It is not surprising that applications like QuickBooks have millions of users. Most founders, when they are getting started, are simply looking for an easy and inexpensive way to get their vendors paid, send invoices to their customers, and prepare a simple P&L at the end of the month or quarter. And even well-funded start-ups, with aggressive growth plans and experienced investors, often start with applications like QuickBooks, as they appear to meet their needs.
But when things get going, these basic systems can inhibit growth. After helping hundreds of companies convert from applications like QuickBooks to a robust, cloud accounting solution like Intacct, we can share some of the indications that it is time to change:
- It takes lot of time to organize data and analyze information in spreadsheets. This could include getting a handle on profitability by customer, product, or location; tracking subscription agreements and the associated revenue recognition; or consolidating results across multiple entities and/or across multiple currencies.
- It takes more than five days to get invoices out. This could be due to difficulty with activities like collecting time sheets from consultants or field reports from service personnel, or lack of integration between your sales order and accounting applications.
- You need to meet more stringent audit requirements. This could include needing better controls (e.g. segregation of duties) as you prepare for a funding/liquidity event or having a proven method for recognizing revenue given the new guidance associated with ASC 606.
- Executives and managers rely on you and your team to access both financial and operational performance metrics and preparing these reports is extremely time consuming. This could be due to the limited tracking and reporting capabilities of the existing application or lack of integration with other third-party applications.
- System performance is being impacted by the volume of information being tracked. This is likely due to limitations in your current accounting solution to support the increased transactional activity of a quickly growing company.
If you are experiencing these or similar issues, you are not alone. The good news is that there are excellent applications out there that tackle these issues head on. But you must be prepared to invest. While you can expect a typical payback within the first year — depending on your requirements — you should expect to pay no less than $5,000/year for a more robust, cloud accounting solution, with an average cost ranging between $20,000 – $30,000/year. Larger, organizations with more complex requirements could pay as much as $50,000 – $100,000/year. In addition, these larger systems will require more traditional ERP implementation — with requirements planning/design, configuration, testing, and roll-out.
Switching to a robust accounting system like Intacct can make a big difference in your accounting operations. The chart below shows how companies are benefiting by streamlining processes in month-end closes, consolidated and multi-entry management, and revenue management, among others.
In the next post, I will discuss some best practices for determining which accounting solution will best support your long-term plans.