Intuit’s QuickBooks is a popular accounting solution for small businesses across a variety of industries. However, rapid business expansion and increasing reporting requirements may signal the need for a more robust ERP platform. As your business is becoming more complex why shouldn’t you look at upgrading your Accounting Software? On this episode of The ERP Advisor Podcast, hear from ERP expert Shawn Windle on what to do when you outgrow QuickBooks.

Is QuickBooks Holding Your Business Back?

Intuit's QuickBooks is a popular accounting solution for small businesses across most industries. However, rapid business expansion may lead to pressure points across disjointed software applications. If QuickBooks is holding your business back, then it may be time to assess your needs so your software can support you in scaling for success.

About QuickBooks

“It really is America’s favorite accounting software.”

Intuit developed QuickBooks for business accounting needs in 1992 to round out its portfolio, which included the popular personal accounting solution, Quicken. QuickBooks Desktop saw rapid success and added QuickBooks Online as a cloud option in 1999. Since then, QuickBooks has become one of the most popular accounting solutions available on the market, with an estimated 80-85% of market share and roughly 29 million businesses relying on it as their financial application of choice.

Between QuickBooks and QuickBooks Online, there are a variety of versions to discover depending on your size, industry, or growth. From smaller options such as Simple Start or Pro Plus, to more common, larger scale options like Enterprise, there is a range of capabilities depending on the needs of your company. This allows the solution to scale with you as you grow.

QuickBooks Compared to Other ERPs

“QuickBooks is the good friend you used to have…that you kind of outgrew.”

Calling QuickBooks a true ERP is a stretch, which makes it difficult to compare to Tier 2 or Tier 1 ERPs. At its core, QuickBooks is a financials application with minimal additional functionality. The price point is very reasonable for a startup business and for core accounting, QuickBooks gets the job done! It offers some time entry, order entry, payroll, and inventory management functionality. But it is not a true Order Management, Time Tracking or Inventory Management application. As a result, ERP Advisors Group considers QuickBooks a “Tier 4” ERP which is focused on accounting.

Once a company becomes well-established, acquires a number of customers, employees, products, projects, and sales, they find their “startup” methods which center around QuickBooks are prone to having silos of information in spreadsheets, lack of controls, too many users in the system who can access everything, or stress on file size with too many transactions. Other businesses may only use QuickBooks for general ledger functions, and due to lack of integration to other systems for Services, Orders, eCommerce, Manufacturing, Purchasing, Time Entry, or Payroll, users spend too much time downloading information from other software and manually enter it into QuickBooks. When the company or organization has a higher volume across any or all of the dimensions of their business, they start to suspect they have outgrown the best friend they started with, QuickBooks.

Common Pain Points of Businesses Who Have Outgrown QuickBooks

“There is a differentiation between perception and real functionality gaps.”

There are 5 major pain points that we commonly see in businesses that have outgrown QuickBooks.

• Internal Controls: There are workarounds with QuickBooks’ add-ons and applications, but there is a lack of robust internal controls. For example, QuickBooks’ ability to close a prior period is not as controlled as other more sophisticated accounting systems.
• Reporting: QuickBooks can generate financial statements and other helpful reports such as Accounts Receivable and Accounts Payable. But businesses that want more insight across sales, inventory, and costs start to rely on data extracts out of QuickBooks and other best of breed software and craft it into meaningful information to help run the business.
• User Experience: QuickBooks is an easy-to-use application, with a simple user experience. However, if you bring in new resources who have used more sophisticated software for accounting, QuickBooks may be seen as far too simple.
• Automation: QuickBooks can perform basic sales orders and time tracking but does not go much deeper. Your company’s accountant may have a difficult time running the business on QuickBooks when further, industry-specific functionality is needed or as your number of transactions, vendors, or clients grow.
• Perception and Appearance: It can be difficult to hire employees while on QuickBooks due to market perception. Accountants and financial executives may not want to work with QuickBooks due to its lack of advanced capabilities. Applicants looking to progress their careers may not want to be stuck on QuickBooks, which may be perceived as too entry-level.

