QuickBooks is the entry into accounting software for many businesses, thanks to its low pricepoint and relative simplicity. However, it is an entry-level accounting system and growingbusinesses quickly come to understand the shortcomings of the software. While many ofQuickBooks’ shortcomings can be overcome with manual workarounds and complementarysoftware,eventually those steps are not enough and problems emerge that begin to stifle growth. Thedifficult part for many of these businesses is determining when they need to move to a newsystem.
If your business recognizes one or more of the following signs, it’s probably time foryou tomove on from QuickBooks and grow your organization with a comprehensive enterprise resourceplanning (ERP) system. ERP systems collect businessinformation from around your company and integrate it into one digital ecosystem. Separatebusiness functions are broken down into modules, including warehouse management, financemanagement, customer resource management and much more. Moving to an ERP platformneedn’t bea disruptive and painful process. Today’s systems allow companies to more easily addspecific ERP modules as they needthem.
12 Signs That You're Outgrowing QuickBooks
Manual processes:
Whether its revenue recognition or the monthlyclose, the limits of QuickBooks functionality force accounting departments intocomplex workarounds in spreadsheets and a morass of journal entries. This leavesaccountants gathering data from disparate systems and manually entering it intoQuickBooks or pulling data out of QuickBooks for analysis. The cumbersome manualprocesses are prone to error and leave less time for analysis and work that bringsvalue.Spreadsheet overload:
Because QuickBooks limits access to thesystem, vital company data is often stored on spreadsheets. Workers then waste timeplaying “hunt for the spreadsheet” trying to find the most recent andaccurate data.Meanwhile, spreadsheets are at risk of manual data entry errors and typically haveweak audit and compliance controls introducing the risk of fraud.Multiple entities:
QuickBooks can’t handle multiple entitiesdirectly, forcing accounting into unwieldly manual workarounds and limitingcompanies seeking to expand abroad. Without automation, multi-entity consolidationbecomes a huge drain on resources.Disparate tools and data:
In order to manage inventory withinQuickBooks, businesses that grow beyond spreadsheets often turn to add-onapplications to fill gaps in areas like inventory management. For example, EnjoyLife Foods, a maker of allergen-free foods, found as it grew QuickBooksand FishBowl for inventory management crashed regularly and couldn’tprovidethe real-time information it needed. This is a frequent problem for companiesrunning QuickBooks. They add on third-party solutions to patch holes in QuickBooksfunctionality only to find that the integrations aren’t as robust as advertised,data doesn’t synch, and issues arrive during upgrades. That leaves data spread indifferent systems and spreadsheets across the organization.User and storage limits:
Growing businesses quickly find they needmore user licenses than QuickBooks provides as they also run up against QuickBooksstorage limits. The maximum number of simultaneous users on QuickBooks is three forQuickBooks Pro and five for QuickBooks Premier. The Desktop Enterprise editionallows businesses to add up to a 10-user license, after which it jumps to 30.QuickBooks performance also starts to diminish as the company file size increasesabove 1 GB. Businesses exceeding these limits can confront costly and problematicsystem outages.Lack of customization:
QuickBooks limited functionality and rigidstructure prevent businesses from customizing it to fit their unique needs. Forexample, businesses can’t limit or change who approves a purchase request or theprocess for approval.Absence of best practices:
That lack of customization has somecompanies looking to QuickBooks alternatives to follow industry best practices likecompliance reporting or audit controls. They find that QuickBooks can’t fit theirneeds, once again forcing them into complex workarounds and limiting efficiency orputting them at risk for falling out of compliance.Lack of visibility:
The more customers, products, revenue and saleschannels a business has, the more difficult it is to gain insights from that data inQuickBooks. Because information is often stored in separate systems or spreadsheets,data is not updated in real-time. Limited reporting capabilities force accounting toturn to spreadsheets, which are error-prone, and gathering data is labor intensive.Tedious month-end close:
Limited functionality and scopecreate a heavy workload for the accounting department conducting the month- andperiod-end close. Staff is forced to track down data from different departmentsbefore entering it into QuickBooks then cross-posting transactional data betweensystems.Guesswork in sales forecasting and budgeting:
QuickBooks is a poor repository for historical information, which makes practiceslike sales forecasting and budgeting difficult. Even though data for trend analysisexists somewhere, it’s too hard to find and extract so employees sometimes resorttomaking educated — and often inaccurate — guesses.Difficulty adding new product lines or revenue streams:
Everytime there are changes in a business, staff have to accommodate them withworkarounds. QuickBooks doesn’t have built-in support for everyday functions likemaking simple changes across matrix SKUs and adding new sales tax rates. Processesthat cry out for automation have to be done manually or from spreadsheets.Expensive and burdensome audits:
As regulations and othercompliance standards evolve, accounting teams that have to rely on spreadsheetsdiscover preparing for audits is time-consuming and subject to risk. When the auditis conducted, many businesses find it takes longer than expected and is thereforemore expensive.
