QuickBooks has been the go-to accounting system for as long as I can remember. Many small and even medium-sized companies use QuickBooks as their first venture into financial software. It is simple to use, popular, easy to find new employees that are already experienced and provides basic features that can enable almost any company to be up and running fast.
QuickBooks has served the needs of single-entity companies for decades. Even some firms requiring complex financial needs are still loyal QuickBooks advocates. While other Companies stubbornly hold onto to these systems well past their ‘best before date’ as if their life depended on it. However, companies do scale, enter new markets, add to their product offerings, and sometimes find QuickBooks limiting.
Can Quickbooks use as an ERP?
No, QuickBooks can cover accounting and some finance functions but it cannot be used as an ERP software because ERP systems go beyond accounting and provide functionality to help automate a broad range of business functions.
As business complications expand, system constraints may pop up that force even the most passionate QuickBooks supporters to consider more advanced solutions. Change is always hard and migrating to a new system always feels risky, but the benefits of a world class ERP system (like Infor) can be worth it.
What are the top 3 reasons to consider replacing QuickBooks with an ERP?
What are the top 3 reasons to consider replacing QuickBooks with an ERP?
- To Eliminate Island Information
- Manual Data Entry Errors
- Bolting on modules can eventually create a monster.
Have You been Pushing the QuickBooks Envelope?
Have You been Pushing the QuickBooks Envelope?
If you answer yes to any of the following questions, the answer is maybe?
- Are you exporting data far too often to Excel? Are you forced to export/import data from one source to another to keep multiple locations up to date? And is this manual data entry causing errors?
- Do you have multiple locations? QuickBooks ‘Enterprise’ claims multi-user capabilities, however managing shared inventory or customers can still be a challenge.
- From an accounting standpoint, is allowing non-GAAP double-entry bookkeeping acceptable?
- Has complex processes like inventory, supply chain management or manufacturing grown? Does tracking job costing, lot/serial traceability, etc. now require manual work arounds?
- Do you ever need real time shipping statuses? To know when an item has shipped, manual steps are required in QuickBooks desktop.
- Are you growing sales but do not have real-time access to inventory?
- How many more licenses do you envision needing? Isn’t the maximum user capability for even QuickBooks’ most advanced versions 30?
- From an operations standpoint, do you need the “P” in E-R-P, namely, “Planning”? Saying QuickBooks was designed for manufacturers is a bit of a stretch.
- Are you considering bolt-ons to hopefully extend Quick Books’ life?
One common QB bolt-on for manufacturers is called Misys.
Misys is a MRP system, targeted at repetitive product manufacturing to a forecast.
Integration between QB and Misys may not be quite as tight as you hoped. For example:
When QB sends a ‘pegged’ sales order to Misys, a work order is created even if there is enough inventory in stock to fill the order.
When an order is sent from QB to Misys ‘unpegged’, the order number does not accompany. Traceability and any relation to the actual order received is lost.
When a customer expedites an order, Misys sees it as another order and auto-creates a work order to fulfil the assumed demand.
When delivery dates change in QB’s, a new order is created in Misys.
Changing shipping dates in QB does not update the shipping date in Misys.
Mysis does not separate GST, instead transfers the whole line-item amount including GST to QB. Canadian customers need to manually adjust the GST on QB invoices.
Then why are there so many loyal QuickBooks followers? Maybe …
- QuickBooks has been working fine for years
- It is so simple, and my accounting team loves QuickBooks
- Any kind of system change increases anxiety
- We have a library of bolt-ons that fill any gaps QB has.
- We believe our QB bolt-ons good enough for our needs
- The QB bolt-ons say they interface perfectly
- We are just too darn busy to ever consider changing systems.
If you are experiencing any, ask yourself if these justify hanging onto QuickBooks?
How long does it take to close the books?
How long does it take to close the books?
When a financial close takes too long, an increase in errors and omissions is a potential result. When data is manually duplicated across multiple systems, human error increases exponentially. Inaccurate financial reporting and costly mistakes result.
A drawn-out closing process creates unnecessary stress for all involved. From the CFO to the entry-level accounting clerk, pressure is increased to get everything done on time and accurately. A foreboding signal to burnout and turnover, which are both costly problems.
A faster financial close improves communication between managers and accountants, as well as reduces accounting and finance burnout. Additionally, a shorter financial close increases transparency and provides more timely data, allows for earlier recognition of revenue or expenses, and may even introduce a positive cash flow.
