It’s common for decision makers in growing companies to mentally survey their finance and accounting technology stack and realize that most of the information they receive originates from Excel or other disconnected applications. They also often conclude that most of their internal control points are similarly Excel-based, or at least managed by people that are largely dependent on the application. These are warning signs that one’s finance and accounting technology stack is either incomplete or not properly enabled. If either issue persists in your organization, it would be wise to address it quickly.
Even Excel Has Limits
Excel is one of the most powerful and versatile applications for analysis and reporting, but that doesn’t mean it’s the right tool for internal control processes and strategic planning. Still, the comfort of Excel and simpler accounting software packages like QuickBooks often make the more expensive but likely needed move to a better platform something that organizations drag their feet on. If it’s clear that it takes too much work to get the information you need from your accounting system and you can see evidence of your team’s frustrations, that’s yet another signal that it’s time to evaluate a move to the next platform. Waiting too long to consider your finance and accounting systems technology roadmap can limit your growth, introduce risk, and foster inefficiency.
The Human Impact on Finance and Accounting Systems
Finance and accounting technology undoubtedly can add significant value when deployed properly and used intelligently. One example of intelligent use is limiting the amount of human intervention that can take place for data modification and calculations. With reliable data, leaders can make better business decisions because they’re based on facts rather than opinions, estimates, mistakes, or flat-out-wrong information.
Too many businesses run on qualitative philosophies of “I know this industry” or “that doesn’t feel right to me.” Instinct is great, but objective factual data should be the standard when it comes to finance and accounting. Smart organizations continually evaluate how technology can make them better and smarter at what they do.
Knowing When It’s Time for an Upgrade
At startup and in the earliest stages of growth, it usually isn’t practical or smart for organizations to invest in expensive and advanced finance and accounting systems. As noted earlier, Excel paired with a basic finance and accounting application like QuickBooks or FreshBooks is a typical and often capable finance and accounting technology stack at these stages. But when are these tools not enough?
Customer volume is one variable that weighs heavily in what’s needed from one’s finance and accounting technology stack. Early on in a business, one may have just a few customers of a single type and the bandwidth to communicate directly with each of them on perhaps a weekly basis. But as these few customers turn into ten and then twenty and customer types vary, leaders lose the convenience that regular direct communications afford them to quickly discuss an open order, an invoice discrepancy, or similar issues.
Additionally, business growth brings ever-widening needs to analyze specific finance and accounting variables and segments from multiple perspectives. A finance and accounting system should enable the efficient extraction of the information leaders need to evaluate each sales channel, expanding offering, entry into a new market, location and other important variables to determine when actions are needed and opportunities to make your company stronger are present.
Leaders should never expect the equivalent of an automatic dashboard indicator like “change oil soon” to let them know when it’s time to upgrade their tools and processes. Instead, organizations and leaders should be disciplined in regularly exploring questions such as:
– Have issues arisen in past periods that could have been mitigated by better finance and accounting technology?
– Are we able to easily extract all the information we need to guide us on where and how we should grow next?
– Will the finance and accounting technology we use today support where we expect our business to be 2-3 years from now?
Selecting the Right System for Your Organization
When leaders do conclude that it’s time to upgrade their finance and accounting technology, they often find it challenging to then determine which platform or combination of applications will provide them with the right balance of features and functions to fully support their near- and mid-term needs. They don’t want to go “on the cheap” and sacrifice value-added capability, but also don’t want to invest in a more expensive platform that has lots of extra functionality they don’t need.
One certainty, however, is that purchasing and implementing new finance and accounting technology is an important decision and not something that leaders should act on from an ad they saw in a Sky Mall magazine or a quick Google search. Leaders that get it right bring in resources that have the expertise to first validate whether new technology is truly needed. If it is, these experts can then credibly and confidently communicate the benefits, shortcomings, and tradeoffs of available options and serve as a guide to successfully navigate the details of system selection and implementation and ensure that the right supports will be present moving forward.
Leaders that plunge into buying a new platform without fully knowing what to ask and look out for can fall into time and money traps. Examples include time-intensive RFP preparation, knowing what add-ons are and aren’t valuable, and negotiating purchase and license terms. It’s also common for seller-provided capability assurances of “oh sure, it can do that” to fall flat upon implementation, leaving leaders and system users frustrated. Make sure that the right questions are posed and sufficiently answered and incorporate key commitments in purchase agreement terms.
Summing it All Up
Finance and accounting systems can have a dramatic impact on the success or struggles of a company. Leaders and their teams need technology that will provide them fast access to reliable information when making decisions that will determine their business’ ability to grow effectively, efficiently and safely. And as new business variables bring about needs for deeper analysis and better controls, finance and accounting must be able to meet them.
As no Magic 8-Ball exists to tell leaders precisely when it’s time to adjust or upgrade their finance and accounting technology stack, each must regularly evaluate their processes and tools on whether they will support their business through its next phases of growth. Bringing in experienced experts and the right resources will strengthen this evaluation and, when the time for a new system comes, provide a path for ensuring that the right system is put in place and properly implemented.
Have questions on whether your finance and technology platform is holding your business back or equipped to move you forward? Request a free consultation from a vcfo expert who can help.