The good news is that growth is the main reason that prompts the replacement of finance software. When companies first start out, they often run a standalone system that sits on a single PC and is managed by the bookkeeper or even the founder.
As an organisation develops, however, customer numbers increase, products or services diversify, new departments are formed, additional sites are opened and the workforce swells. As a result, the number of transactions that are being processed goes up significantly and the complexity required of your accounting platform also moves up a gear.
Expansion is usually a catalyst for making your system redundant but there are also warning signs that you can look out for. One of the typical symptoms of an ailing system is when end-of-month reports take a month to produce. If you feel you’re always in catch-up mode or it’s difficult to obtain the management reports you need without having to resort to complicated spreadsheets, then alarm bells are likely to ring.
You may also find the responsiveness of the software also slows rapidly. This is usually due to a rising number of transactions and data being processed. A start-up package is not designed to support unlimited records and eventually is likely to grind to a halt completely.
It may not just be the physical signs that suggest a substitute solution is required. Even though the fundamentals of accountancy have changed little in the last 50 years, the way in which we buy and sell goods has. Think about the advances in concepts such as e-procurement or selling on-line and how these could benefit your business. Ask yourself whether these could save you money or make you more competitive. If the answer is yes, is your current system capable of supporting them?
Also think about whether more advanced technology could make your operation slicker and reduce overall costs. The latest breed of finance software has become a lot more intelligent and includes functionality such as e-invoicing, self-service budgeting and other forms of automation that can make you more efficient. In particular, if you’ve reached or are approaching a turnover of above £5m then it’s likely that the scale of your operation is such that the returns of a more sophisticated system may well be worth it, even in the short-term.
In the current environment especially, a business should be more reliant on the finance engine to help it improve cash-flow and adapt to changing market conditions. If the system you have is struggling and has neither the functionality or flexibility to achieve this then it may be time for a change.*Simon Kearsley is CEO and co-founder of accounting software vendor bluQube.