Accounting Software Solutions – Keys to Success

Intro

When most of think about our businesses, we focus on what we sell – our products and/or services. We often forget that our organization must have a good underlying infrastructure to support it, or it will fail. Putting that infrastructure in place can be expensive both in terms of time spent and dollars expended. So when we make the investment, we want to do it wisely to ensure its success.

Foundations of Business – the 3 Legged Stool

Think of your business as a three- legged stool. If any one of the legs is not supported properly, the stool falls over.

1. The first leg is what you sell – your product and/or service. This is what we think of as the core of our business.
2. The second leg is how you sell it. This includes your sales processes, marketing efforts, and merchandising. It’s how you deliver your products and services. Without the proper delivery mechanism, your product and/or service won’t get to market.
3. The third, and equally important leg, is business management. This encompasses how you run your business to comply with laws (including tax laws), measure your performance, and communicate your performance to others who need to know, like your banker or investors.

The Business Management Leg – Your Accounting Software System

The focus of this article is on the third leg of the stool. Without this leg, your business is doomed to failure. You run the risk of getting in trouble for failing to comply with applicable laws. You also can’t know where you’re going if you don’t know where you’ve been. And you must be able to communicate your performance to ensure that others you need to help with your business can see how you’re doing.

An important component of the third leg is your accounting software system. This system really aids you in all three areas of your business. It keeps track of what you sell – using inventory tracking systems for products and time tracking, job costing, and billing systems for services.

It also keeps track of how you sell it – by giving you analysis tools you can use to make decisions. For example, seeing sales by customer and sales by product line reports can give you much needed insight into the success of your sales and marketing efforts.

And it obviously helps with the third leg, business management, by providing you with financial statements and tracking mechanisms to keep track of what you own and owe and how profitable you are. These measurement tools provide you with a comprehensive financial picture of your company.

Top 10 Things You Need to Know When Selecting an Accounting System

As stated earlier, selecting, implementing and maintaining an accounting system is a significant investment in terms of both time and money. Additionally, having the wrong system in place can have a significant negative impact on your business. System downtime is expensive – idle employees, lost sales, unhappy customers. And being unable to measure your performance can prevent you from making good business decisions.

1. The first question to ask is who stands behind the product? Whether it’s Microsoft, Best, or Intuit, or another organization, make sure your solution is backed by a company that knows what it is doing, is going to be around, and devotes adequate resources to their research and development efforts. Also look for a company that provides you with good resources such as informative websites. Don’t fall for cheap, unsupported solutions. You’re making a big investment in your business, so you want to do it right. Buying a cheap system may be attractive because of the up-front cost but can end up costing you thousands of dollars more on the back end when you experience problems or failures.

2. Next ask how easy the product is to use. Does the software provide wizards or other visual/graphic tools to help you perform set up and transactions? Most of the major products on the market today are fairly user friendly.

3. Also, can you get the reporting that you need? No accounting solution can anticipate your every need or desire for reports. We each measure our performance in different ways, depending on our industry and our personal preferences for how to slice and dice the data. You need an accounting system that has a database structure that allows you to extract data easily to create custom reports to meet YOUR needs. Before you buy any product, look at the standard reports that are available out of the box and determine what additional reports you must have and find out how you will get those reports.

4. Ask if the product is integrated with other tools you use. Look for a system that easily integrates with other tools you use in your business already – Word, Excel, etc. Having successful, easy integrations can save you lots of time and eliminates potential errors caused by duplicate keying of data.

5. Also ask if the system be customized and how. If you need customizations – from adding fields to changing windows, are the tools available for you to do or get those customizations done? For some customizations, you may have to hire technical expertise (like a programmer), but if the accounting software solution you select does not allow customizations, even by a programmer, then you’ll be stuck with the functionality provided by the product.

