In Pursuit of Profit
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So, how do you know when your existing accounting solution isn’t going to cut it anymore? And what should you look for in a new platform?
Analyze these areas to determine if you need to upgrade:
When you first started your business, your accounting needs were probably fairly basic. You may or may not have needed formal payroll system. You likely handled all your payables and receivables yourself. You may have generated quotes or estimates by hand, and it worked for your business at that time.
But now your needs have changed – you have more employees, sales, bills, and receipts. These affect the day-to-day operations of your business and may have year-end tax implications. When upgrading your accounting software, determine which features you need and find a solution that offers those to perfection.
Ask employees for feedback on which features would help them most, and then rank your needs to get a sense of which are most important and which are “nice to have” features. Don’t compromise due to cost or time constraints.
More Sophisticated Functionality
If you have been using the same accounting system for a while, better offerings are likely to be available now vs. when you last made a purchase decision. There are often more premium versions of the existing software available that you are already using. Other times, competitors of your current software system have innovated faster to develop better functionality.
If your current accounting software has tiered offerings, that’s a great place to start researching your options. By upgrading within your existing company’s offerings, you will have access to more functionality without needing to learn an entirely new system.
However, if this is not a possibility, identify where other solutions offer more sophisticated functionality and then evaluate whether that functionality can increase your business’ profitability or if it’s just sales fluff. If another accounting software package can improve efficiency over your existing solution and foster continued growth, it’s time to switch.
As your business grows, your reporting needs will grow as well.
Bigger businesses have more employees, and deeper hierarchies, which means a greater dependence on financial reporting to pass up the chain. Executive-level managers have enough experience to understand how valuable robust reporting is, which means that they’ll want the kind of reports that a simple accounting solution probably won’t offer.
Ensure that any solution you evaluate offers the kind of accurate, actionable reporting that your business needs. Offering reports and charts that look nice but don’t tell the full financial story of your business isn’t enough. Reporting should also be customizable to give you the flexibility to focus on the metrics that matter most to your business.
Expanding Business Demands
Whether it is a one-time need (like changing from cash to accrual accounting) or an ongoing need (like adding new products and new regions), expanding business demands will influence a business’ accounting software choice. That is why it is critical to not only look at your current needs, but also anticipate your future needs.
Selecting a new accounting platform in a vacuum is a mistake that will likely result in having to make another switch again in the future. For this reason, forecasting and planning projections should be closely intertwined with a new accounting system evaluation.
Some businesses end up switching accounting software simply because it doesn’t make sense to pay to keep adding users. If your existing system is priced on a per user basis and your growing personnel is driving costs up, there may be another solution that is just as good (if not better) that will end up being more cost-effective over time.
Alternatively, some accounting platforms just don’t handle a multitude of users well. They’re not set up for proper permissions management and change tracking across a swath of employees, which makes managing lots of users a nightmare. In this case, finding a new solution is crucial to maintaining the integrity of your financial system.
Many business owners get caught up in the chase and forget that they have another option. It is not always possible, but in the right scenarios, a growing business may not have to switch accounting systems at all!
Instead, it may be feasible to adapt your existing software to accommodate your new needs. Adjusting your usage of your current platform is often much faster and more affordable than switching.
An accounting professional can work with your business to determine how your needs have changed and whether your current software can handle these changes.
Experienced accountants are accustomed to managing and leading financial change within organizations, which means that they can make informed recommendations so that you can potentially keep using your existing software.
In these situations, a third-party accountant is not creating just a band-aid fix to delay selecting a new system. Instead, he or she will use available options and functionality to mold the platform to better fit a business’s evolving needs.
We can help keep you better understand how to improve your system and evaluate whether it is time to upgrade. Contact Eric Moore, ASP Practice Leader. Eric’s contact information is here.