Growing companies should realize when it's time to move on from their current accounting software. Your software is crucial for sustaining success through a company's expansion. Few areas of your business understand this better than the accounting department, where even a small uptick in business activity can result in an exponential increase in workload.
If you are wondering whether it is time to let go of your old accounting system, ask yourself these six questions:
1. Is your software structured to meet your company's reporting needs?
Your accounting software features many capabilities, but is it designed to work with your business? Effective software is structured to be congruent with your accounting operations and to enable efficient reporting, namely-
- Your software should be project-driven, meaning that is has a project ledger, in addition to the general ledger, for tracking project accounting data
- Your software should accommodate reporting by cost center (e.g., department)
- Your software should have built-in business rules that are designed to calculate and allocate bid & proposal and independent research and development costs
- Your software should automatically handle unallowable expenses that cannot be passed along to the government (those pertaining to FAR 31.205).
If you are sacrificing some of your reporting needs, then that alone may be an indicator that it is time to find a new cost accounting software program.
2. Does your software have good controls of access to open and closed periods?
For companies that are publicly traded, or report to investors, financials are generally set in stone once the closing process has been run. However, the majority of organizations need the flexibility to report the most accurate representation of each month's performance–even when some transactions are made long after closing. On the other hand, too much flexibility can mean costly errors in your closed and future accounting periods. Effective software contains robust security to control who can access information, regardless of the period. How does your accounting software handle this access?
3. Are you experiencing processing bottlenecks?
Company growth means bigger workloads and more data to process, which can bog down your accounting system. If your processes are done off-line, then you are vulnerable to delays and mistakes. Inefficient processes may cause you to overcharge a client or fail to bill for all the work in progress.
Consider how your software is handling its increased workload. If daily processes have outgrown your software's capabilities, then your company is ready for an upgrade.
4. Are you entering information more than once?
This question is very straightforward. If you are using spreadsheets to track information and still having to enter that same data into your accounting system, it's time to look for more integrated software. Doing things twice is inefficient; plain and simple.
5. Can your business reporting requirements be met with the data and technology inherent in the accounting system?
Financial reporting requirements are increasingly complex, so you need a cost accounting system that doesn't add to this complexity. If your business has experienced growth or other major changes, your reporting requirements may have changed as well. The best accounting software solutions that evolve as regulations and accounting requirements do.
6. Can your vendor integrate with best of breed applications?
Companies that use best of breed software benefit from deeper and industry-specific functionality. Other benefits include being able to minimize the potential for software functionality gaps and not having to be locked into a single vendor. Is your current software provider limiting your use of applications? If so, it may be time to find one that allows you to leverage the benefits of best of breed software.
After asking yourself these six questions, you may come to a conclusion about whether your company and your accounting software are still a good fit. If you have outgrown the software, then use these questions as a checklist for evaluating accounting software that is a better match for your needs. Is your current system still working for you?