Archive for the ‘How To Select An Accounting System’ Category

8 years ago we first published a series of posts entitled “Software That Matters.”  It was an ERP implementer’s point of view, culled from long experience, on why and how to purchase a business management software system.  Later, we turned Software That Matters into a popular white paper that has since been viewed hundreds of times.  

Now eight years later, we thought it was time for an update, to reflect lessons learned since then.  (We also did a 2015 update three years ago.)  Much of what we wrote then remains every bit as true today.  But we decided again to carefully retrace our steps, re-edit our paper, add some comments and present it as a series of blog posts that will carry us through November, 2018.  We think that’s timely, as many companies at this time of year tend to reconsider the software they use to run their business — and how they might do better.

In our series we will again try to convey what’s important, what to measure, how to buy, what works, what it costs… and the many other business considerations required of this strategic investment, in what is probably the most important (and expensive) software a company will ever buy.  In other words, the Software That Matters.


Asking Why On The WAY To A Better Answer

Starting with the premise that ERP is, above all, a strategic investment, the point is to create long-term strategic business advantage by being able to deliver your company’s products or services better than your competitors.

That strategic advantage might be faster fulfillment, or orders shipped more completely, or services delivered less expensively, or perhaps a level of service or product customization competitors can’t match.  In virtually all cases, it is best accomplished by creating and managing business processes that are optimized to deliver the greatest possible value to a customer at the lowest cost.

How do you do this?

Well, for one, you find ways of doing things cheaper, faster, better.  That’s where the ERP edge begins.

Utilizing computers and software as a competitive edge usually starts with eliminating human redundancy, eliminating tasks that have to be done more often than necessary, making tasks easier or more foolproof, eliminating or reducing errors, and improving and streamlining your processes through automation.

In virtually every company we work with, we see redundancy and waste.  It’s not the plan, it’s just the way things developed over time.  This is where the power of WHY comes into play… and how it leads to ERP.

One of the lessons we’ve learned over the years – and can never apply enough – is to ask clients Why?  Why do you print that report every week?  Why do you keep so much safety stock?  Why does your staff spend so much time ‘following up’ on (or “expediting”) orders?  Why do you have thousands of redundant bills of material?  And so on…

The answers almost always lead to further Why’s as we drill down to the core, underlying issue(s) – issues that often are actually pretty far removed from the initial inquiry.  More often than not, things are done the way they are because, well, we’ve always done them this way.  It used to make sense.

So to close the circle: with today’s technology, with today’s newer ERP systems, with an intelligent look at your business’ processes and procedures, it is possible to identify and correct or eliminate the wasted steps, the redundant processes, the disorganized data and disconnected systems.  And today, it’s possible to streamline, tighten up and tie together much of an organization’s information under one umbrella — or at least, fewer umbrellas than ever before.

That umbrella of unified and consistent information, available to all who need it, becomes the foundation for your management team’s ability to make the right decisions about the right issues and products at the right time.

And that is the essence of ERP.

In our next post, we’ll look at the key motivators behind most ERP decisions.  Stay tuned…

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In our prior post we began listing some of the red flags, incidents culled from real-life incidents as noted in a white paper from Tribridge, which hurt businesses in multiple ways.  As it turns out, there are a lot of them, so we’re adding a few more here to round out a two-part post.  The original document can be found here.

Continuing our list of issues we often see clients wrestle with – and waste TONS of time and money on – here are a few more that can be remedied by taking the plunge and finally updating that old, tired accounting system to one of today’s new offerings.

