When Is It Time for a New Accounting System?



Struggles with an accounting system may be a sign that it’s time for something new.  Growing companies may quickly outpace an original or older accounting solution.  Here are several indications that may justify moving to an accounting system with more features and scalability. 

User Permissions

Some companies have a need to limit certain functions to certain users.  Most systems come with basic functional limitations, such as restricting Accounts Payable and Accounts Receivable functions.  It may be helpful to have more granular user permissions such as access to only purchase orders or a certain bank account.  Mid-market systems like QuickBooks Enterprise provide those features. The key is to balance efficiency with security; that is, users need to be able to access areas of the accounting system they need in order to get their job done without having to constantly locate a supervisor. At the same time, there needs to be balance so they don’t access areas unrelated to their job description.

Multiple Companies and Consolidated Financial Statements

Multiple companies that are the “children” of a parent company may need consolidated financial statements. A more robust accounting system makes it possible to open and view information for multiple companies at the same time.  Or, if set up correctly from the beginning, it is entirely possible to track multiple companies within one set of books which makes consolidated financials a snap. Be careful, though, tracking multiple subsidiaries can quickly turn into a mess if not done properly and efficiently.

Number of Customers and Vendors    

Keep an eye on the total number of customers and vendors. The limit is 14,500 records for QuickBooks Premier, a popular version for new companies.  Each system has their own list limits, and these limits can get complex quickly. Businesses need to be prepared to switch to a new accounting system before data limits impact everyday business operations.

File Size and Performance 

There may be file size limits, especially if the company manages a high volume of transactions or multiple years of history in one file. It may be possible to condense files or set different preferences to speed up accounting system performance. Performance may be an issue if an older accounting system is installed on a newer PC. One example is a client installing a 32-bit version of their accounting software on a 64-bit operating system. It seemed to work until the office manager tried to do more advanced things like email invoices or export to Excel.

Inventory Features

Inventory issues are time-killers and create headaches. A mid-market system like QuickBooks Enterprise provides a few basic features, such as tracking inventory in multiple locations, using the first-in-first-out (FIFO) method, and managing lots or serial numbers. But if a business needs a different method of calculating inventory or more advanced features than those provided in the “off-the-shelf” software, it may be time to upgrade.

Enhanced Customization   

Most mid-market accounting systems provide better customization such as additional custom fields, better reporting, and improved form design.  The base models offer standard reports with limited customization options. However, if the accounting system is designed correctly these reports can usually handle most business owners’ needs.

Manual Processes

How many ‘touches’ does it take to pay a bill or create an invoice? If there are multiple approvers and/or data entry takes an inordinate amount of time, then it may be a good time to make a change. Another clue is using manual spreadsheets to manage processes and information when a reporting feature could make the task simpler and more accurate. It’s easy for companies to get in the ‘we’ve always done it this way’ mode. Take a look at processes to see if manual processes can be automated.

Number of Simultaneous Users

The final reason to switch to a larger accounting system is to accommodate more simultaneous users.  QuickBooks Pro allows for up to three simultaneous users, QuickBooks Premier handles up to five, and QuickBooks Enterprise makes room for up to 30 simultaneous users.  QuickBooks Online allows up to 25 simultaneous users.  Other software packages start out at a base level for the core package and offer add-on modules as well as an additional charge for each user. There also is usually a substantial investment in conversion and training as well so it’s important to accurately predict the number of users before decided to make a change.

If it’s time to move to an accounting system with more features and scalability, businesses may want to consider cloud applications as well as on-site systems. Many companies move accounting to the cloud to take advantage of ‘software’ that never grows obsolete. Financial information is typically available from any device that connects online.

Lucrum Consulting has extensive experience helping clients select the best accounting systems for their situations. If you need help determining what type of system is best for your business, give us a call.