6. Determine if your data is protected. This is a key point for you to consider. Look for a system that provides full history of transactions. Look for a system that protects posted or committed transactions. Some systems let you change or delete transactions too easily – sometimes months after the fact. Also look for a system that allows you to protect certain areas of your system – for example, if you have someone who helps with paying bills, you may not want that person to get into the payroll module. So if that’s important to you, find a system that allows you to restrict access by user. Having a system that protects your data is important for several reasons. First, all users make mistakes, so you want a system that helps guard against those mistakes. Second, if you have employees working for you, even close family members, the opportunity for fraud exists. Now I know you think Aunt Ethel would never steal from you, but stranger things have happened in business. And finally, others who look at your data (such as your auditor) need confidence that the information is correct and complete.

7. Ask if the solution will perform in the long run. Does it provide you with reliable, multi-user access without slowing performance? Look for a system that has true record-locking, networking capabilities. In this area, you should plan for growth. Some of the most common systems on the market today work well for one user, but performance declines markedly when additional users are added.

8. Another key thing to determine is if the solution is scalable. Most of us have short and long term growth goals for our businesses. So you need a solution that can grow as your business grows. Is the underlying database structure solid enough to support the growth? Can you add features or additional modules as needed? What happens when you outgrow the current version of your solution? Is there another version or even another product that you can move to as you grow?

9. Before you buy a solution, know where you will go for help. Whatever system you select, the output will only be as good as the setup and input you give it. If you don’t understand the system, it won’t work for you. Where do you go with questions? Who will be your support for the system? Will you be calling an 800 number? Will you have someone local? Is there an online knowledge base of commonly asked questions?

10. And the most important thing to determine is if the solution is suitable for YOUR business! If you’re selling widgets, you need a strong inventory control system. If you’re selling services, you need a strong time and billing system. List the key features you need – different price lists for different customers, multiple shipping addresses for customers, serial numbered inventory, etc. – and make sure that any solution you select meets those requirements. Determine if the system is flexible enough to accommodate your needs – for example, does it provide multi-segment chart of accounts to allow you to track departments or locations? Before you consider buying a solution, spend time either on your own or with a consultant examining your business processes, identifying strengths and weaknesses in those processes, and designing a system that meets your needs both now and in the future. Be wary of a consultant who offers you a software solution without truly understanding your business and its processes.

Keys to Success – So you bought it - What’s next?

Whatever system you select, follow these keys to success. No system will meet your needs if you don’t implement and maintain it properly.

1. Be committed to making the upfront investment in software and hardware. Trying to make a basic version perform like a premium version will not work. Running any solution on inadequate hardware will result in poor performance and tremendous frustration. Measure the cost of setting up an adequate system on the front end against the potential for total business failure on the back end.

2. Take ownership of your solution ASAP. This is YOUR accounting solution, not your CPA’s, not your software support person’s. YOU need to understand how it works.

3. Understand your accounting and sales records. It’s important to really understand the numbers – where they come from and what impacts them. This understanding will be key to determining what factors control the success or failure of your business.

4. Watch your financial trends. Is your accounts receivable going up or down? Why? What is your cost of goods sold as a percentage of sales? What’s the trend for it? These trends, especially when compared with standards for your industry, can serve as barometers of the health of your business.

5. Keep your records current. Measuring your performance can only be done with up to date records. Too many small businesses work out of the shoebox during the year and don’t really know what has occurred in their businesses until it’s too late to do anything about it. You need current numbers to make current and future decisions.

6. Have an excellent disaster recovery plan in place. Perform daily backups of your data. Store backups off-site. Work with your technology partner to ensure that downtime will be minimized in the event of a catastrophic failure.

7. Don’t hesitate to ask for help when needed. You’re very good at your core business – whatever products and services you sell. Focus on that and get help with areas where you may not be as strong. Ask your software provider to help you with your system and custom reporting needs. Ask your CPA for help tracking and understanding your numbers.

YOUR Accounting System

In summary, we’ve talked about several things to consider for running your business. Buying and implementing accounting software is a big investment, and it’s key to the success of your business, so you want to do it right. Be sure to ask key questions before committing to a solution. And follow the keys to success once you’ve committed.

Pick the right system for YOUR business – now and for the future.

For more information, contact Robyn Evans or Sherry Whitten at iDrive LLC.

8436 Stone Wood Cove West

Cordova, TN 38018

www.idrivellc.com

rtevans@idrivellc.com

swhitten@idrivellc.com

901.753.1469 phone

901.755.2156 fax