive services firm, providing financial and technology leadership to businesses nationwide.
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