Fishbowl, an inventory management platform with pre-built QuickBooks integrations, is an example of leveraging a company’s existing QuickBooks investment, especially in the manufacturing space. Manufacturers who are content with QuickBooks’ financial capabilities tend to develop deeper inventory management requirements. The “quick fix” to this problem is a Fishbowl implementation. While this is a viable option, a sudden boom in growth could make it difficult for your business to keep up.

In these scenarios, businesses eventually reach a peak and must start exploring larger, industry-specific solutions. On the plus side, using “band-aid” solutions like Fishbowl as a gradient step before migrating to a new system can make your transition to a more robust ERP much easier, even if it is only temporary. Bolt-on applications force your business to build your key data, like inventory or BOMs. into a new system and get your team used to working within a structured software application. This begins to enforce some rigor on your processes and is a good gradient step before tackling the challenges and costs of an even more structured ERP later on.

Establish If There Is a Case for Change

“You will pay IMMENSELY down the road if your books are crap.”

Even if you know your business has outgrown QuickBooks, changing accounting solutions and upgrading to a new ERP platform is no small feat. There are several factors to consider, especially the costs and fees associated with this transition.

As your business continues to expand, the need for more resources becomes even more dire. A true ERP can automate those processes and free up your resources to do more value-added tasks.

Beyond its impact on current employees, messy financials can dissuade banks, investors, and even applicants from working with you. The public perception of QuickBooks can make it appear as though your business is either unready for further expansion or struggling to grow. In order to continue to grow, you may need investors or top-tier applicants. Those investors and prospective employees may not want to work with an application lacking the functionality needed to expand. Getting a company ready for a sale or IPO can be a worthwhile reason to upgrade.

While it may seem easy to kick the can down the road due to the fiscal and temporal prices of making a change, choosing not to invest in your accounting software could lead to much larger problems down the road. It comes down to when you feel is the right time for your business to handle the growing pains.

What To Do If You Have Outgrown QuickBooks?

“It is only going to get harder to upgrade later on.”

Once you know QuickBooks can no longer support your business, the best approach is to take action.

If you are not set on moving off QuickBooks just yet but see the need for further support, evaluate bolt-on solutions to add to your instance of QuickBooks. QuickBooks offers industry-specific solutions for businesses to buy time on the solution by providing additional, necessary functionality. But don’t just take our word for it, be sure to do your research on all available options before determining the right path forward.

Ultimately, you may realize a bolt-on solution is not enough. The next step would be to further educate yourself on the available ERPs.

When looking to improve your control and scalability, begin researching Tier 3 and Tier 2 ERP applications. By utilizing outside sources and unbiased websites (like ours!), you will help your business find the right solution.

In order to effectively communicate your requirements to potential vendors, you must understand your true needs for new software. If you start contacting vendors too early without that in hand, you risk being sold on a product that does not actually fix the issues exacerbated by outgrowing QuickBooks.

At the end of the day, you will be painfully aware when you have outgrown QuickBooks. You will begin to notice the increased need for resources, as well as an influx of Excel or Google sheets to keep track of processes outside of QuickBooks. Other times, your QuickBooks file could be at maximum capacity or you have to wait for users to get out of the system because you have too many people who are entering information. There is no shame in trying to stretch out QuickBooks’ lifespan. But you may not be any less busy in the future than you are now! Carving out the time to do your homework now may ease growing pains when you will be even busier with more salespeople, clients, and projects!

Conclusion

“When you know, you HAVE to do something about it.”

Intuit’s QuickBooks is a valuable resource for growing businesses, providing ease of use and reliability to financial professionals. However, a growing business may reach a point when there is a need for more than core financials. Knowing when to make the jump from QuickBooks to a more robust ERP is challenging, but ERP Advisors Group is here to help. If you are considering moving off of QuickBooks, or undertaking any ERP project, our team can provide you with the insight you need to make the right decision. Schedule a free consultation with us today.