As part of Solutions Review’s Premium Content Series – a collection of columns written by industry experts in maturing software categories – Sean Chatterjee, Vice President of Partner Sales at Acumatica, outlines the signs which indicate that it is time for a company to upgrade its general accounting software solutions.
An accounting team is an essential facet of any business. Accounting teams rely on modern technologies, such as accounting software like QuickBooks, to manage the financial health of an organization and operate efficiently at scale. Accounting software enables businesses to improve the way they manage their accounting transactions, from accounts receivable (AR), accounts payable (AP), and bank management to revenue tracking and financial reporting.
A standalone accounting solution provides specific functionality and works to streamline financial processes and benefit accounting teams. And the benefits are many. Accounting teams can eliminate manual data entry, improve reporting accuracy, automate and leverage built-in reports, simplify payroll and tax filing requirements, reduce labor costs, and access stored data centrally.
Many small and medium-sized businesses find general accounting software systems like QuickBooks to be simple and, most importantly, affordable. However, general accounting software becomes too simple and inflexible as businesses grow. Company decision makers need to know the critical tipping points that indicate it’s time to move from general ledger software to a robust enterprise management system to maintain operational efficiency and scalability with growth.
Tipping Point #1: Rapid Growth
Startups and small businesses can get by with general accounting software initially, until their business takes it to the next level. For example, with general ledger software, multiple locations require multiple databases, which is not conducive to a unified operations team expanding its number of physical locations or supporting a dispersed workforce. .
As businesses increase their revenue, employees, customers, and offices, they will need a more advanced business management system. These systems allow companies to manage multiple sites from a single database, meaning employees can work anywhere without losing real-time visibility or access to company data. Additionally, businesses can use the software to automate manual, repeatable tasks, allowing them to efficiently collect, organize, and analyze their data.
Tipping Point #2: Siled Data
As businesses grow, basic accounting software struggles with disparate spreadsheets, disorganization, and hidden manual processes. Basic software does not offer advanced features such as automated communication with customers, sophisticated reports or dashboards.
A cohesive business management system integrates multiple departments and applications to provide an end-to-end business management experience. While these systems offer features like accounting software, they take that functionality to the next level. Businesses can use a comprehensive management system to access information between services and third-party applications, giving them a complete and consistent view of the business.
Tipping point n°3: disconnected professions
General ledger software offers businesses a good starter package at an affordable price. However, it is primarily designed to handle basic bookkeeping. Managing business processes outside of finance requires a more robust enterprise management system that can handle accounting and financial management needs and other business requirements, such as manufacturing, distribution, and more.
A company in the manufacturing, DistributionWhere Trade industries, for example, deals with supply chain logistics, inventory tracking, warehouse management, etc. Basic accounting software is not designed to handle these complexities. Core systems can’t integrate data from every line of business, making it difficult for decision makers to have visibility into the state of each line of business. With the visibility provided by a comprehensive business management system, organizations can make more informed decisions to increase efficiency and productivity and positively impact business results.
Upgrade to a consistent business management system
After evaluating these signs, businesses and their accounting teams can determine whether it’s time to upgrade to a full-featured business management tool or stick with accounting software that does its job but nothing else. They should also investigate similar use cases.
Companies that adopt a comprehensive business management system enjoy a significant return on investment. According to a Forrester study, companies that implemented a more extensive management system experienced a 15% increase in gross margins, a 15% increase in sales volume, and a 45% increase in employee productivity. Additionally, the study determined that organizations would see benefits of $3.5 million over three years against costs of $2.1 million, resulting in a net gain of $1.4 million. and a return on investment of 66%. The solution had a payback period of 16 months.
Suppose decision makers agree that a more robust accounting and management system would benefit their business. In this case, the next step is to identify the best solution for them and their unique needs. There are many solutions on the market. Carefully evaluating the different accounting management options will go a long way in selecting the right software, ensuring a successful implementation, and achieving a quick return on investment.
As businesses grow, the path to success changes. Finance teams are key to helping their business succeed and leveraging the tools they need to support business growth. With a broader business management plan in place, businesses will have the flexibility to grow, access real-time data across departments, and connect lines of business to ensure future success.