The finance team is already bogged down during every month end, so much so focusing on strategic business improving initiatives is a luxury.
Is Financial Forecasting possible on Quickbooks?
Is Financial Forecasting possible on Quickbooks?
It is not easy to do financial forecasting when QuickBooks only has basic reports that lack trend analysis insights.
Many ends up exporting data to a spread sheet or 3rd-party tool with some financial reporting capabilities. You might then be able to ‘pseudo’ manipulate data for an improved understanding of future trends.
Does QuickBooks Automate Systems?
Does QuickBooks Automate Systems?
QuickBooks is ‘manual’ process reliant. Most employees get used to this data entry burden, however for those that have used end to end integrated systems before, it can become frustrating. In fact, some get quite irritated.
Analyzing data inevitably is done manually and becomes risky to manipulate. Cross-entity single views of shared accounts, customers, and vendors is not possible within QB. Companies may subconsciously allocate more overhead to compensate for these manual processes, for example jumping from one QuickBooks instance to another. Some just manually track intercompany eliminations, revenue recognition, allocations, and accruals for expenses.
Do you really want your finance teams to cut into their weekends to finish their work?
Do you Calculate Revenue Recognition?
Do you Calculate Revenue Recognition?
Businesses use a variety of methods and reports to recognize revenue.
- Balance sheets provide a snapshot of a company’s assets, liabilities, and equity. This helps assess solvency and financial risk.
- Income statements show how much revenue has been generated versus how much spent over a period to assess profitability and identify trends.
Without proper revenue recognition, a company’s income statements can be inaccurate and misleading.
QuickBooks does have workarounds:
- Use an outside spreadsheet or 3rd party program to manually calculate revenue recognition.
§ For companies with high transaction volume this can be very time-consuming.
- Use QuickBooks’ feature to create an invoice for every revenue-generating transaction.
Despite these workarounds, the lack of proper revenue recognition tracking can have consequences.
Does QuickBooks have the financial controls to accommodate ASC 606 and IFRS 15?
Does QuickBooks have the financial controls to accommodate ASC 606 and IFRS 15?
Financial controls ensure accounting records are accurate and reliable, reducing the risk of errors and fraud. Accurate auditing can be challenging in QuickBooks. Users end up exporting data to 3rd-party tools to perform audits.
Under IFRS 15 and its American GAAP equivalent ASC 606, companies need to recognize the additional revenue from any contract extension at the time of any contract modification when earned. Typically when the underlying goods or services are delivered.
This can impact the timing of revenue recognition. For example, if a company delivers a one-year subscription service on January 1st, the entire subscription fee needs to be recognized as revenue on that date under ASC 606/IFRS 15 Compliance.
Companies also need to know whether there is an impact on the amount of revenue that will ultimately be earned. Eg., Many subscription services include a discount for prepaying for longer periods. If a 10% discount is ooffered for contracting for two years of service, the company needs to consider this when recognizing revenue under ASC 606. Any customers taking advantage of the discount need an estimate to recognize the corresponding amount of revenue at the time of sale. Any subscription extension by an additional year is considered a contract modification.
Was QuickBooks ever designed with Professional Chartered Accountants in Mind?
Was QuickBooks ever designed with Professional Chartered Accountants in Mind?
Even though responsibilities cross over, Bookkeepers and Accountants serve different purposes. Bookkeepers ensure financial transactions are recorded properly. Transactions such as recording invoices, receipts, and payments. Whereas Accountants focus on providing financial information needed to make informed business decisions. Knowing when to utilize each will keep your finances in order and ensure better decisions.
If you expect accounting software that will automate bookkeeping, QuickBooks may not be the best choice.
QuickBooks doesn’t play well with:
- double-entry bookkeeping features.
- tracking expenses and income in separate accounts.
- creating accurate financial statements.
Not only does QB require a separate instance for every financial entity but is also lacking businesses features for multiple entities. Besides, consolidated financial statements are just not possible.
Whereas a world class ERP (like Infor) will track all your entities separately. Ensuring you do not have duplicate invoices or payments, and all assets are accurately managed. In fact, a financial management system that’s endorsed by the American Institute of Certified Public Accountants (like Infor’s) might be better.
Data Silos are QB By-products
Data Silos are QB By-products
As any business grows, making quick decisions becomes critical. If data is difficult to access, market pressures can result in rash decisions based on whatever is known at the time.
