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Is it Time to Say Goodbye to QuickBooks?

Discovering if your accounting program is limiting you

For companies of a certain size, nothing beats QuickBooks as a way to organize, track and manage the financial aspects of the business. But at some point, the limitations of this type of entry-level accounting program become painfully apparent, especially when your company is on a growth trajectory that is quickly adding layers of financial complexity.

With increasing urgency, the question becomes: is it time to say goodbye to QuickBooks? There are numerous telltale signs that you’ve begun to outgrow the QuickBooks capabilities. Based on our work with clients across various business sectors, a handful of possible reasons rise to the top of the list.

The procurement process bogs down.

When the approval hierarchy of your company becomes more involved, it would probably be more efficient to have an automated purchase requisition system that gets necessary to purchase approvals from all levels of management automatically. Today’s more robust accounting software packages help to automate the entire purchasing function of companies. You can set them up to create and approve purchase orders, pick and order the product or service, receive and match the invoice and order, and pay the bill online.

Accounting across entities or projects gets messy.

Maybe your company has grown to include multiple subsidiaries, and you need to pull together a consolidated financial statement frequently. Any intra-company transactions between these subsidiaries need to be eliminated so that you don’t overstate your true revenue and expenses to the outside world. Consolidating information among subsidiaries according to shared projects and/or programs can also get messy and time-consuming if you’re still stuck relying on a manually-based entry-level accounting system.

Data security is limited.

Managing access to company financial information is always a challenge, and that challenge only intensifies as more and more employees are added to the payroll. Unfortunately, entry-level systems like QuickBooks are limited in the levels of security that can be achieved. After all, this type of system is just one big database; when you attempt to manage what certain individuals throughout the company can do and see, no security distinction can be made between, say, accounts payable, accounts receivable,  the general ledger, and such.

A more robust, mid-range system can provide role-based access control to ensure that users can only use data and applications that are related to their responsibilities. In other words, users can only access the application and even certain fields, not the underlying database. Changes to every transaction are tracked with user login details and a timestamp, providing a complete audit trail for future review.

Inventory gets harder to track and value.

Although QuickBooks can handle some inventory tasks, it doesn’t get very granular. Take inventory valuation, for example. QuickBooks tends to rely on a weighted-average approach to valuing inventory. That’s fine for some applications, but many growing companies require more accuracy in how they account for inventory costs. Some are better off using the first-in-first-out (FIFO) method; others prefer the last-in-first-out (LIFO) approach. With mid-level accounting software systems, you have options. The user can choose which method best suits the situation,.

Figuring foreign exchange gains/losses gets cumbersome.

Companies doing foreign transactions in global markets can run up against the currency fluctuations that occur between the moment a good or service is ordered and the moment they are actually paid for.  This differential has to be accounted for on the P&L; to do so manually using an entry-level accounting system can be a time vampire for company bookkeepers. Fortunately, several mid-range systems track worldwide currency exchange rates in real-time and can update and report on these non-operating expense fluctuations automatically.

Recognizing revenue gets more complicated.

Revenue recognition is a hot topic in financial accounting and is particularly relevant to companies in areas such as the life sciences sector, where collaboration agreements among business partners are common. For example, a company could be working on a project that kicks off three different streams of revenue at different times; 1) an upfront payment to begin work, 2) a two-year grant for staff support, and 3) payment for rights to use the intellectual property once it is developed. Under the latest accounting standards, how these revenue streams get “recognized” can be beyond the capability of an entry-level software system like QuickBooks. A more sophisticated, mid-range solution is in order.

Revenue Recognition for Life Science Companies

As you can see, there eventually comes a time when – no matter how well packages like QuickBooks have serviced the early stages of a business – they just can’t keep up with the transactional and reporting needs of your growing company.

That’s when a company needs a system that can do more, and do it all in one place; from automating prepaid and transaction runoffs, to customizing financial reports that are hyper-specific to the recipient, to creating custom, module-by-module dashboards that users at any management level can securely access to see the real-time numbers that impact their area of responsibility.

Is it time for your company to finally say goodbye to QuickBooks?

If you’re ready to discuss the next steps to finding the right accounting program, fill in the form below and our team will be in touch.

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