  1. Errors tracking time and equipment. Paper based tracking systems invariably lead to mistakes, but when those mistakes show up in somebody’s paycheck as the result of mistaken record keeping, things can get a bit testy.  Multiple teams performing manual time entry on paper sheets is one such recipe.  Not to mention a lack of insight into T&M performance (since it’s all written down instead of inside the computer).  Today’s modern systems provide web-based data collection opportunities for remote employees.  These can feed payroll – or a payroll service – and later provide all the reporting a company needs to track and manage its service performance.
  2. Document delays that slow month-end close. We see it all the time: companies that can’t close their books within a couple days of month-end.   (Some can’t do it within a couple months!)  While there are a host of causes, most have to do with manual processing of various sorts, often coupled with high transaction volumes and multiple silos of unconnected information. An ERP system is built to manage and consolidate exactly this type of month-end chaos.
  3. Service and warranty confusion. Service management software, often built piecemeal a decade or two ago and with few links to accounting, can cause delays to service work, lack of up to date inventory information and poor warranty tracking that makes tech’s lives difficult.  A fully integrated modern system utilizing tablets in the field can record service work, material consumption and keep warranty information up to date.  Orders can be placed and managed, and inventory and assets can be tracked accurately and almost instantly.
  4. Inaccurate inventory levels. Whether you’re in retail, wholesale or manufacturing, inventory counts.  Errors in counts, lack of consistent cycle counting, month-end closing complications, difficulty with counting bulk-weight items (like nuts and bolts), and no inventory into warehouse moves or inter-store transactions are but a few of the ways that inventory can become inaccurate, or worse.
  5. Unsupported inventory practices. A lot of older systems do not support all the recognized inventory accounting and costing practices (like LIFO, FIFO or Standard) or, if they do, they are often awkwardly implemented and difficult to use.  This can lead to using spreadsheets to manage inventory.  But manufacturers need to be flexible enough to manage processes unique to their particular build-to-order or build-to-stock or engineer-to-order requirements.   Today’s newer systems allow for better synchronization of build-to-order and –stock situations, and allow for a choice of costing systems (typically Standard, Average, LIFO and FIFO) which, with careful management and implementation, can better match up with manufacturers’ exact requirements.

Time and space prohibit us from sharing even more red flags.  Suffice it to say that if even a few of these issues are yours or sound familiar, it may be time for you to start your search.  The answers lie in today’s advanced, sophisticated, and yet very cost effective new ERP systems.



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cindy jutrasIn a recent white paper, Cindy Jutras (pictured, left), founder of Mint Jutras LLC, a tech firm “specializing in analyzing and communicating the business value enterprise applications bring to the enterprise” collected over 900 responses to a survey of companies’ enterprise solutions.  Today we’ll reprise just two major conclusions from their report entitled “New Realities of Replacing Your Accounting System.”

First, they asked the question: Why Might Companies Replace [Their Current] Solution?  Here’s what survey responses revealed were the driving forces:

  • Seeking more functionality was cited by 49% of all respondents
  • Outdated technology: 46%
  • Cost advantage (seeking to lower TCO): 44%

Those were by far the three main drivers for system replacement.  Other factors cited included:

  • “Our business is changing” by 26% of all respondents
  • Integration issues: 24%
  • A (new) consolidation strategy: 21%
  • Current system cannot scale with our growth: 20%

Given these incentives to change, when asked to define their selection criteria, survey respondents chose the following [on a scale from 0 (“not a consideration”) to 4 (“must have/most important”) ]:

  • Fit and functionality: 3.51
  • Ease of use: 3.49
  • Flexibility to address changing business needs: 3.41
  • TCO (Total Cost of Ownership): 3.28
  • Quality & availability of vendor support services: 3.25
  • Integration technologies and capabilities: 3.21
  • Ease & speed of implementation: 3.12
  • Ability to tailor functionality without programming: 3.10 (*)

(*) Note that the survey respondents specifically excluded manufacturers – for whom customization and tailored functionality tend to be key, critical factors in selection.

The report’s author noted the ongoing importance of fit and functionality (always the top priority of selection committees) along with the increased importance today of ease of use.  Fitting future needs was deemed more important than ever, logical today given the changing face and pace of the business environment.