Since QuickBooks is accounting focused, other business units could be using their own siloed solutions. The increased use of spreadsheets and standalone add-ons may appear to help one area of the business whereas hinder others.
Most manufacturers care less about technology, yet they do care about data access and functionality. Regardless how you personally feel about leading-edge technology, consider these facts:
- According to an IDC study published in Forbes, “There is a clear connection between revenue growth and digital transformation.”
- Gaining market share is never easy.
- Many SMB’s attribute their combination of size and flexible technology as a competitive weapon over larger firms that take longer to adapt.
- QuickBooks does not accommodate data analytics via internet of things (IoT).
· Do you need to consolidate information across platforms for cost reporting from CRM to inventory management? These disparate systems make it nearly impossible to access cross departmental data.
· Have you ever managed multiple entities within QuickBooks?
o Did you have any challenges creating consolidated statements or eliminations?
Is ‘Real-Time’ Data Not Really Real Time?
Is ‘Real-Time’ Data Not Really Real Time?
· How often do you view your company’s financial position or try to slice and dice to analyze your data?
· Do you have sophisticated needs (multi-warehouse planning or production)? Then you might need more than simple accounting.
· Have you ever tried to create or track backorders or partial shipments in QB?
· Have you ever tried to calculate your current cash balance within QuickBooks?
So many systems ‘interface’ with QuickBooks
So many systems ‘interface’ with QuickBooks
· Many 3rd party modules claim APIs interfaces with QB. In fact, to satisfy those who do not want to leave QB, Infor VISUAL ERP has an interface. However, what they define as interfacing may not be synonymous with what you expect. Do they really integrate 100% with QB or is data integration only possible at specific points?
· Lack of integration leads to inefficiencies and data errors, which negatively impacts your bottom line.
· There is no question that QB has a loyal following. To live off QB coat tails, some end-to-end ERPs have created interfaces to attract those that prefer to not replace accounting.
o Please note, you will never have as tight an integration when interfacing disparate systems, as you would with a single end-to-end ERP.
· Whereas tightly integrated systems have many benefits including:
o Cost reductions. Less need to buy expensive duplicate software licenses.
o Less need for maintaining multiple copies of data.
o Provides employees data access that would otherwise be buried.
o Eliminates the need for manual data entry, saving errors, time and money while improving strategic decision-making.
o All data available in one central repository increases Efficiency.
o Employees never need to search multiple databases or files to locate needed information.
· As with all software evaluations, it is best to visit companies that have already experienced these interfaces. Why not learn from someone else’s mistakes?
Why do QuickBooks users expect to use Spreadsheets?
Why do QuickBooks users expect to use Spreadsheets?
Spread Sheets and addons appear to extend QuickBooks’ flexibility and life. QuickBooks users then become dependent on spreadsheets. However, these work arounds can be temporary solutions to long-term problems, and more issues can unfold:
- Security risks - When using spreadsheets for complex financial data, there is always a risk someone can access and change something without your knowledge.
- Data quality – How can you ensure the data is accurate and up to date?
- Therefore, strategic decisions are being made on outdated or incorrect information.
- Functionality reliant on workarounds can compromise data integrity.
- Difficult to share – Sharing data with anyone is cumbersome.
- Time-consuming – Any task that is tedious leads to avoidance, frustration, and errors.
· Manual processes take time away from proactive business initiatives.
o Lack of automation that cannot proactively signal data out of tolerance may be the first step to a declining business.
· Do you really want to allow changes to historical transactions?
o Historical changes can come back to bite you, especially when they affect a transaction like a tax filing that has already been completed.
· The lack of GL account IDs can be intimidating.
· Stressed supply chains and mobile demands place any businesses into a state of chaos.
o Can you “wait until the right time” when technology is moving so quickly?
World-class integrated systems (like Infor) are a blessing as they:
· Instantly automate revaluations and currency conversions.
· Improved consistency: Automation ensuring tasks, such as AP approvals and invoicing, and are completed consistently.
o This eliminates variation in the process and improves results.
- Improved efficiency: Dimensions on every journal entry means you close the books faster.
- Avoid duplicate data entry and re-establish your single source of truth.
- And finally, automation frees up resources for other important tasks.
- A common comment from Infor clients is they have shifted from being 80% manual to 80% strategic.
Here is a tip. If you find yourself relying on too many workarounds, and questioning if you are outgrowing Quick Books, you probably already have!
Author: Andy Pratico
