QuickBooks is a household name among small and medium sized business. It is typically one of the first accounting packages a business will move to after its initial transition off of Excel spreadsheets for a true accounting package. It is a sound application that knows its place in the marketplace. And as many bookkeepers and accountants become comfortable with it within a company, there is often a resistance to move off of QuickBooks on to a more robust ERP package.
There are some early warning signs that business should keep an eye out for that may signal that they should begin exploring ERP packages that can support their continued business growth and expansion. Below are a few that you should be wary of:
- Excessive processing times for transactions and report generation
Almost every application you work with has its limitations. As more list entries are created and transactions are entered on a daily basis, this will cause the size of your data file to increase and force the application to dig through more information as it processes information. The report that took you 5 seconds to run is now taking 30 seconds to run.
- Not enough reporting insight
QuickBooks offers a fairly intuitive, user friendly report generation interface which is nice when you are building your first few financial reports. As the demand for data analysis has grown, it is now sliced and diced in order to make thoughtful and educated decisions around how your company should move forward. In order to dig into that you are going to need a more flexible and powerful database backend.
- You are processing many financial transactions outside of QuickBooks or via journal entries
One of the most concerning tasks a company can start doing is begin reverting back to Excel or moving to a number of disparate systems. Making this jump not only increases the likelihood of duplicate data entry (a huge time sink) and human errors, but also makes the move to a more comprehensive ERP package that much more difficult.
- You are getting close to exceeding 30 concurrent user licenses
This is an easy one to watch out for. If you have the need for more than 30 users to access your accounting package for Accounts Receivable, Account Payable, Inventory Management or financial reporting then you may need to move to something more accommodating.
- Your business needs more access to system customizations or integrations
It would be nice to think that there is an ERP application built that will handle every business need for your unique company operations. Unfortunately, that is not the case. In all of my years of consulting, I have never encountered a system that does exactly everything that a company needs it do. There is typically always a customization, an integration or a workaround that gets put in place somewhere along the line. The main issue with QuickBooks is that is very restrictive around what it will let you customize. Many other ERP applications are built to be customized and modified to fit your business.
- Your company is required to have more stringent audit and security controls
If you are working in an industry that is highly regulated or has strict compliance standards then this may also be a major red flag. QuickBooks does offer your standard security and audit log features, but they are also lacking in many instances and areas.
- You are starting to encounter list limitations
List limitations are another area that you should be forward thinking about. During my years as a ProAdvisor, I would often receive the phone call that a user could no longer enter a new inventory item into the system and this was due to the list limitations that QuickBooks has. It is much easier to keep an eye on this up front, rather than wait for the day when you hit the ceiling. Performing a purge of a list is not always the easiest task.
- You want to put in place workflow automation processes
As your company grows and you are processing more and more transactions on a daily basis, you will inherently begin to look for methods to cut down on data entry time and reduce human error. AP and AR Automation have had quite the buzz lately, as they should. They improve efficiency dramatically and offer significant cost savings. Aside from memorized transactions or building custom integrations, QuickBooks falls quite short here.
- You find yourself using more and more Excel spreadsheets to manage data
I’ve mentioned this above, but feel the need to mention it again. If you find yourself moving back to the comfort blanket, which is Excel (it is a great tool) you should start to consider your alternatives. This is taking a step backward in data management and improving your business processes.
- You want to more clearly define roles, responsibilities, and capabilities in your system
As your company grows and you go from having a singular bookkeeper to an AR clerk, an AP clerk, a payroll clerk, a warehouse manager, etc. you will find the need to define specifically what employees have access and what they are able to do. Now although QuickBooks does have some rudimentary roles that can be defined, there are significant limitations around how granular you can get with defining those roles.
Switching accounting systems can be a daunting task, but with the right discovery and planning you can alleviate some of the pain and improve your chances for success. It is better to start thinking about this in advance rather than waiting until your applications start to slow down your growth. Technology should not be a limitation on your growth, but a catalyst to take your business to the next level. In my next blog post I’ll talk about the steps for preparing for an ERP system migration.