Finally, two items were notable for not ranking high on the list:

  • Deployment options (2.26), and
  • Mobile access (2.19)

Despite “mobility” and “cloud” (or SaaS) being hot topics today, most surveyed SMB companies showed minimal concern for these two characteristics.  Industry pundits continue to opine that ‘it’s only a matter of time’ before these opinions change, but so far, that’s what companies are saying today.

The Mint Jutras white paper can be found at the proformative.com website here.

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Continuing our series of posts based upon a recent white paper by Geni Whithouse, entitled Charting a Better Course for Your Business: Eight rules for investing in a new accounting system, which can be accessed (after free signup) here(This is the final post of a six part series.)

Business face new challenges when they moved into international waters (to steal from Geni’s sailing based metaphor).  These include:

  • Features that work together to create a multi-national system for global business management.
  • Support for concurrent multiple currencies
  • Support for multiple languages for screens, reports, documents
  • Real-time financial visibility into global, local and consolidated reports
  • Full-time system access from anywhere with an internet connection

At the same time, clear access to information across the network is necessary for employees to have information at their fingertips.  This requires features like clean cut-off periods within general and sub-ledgers, and the ability to quickly begin work in a new accounting period, often before the prior one has been closed.

Staying informed about progress toward incentives and goals, and being aware of quickly changing trends means that today’s better systems feature things like dashboards, alerts and user-definable reports.


In this series of six posts, we’ve enumerated 8 key elements to consider when selecting a new or upgraded financial system, which we’ll quickly summarize here.

1. Select a multi-ledger (not single ledger) system.

2. Select a system with a flexible, multi-dimensional account structure.

3. Select a system with multi-scenario capabilities to track and compare KPIs, ratios and metrics.

4. Be sure your system supports clear communication, like personalized dashboards or user-based (frequently termed ‘role-tailored’) clients

5. Be sure your system supports multi-user access secured by strong permissions

6. Be sure your system supports ‘the rules’ – not just GAAP, but for transaction integrity, workflow processes and system security.

7. Select a system that supports multiple entities within one parent business entity

8. Look for a system with multi-currency and foreign language capabilities if you think such needs will ever apply to you.

Following the above tips — but only after a thorough initial workflow and process analysis before you begin your search — will go a long way towards ensuring that the system you choose today will be the one you can still live with – ten years from now.

 * * * * *

We hope you have enjoyed this series on how to select an accounting system.  We think Geni Whitehouse’s comments are right on the money, and so we took time to present them over several posts.  Once again, you can access her original document here.

 Your comments and input are always welcome.

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Continuing our series of posts based upon a recent white paper by Geni Whithouse, entitled Charting a Better Course for Your Business: Eight rules for investing in a new accounting system, which can be accessed (after free signup) here.  (This is part five of a six part series.) 

Two more factors are important when investigating a new financial reporting system.  One is controls and access to the accounting information, and the other involves reporting when a company grows (as many do) into a multi-entity organization.  First, controls…

While employees are vital to a business, and their access to important data and KPIs is equally vital, a good system will have the necessary security controls to prevent unauthorized users from accessing certain areas of the system.  It’s a delicate balancing act, but as Whitehouse points out, you may not want your A/P clerk entering and reviewing invoices – for obvious reasons.  Thus, a good system will enable user rights through a “granular segregation of duties.” 

In short, you want a system that provides adequate controls so that users can access the areas where they are authorized, but explicitly not be afforded access to those areas where they are not.  Today’s more sophisticated systems employ complex system and security architectures that allow for this.  Your typical entry-level, single ledger accounting system, say QuickBooks, will not.

When a system sets permissions and passwords at the module level, providing all or nothing level access to the company’s data, it’s time to evaluate whether that is appropriate to the point your company has evolved.  For some, it works; for others, it doesn’t.

One more point: a good system allows for repeating and reversing journal entries, default accounts for invoices, and other system-wide parameters.  Such controls ensure uniformity of accounting and can aid in the enforcement of good internal controls and ensure that procedures are applied consistently.

