How do you know it’s time to switch your accounting software for something more modern? It’s certainly not a decision to be taken lightly. However, if you can look critically at how your company is running, you may start to see that an older accounting system is affecting the business’s ability to grow and change. This principle also applies to entry-level solutions like QuickBooks that are good for small companies but don’t adapt well to increasingly complex accounting workloads.
Accounting Software and the CFO’s Role and Goals
One reason to take a clear-eyed look at your accounting software relates to the changing role of the CFO. In the (not so good) old days, the CFO was the “money man” (or woman), the “bean counter.” Today, the CFO is expected to play a key role in strategic planning and the execution of agile business plans. In this new incarnation, the CFO uses a wide range of operational data reporting to contribute to the strategic management discussion. Most old or low-grade accounting systems can’t support this very easily.
Signs of Trouble with Legacy Accounting Software
Chances are, your existing accounting system “works just fine.” It can reliably produce financial statements. Month end closes may be slow, but everyone knows how to use it. All is well. Except, if you pay attention, you will probably notice seemingly minor irregularities in the way things get done in the accounting department. These are concessions to a system that’s out of date and hard to change. They’re not that minor, either. They reflect how an old or under-featured system is holding the business back. Examples include:
- Reporting is a struggle—Outside of the standard reports and statements, the system cannot easily produce reports or data for use in analytics or data visualization.
- Manual processes are affecting productivity—accounting team members have to rekey information from other systems into the accounting software, e.g. turning sales orders into invoices.
- Spreadsheets are used to run the business—If the accounting software won’t create reports or function in ways that align with how the business actually runs, accounting team members may start creating spreadsheets to meet the needs of management. For example, sales reps may need accounts receivable aging reports sorted by customer. If the accounting software isn’t able to produce such a report, inefficient and error-prone spreadsheets take over.
- It’s difficult or impossible to management multiple entities or handle multiple currencies—Companies that span multiple corporate entities often do well with unified multi-entity accounting capabilities. These save time and keep things organized. Multiple currencies are a comparable challenge, especially today when supply chain vendors and customers may easily span national borders. A modern accounting system should be able to handle multiple currencies.
- You lack real-time access to financial data—Business moves at a fast clip today, so it’s quite useful to have real-time financial data available to help senior managers make business decisions. For example, should the company extend more credit to a certain account? If this is a material issue, it’s a great idea to know the account’s status in detail—across multiple systems e.g. order management and logistics—as well as the overall financial picture for the company. The decision to extend credit could affect cash flow, but you won’t know that if you don’t have up-to-date financial information.
Modern accounting systems address all of these shortcomings that arise with older or entry-level accounting software. We have worked with many companies on the process of assessing existing accounting software and evaluating different upgrade options. To learn more about how we can help your business in this regard, visit our website.