Geni Whitehouse is a long-time veteran of the accounting software industry. I first got to know her personally when she was with the new fledgling American division of a Danish accounting software company then known as Navision. That was over a decade ago, and today Navision is Microsoft Dynamics NAV, one of the premier products in the ERP and accounting software industry.
Recently, Geni (pictured at left) penned a great little white paper available here (after free sign-up) “Charting a Better Course for Your Business: Eight rules for investing in a new accounting system.” It carries the ever so cute subtitle “Even a Nerd Can Be Heard.”
Geni’s opening premise is that any good accounting system should propel a company forward. Simple enough, but as she notes, not all of them do. A good system, she notes, “will turn information into insights, and give employees the access they need to make informed decisions.” Many accounting systems do just the opposite.
Geni reprises the comment we so often proclaim: that an accounting (or ERP) system is a strategic investment. As such, companies need to start with the proper foundation: a strong and accurate system design. Mixing frequent sailing metaphors with her key strategies for implementing an effective system, she concludes her initial premise by noting… “By taking the time to carefully select the right solution, you can confidently set sail on a grand business adventure.”
Her article is well thought out, and well-written, and we agree with her conclusions wholeheartedly, so we thought we’d devote our next several posts to reprising Geni’s thoughts on how to select the right solution for your firm.
A great many businesses will start out with a simple single-ledger system, like QuickBooks, probably the best-selling small business product on the market today. QuickBooks stores all your business information in one place, which is simple and appropriate, she points out, for many small businesses. More sophisticated systems will use a series of inter-connected ledgers. This just means that accounts receivable information, with its detailed information on customer data, terms and credit limits, is kept in a separate ledger from, say, accounts payable data, or general ledger. This multi-ledger approach helps optimize the better systems for reporting, analysis and data mining.
Under these types of systems, only summary posted information is often held in the general ledger, with base transaction details stored in their own respective ledgers. Reporting needs can often be handled from these subsidiary ledgers, and the overall system architecture promotes speed, efficiency and scalability. As Whitehouse notes, multiple ledgers also provide faster closing, better auditing, and rich planning and reporting opportunities.
So… when is it time to make the move up from a simple single-ledger system to a “real” accounting system? We’ll take a look at a few telltale signs beginning with our next post. Stay tuned…