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How You Can Identify if Your Accounting Software Needs Updating

By Gareth Berry

Republish: EasyPublish™ Published: 08Jul2009 Word count: 767 Viewed: 155 time(s) Get Free Content For Your Site

Identifying if your accounting software system needs replacing can be an arduous task. In the nine years I have operated in the industry I have come across all manner of situations where businesses are being hamstrung by their lack of understanding in this key area of identifying when you've outgrown your current accounting software system, and how to easily go about selecting the right replacement.

Just some of the more simple flags that will tell you you've outgrown your current accounting software could include:

- You are experiencing limited transaction functionality. Where transactional information is largely being entered manually and you find yourself employing more people to do simple order processing tasks that could be automated. (like integrating with a web site)

- You have added a new branch, or merged with another business, and need to have access to key information in real time, and have transparency across all of your entities.

- Your current system has started to slow down requiring you have to continually archive your data and refer to your backups.

- You have entered new markets or obtained new key accounts with more complex accounting implications. Such as "Foreign Currency" transactions that your current system does not facilitate.

- You find yourself maintaining multiple and disparate systems to do your core business functions. Like CRM (Customer Relationship Management), Manufacturing & Financial Information all being maintained separately and not integrated to share key information.

More complex requirements around integration can prove to be costly in both time spent investigating and implementing, such as:

- Streamlining all your pricing, product and supplier information across multiple branches or even with key partners in your distribution network.

- Perhaps you have been asked by your major suppliers or customers to send you electronic information and your current system either doesn't, or you have no one who can offer you an affordable solution.

Identifying what areas of your business that require attention to their systems is the first step in the process. The key thing in this identification phase is to try and quantify those areas. This will allow you to prioritise your systems needs more accurately, and give you an indication on a suitable selection, design and implementation cost to solve that problem.

A recent example with a distribution company, they had an issue with their telephone sales people entering in the wrong products at the order entry phase. The goods being delivered up to 300 klms away would need to be returned, and the correct replacements sent out at the cost of the distribution company. This process alone was costing them more than $250,000 not to mention the good will and reputation damage this issue was causing.

The solution to this particular problem was to design and implement a telephone operating system at a price of only 1% of the cost of the problem!

There have been many other instances where the price for the solution has exceeded the cost of the problem, in which case changing or integrating new software to cope with the problem was uneconomical. But bear in mind that a small issue today can grow and compound further down the track.

Needless to say, changing an accounting system is a daunting task. Not only will it cause disruption, but often you will find that the cost of this disruption is grossly understated. Any change will encounter resistance from your current staff. And customers and suppliers will also make up their mind with their feet if your systems cause major problems with them dealing with you too.

In summary, identifying that you need a new system, or an integrated solution is the first step. Taking a full account of all your systems (or lack thereof) and procedures that are failing, not available to you with your current supplier or costing you money is the next step. Quantifying these by laying out the real cost of the problem areas should then be done. Then you will have a good basis to create a needs document and prioritize it quickly. Then your search for an appropriate solution can begin.

- Identify that you have a problem with your current accounting software system

- Take a full account of all your systems and procedures that could be improved or costing your money

- Quantify these problems so you know the real cost to your business. And don't forget to factor in the opportunity cost if it is relevant

- Use this as a guide to start writing out and prioritizing your needs of the replacement accounting software system

- Contact various vendors in search for a new accounting suite.

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