Moving on to our other topic today, as a company grows it often evolves into a multi-entity organization.  For example, there may be separate business units for a company that manufactures, and distributes, and implements, and services its own products.  Managers need visibility across entities, and often, it’s not practical to force the same accounting procedures across all of them. 

In larger organizations, each entity needs to operate independently, even though you often want to consolidate portions of their reporting and financials.  It takes a powerful and well thought out accounting system to do this.  In a well thought out system, individual entities can be managed independently, have their own reporting standards, and yet the key financial data can be rolled up globally into a parent entity.  When an accounting system supports only a single business entity, it’s time to consider a move up in order to provide consolidated reporting and management.

Next in this series, we’ll take a look at multi-currency, and clear access to information.  Stay tuned…

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Continuing our series of posts based upon a recent white paper by Geni Whithouse, entitled Charting a Better Course for Your Business: Eight rules for investing in a new accounting system, which can be accessed (after free signup) here. (This is part four of a six part series.)

Business owners need clear insights, driven by underlying data, to guide them safely.  Whitehouse suggests (and we do too) that a business might want to create some Key Performance Indicators (KPIs) as a group of non-consecutive (Chart of Accounts) account numbers to form a special report.  This requires a strong and modern financial reporting system, one that can, as she states “transform data into operational insights” by…

  • Combining statistical and financial information to create ratios and KPIs
  • Creating rollups and groups of accounts throughout the system, ensuring that all users have the same insights into key metrics
  • Creating budgets, plans and forecasts for both financial and operating metrics and comparing them with actual results

She notes once again that it’s “time to bail” on your old single-ledger system “when an accounting system relies on external tools to capture operational information and has no ability to create Key Performance Indicators or custom metrics.  You shouldn’t have to buy expensive data warehousing tools, load external add-ons, or resort to spreadsheets to get the timely analytics you need.”

In a similar vein, Whitehouse points out the importance of adhering to accounting standards or, as she puts it, “abiding by the rules.”  This is known as following GAAP (Generally Accepted Accounting Principles) designed to ensure that information and reporting is consistent across industries.  It’s difficult to run a business well when the information is not recorded properly.

Here again, she notes the weaknesses of single-ledger systems, like QuickBooks, which “rely on hard-coded accounts, and reporting gyrations to facilitate different reporting requirements, if they even support them.  These systems are difficult to audit, require complex reporting and constant maintenance.”

Next up, we’ll look at the importance of internal controls and the challenges of multi-entity organizations when choosing an accounting system.

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In this third in a series of posts (which began here) on selecting an accounting system, based on a white paper by Geni Whitehouse found here (and cutely subtitled “Even A Nerd Can Be Heard”), we take a look at still a few more reasons companies make the choice to move up from entry-level accounting systems, like QuickBooks, to the more robust solutions offered by many of today’s top publishers.

As Whitehouse notes in her paper, it’s “time to bail” when…

An accounting system either has no structure for organizing accounts, or relies on hard-coded account segments, [and] you end up with the following recipes for disaster:

  • An unwieldy chart of accounts
  • One dimensional data with limited analysis and planning
  • Rigid financial statements that depend on the order of accounts in your general ledger

A typical hard-coded structure might look like this:

Account      Dept   Loc
6000           100     100
6100           100     100
6200           100     100
6000           200     100
6100           200     100
6200           200     100

 Such a rigid methodology is not conducive to flexible reporting, and if not “dimensionalized” to enable slice and dice reporting of selected, key departments and categories, leads to a system that simply cannot provide the necessary departmental and corporate financial reporting that is necessary to run a fast-growing, expanding business.  In fact, it’s not even sufficient to run a slow-growing steady business, if what you desire is the ability to truly view, understand and share new business insights.

To ensure good business visibility and to deliver key insights, you need a system capable of providing you with, and measuring against, key performance indicators and significant accounting ratios.

And we’ll take a look at how that figures into the equation in our next post.

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