You’re Ready to Move On. What’s the Next Step Up From QuickBooks?
Aviva Biology Services — a pioneer in the development of antibody detection todetermine causes of cancer and degenerative diseases — realizedQuickBooks couldn’t meet its multi-subsidiary needswhen it acquired another biotech firm.
Similarly, Dyla LLC, maker of Forto coffee shots and Stur flavor enhancers, noticed runningtwo separate businesses on QuickBooks wasn’t sustainable as it grew. Staff werespending too much time in spreadsheets synchronizing inventory. Themanufacturer switched from QuickBooks to NetSuite
Once people realize that QuickBooks is holding the company back, the next step is to evaluateand select a more powerful option — one of the most common solutions is a cloud-based ERP system. This can sound like a dauntingprospect for some given ERP’s reputation for being best used with large-scale projectsandby large companies. However, today’s ERP platforms allow companies to start small andaddfunctionality as they grow by incorporating modules like inventory management,customerrelationship management (CRM), financial management and humancapital management.
NetSuite, for example, has created the SuiteSuccess methodology to get businesses up andrunning on ERP in 100 days or less. The Financials First solution focuses on core financialmanagement with preconfigured reports and dashboards for roles like controller and CFO. Oncein place, companies can expand their use of the software at their own pace.
With a comprehensive ERP system in place, businesses can ditch onerous manual processes infavor of automation, freeing up staff for analysis and tasks that grow profits. Reportsgenerated from the platforms include drill down capabilities and they deliver insights intothe entire organization across financial, sales, employee, customer and product data. Whenyou evaluate QuickBooks against an ERP solution,you’llsee that an ERP platform eliminates the need for multiple point solutions and integrationsthat fail. Its intuitive and flexible customization platform lets customers adapt the systemto their unique needs while offering industry leading practices baked in.
Determining how and when to move off of QuickBooks can be a daunting task. Some businesseslaunch their company on an ERP system, but for most it becomes a matter of determining whenand how QuickBooks is holding them back from growth and new opportunities and markets. Anyone of the above signs can be reason enough to make the move. Many find that they wish theyhad moved off of QuickBooks earlier. Others move from QuickBooks to another interim solutiononly to discover later that the new solution still doesn’t fit their needs forcingthem,once again, to upgrade to a full ERP suite. ERP platforms today are more accessible thanever for businesses that have outgrown QuickBooks.
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FAQs About Outgrowing QuickBooks
How big is too big for QuickBooks?
There’s no hard and fast rule based on revenue or employees, but businesses that findthemselves reliant on spreadsheets to conduct core accounting, those that have reached over500 SKUs in inventory or those hoping to add new channels, geographies or products find theyneed a more comprehensive system than QuickBooks. Companies that look to standaloneapplications to fill gaps like inventory management are probably ready for an ERP solution.
What is the next step up from QuickBooks?
While there is financial management software that delivers an additional level of accountingfunctionality, most businesses moving on from QuickBooks elect to turn to cloud-based ERPsystems that offer core accounting features that can scale with the business as it grows.
Do big companies use QuickBooks?
No, QuickBooks is typically reserved for small businesses without the need for advancedreporting or accounting.
What size company is QuickBooks good for?
QuickBooks is sufficient for a business with five people or less in its accountingdepartment. Additional complexities like a need for inventory management or more advancedreporting can mean QuickBooks may not be right for some with small accounting departments.
