Most small businesses begin by using QuickBooks (or FreshBooks, Peachtree / Sage 50, etc.) as their main accounting system, which was recommended by their CPA firm. QuickBooks is inexpensive and relatively easy to learn and implement. It’s designed for very small businesses that have simple operational processes and reporting requirements. However, as these businesses begin to grow, and the level of complexity increases, QuickBooks can become a burden to business operations by slowing down business functions, management reporting, and the month-end close. These growing businesses often don’t realize how crucial business software is to company expansion. They struggle to recognize when their business needs have outgrown this simple solution. There’s no one answer for how big a company must be before it outgrows the software. To help determine if your business should move away from QuickBooks, and onto an Enterprise Resource Planning solution, I’ve identified some major symptoms that indicate that it’s time for an ERP system.
You use a lot of spreadsheets – The modest reports available in QuickBooks may not be providing you with an adequate view of your business. One common theme I see is that businesses that use QuickBooks are rely heavily on Excel to manage the many parts of their business operation that QuickBooks doesn’t address. Creating a detailed report that provides you with all the information you need requires a lot of time manually entering redundant data from one source to another. If valuable employee productivity is being wasted on tedious data re-entry, or worse, data has become inaccurate, it’s definitely time for an ERP solution. ERP will allow management to gain insight on real-time status and operational performance.
Users – If you have five or more employees regularly entering data, or have people needing access remotely, QuickBooks may not be the best fit for your company. Most versions of QuickBooks tend to become problematic at 5 users. Typically this much activity causes the database manager to get bogged down resulting in user disconnection from their session. If you experience these problems, consider engaging an independent consultant to help find the right ERP solution for your business. (Make sure the consultant doesn’t have any financial ties to any ERP vendor, or you will wind up buying that system.) It will be money well spent.
Accountability – Unfortunately, QuickBooks is a single-entry accounting system meaning it doesn’t employ “audit controls.” These controls keep record of every transaction entered into an accounting system so the account balance can be traced back to the transactions that make up that balance. Growing companies need a double-entry accounting system that allows them to comply with corporate standards, industry standards, and government regulations. The proper ERP solution will help management monitor and protect company assets, and make better business decisions.
Throughput – Eventually QuickBooks users could begin to notice a decline in speed, especially in the solution’s menus and reporting functions. Most companies using QuickBooks tend to notice such problems when the file size reaches 250 MB or when the total number of transactions exceeds 32,000. Significant performance problems usually occur when any file list, such as customers and vendors, exceeds 8,000. A big benefit of moving to an ERP system is scalability. The right solution will allow any amount of data to be processed quickly.
Many businesses require some custom programming to handle processing in the manner necessary. For that to be a possibility, an Enterprise Resource Planning system is required. Most will provide customization services to one extent or another, but if heavier customization is required, be sure to choose a system that can handle the job. Some, especially some “cloud” only systems, can’t.
Transactions – The number of transactions your company handles on a daily basis is a good indication of whether QuickBooks is still the right solution for you. If there are only a few simple daily transactions, remaining on QuickBooks may make sense. If your company requires detailed revenue and expense tracking, or types of transactions that it doesn’t handle, an ERP system may be a better fit to handle your growing needs.
Using third-party packages “bolted” to QuickBooks
For most companies, QuickBooks can’t manage all of the operational requirements of the business. There are many third-party software vendors that have developed products that “integrate” with QuickBooks to fill the gaps. These add-on packages often have inferior user interfaces, and the integration can be damaged by updates. Using these products will only take you so far in your efforts to streamline your business processes. ERP will allow the company to unite fragmented data and automate processes from end to end.
Make sure that the ERP consultant you engage is truly independent, and not a covert salesperson for one of the ERP manufacturers. The right consultant will make sure that the right system is chosen, implemented properly, and will save a lot of money along the way.
Visit Enterprise Resource Consulting at http://www.EnterpriseResourceConsulting.com