In our previous post here we noted that the purpose of a good accounting system is to move your business forward. We looked at how white paper author Geni Whitehouse explained the distinction between a “beginning” accounting system, such as QuickBooks, with its more full-fledged brethren, the multi-ledger accounting systems. In today’s post, we’ll look at some of the signs that it’s time to make the step up from QuickBooks into a more robust solution. (This is part two of a six part series.)
As Whitehouse points out, with a single-ledger system, you slow yourself down and limit your opportunities for growth by:
- Causing sluggish performance as you add transactions
- Providing limited reporting options
- Making the month-end close a slow and painful chore
- Limiting security
- Creating a cumbersome reporting structure
- Requiring everyone to stop what they’re doing when it’s time to close the month.
Based on our own experience of 25 years, to Geni’s list we would add:
- Severely limiting your ability to modify or change your system in any way
- Sometimes limiting the number of transactions the system can handle
- Limiting the extent you can grow, in terms of system limitations on functionality
The solution involves stepping up to a more sophisticated system. But unlike what you probably did when you implemented QuickBooks or any other entry-level package, this time, you need to spend some time in planning and design. Serious time. Starting with the Chart of Accounts, the fundamental framework upon which any good business financial reporting system is based.
The Chart of Accounts provides the structural basis by which you can report and perform comparisons – between periods, entities or budgets. A good system will allow you to segment information so you can extract the information you need, leading to the true purpose of any good accounting system: business insights!
How do you get there? By selecting a system that offers:
- A user defined chart of accounts
- User defined reporting “dimensions” for slice & dice reporting
- User defined statistical accounts to incorporate operational data into your budgeting, financial reporting and management metrics
We’ll look at more of Ms. Whitehouse’s tips for selecting an accounting system in our next post. Please stay tuned…