Has Your Firm Outgrown Its Accounting Software?
Establishing an alternative asset firm isn’t easy. In addition to finding clients and devising investment strategies, firms must figure out a host of administrative issues – locate office space, set up phone lines, buy pens and paper, etc.
Another issue on that list is finding accounting software. Every business needs a tool to track costs and revenue, and, luckily, there are several solutions on the market that cater specifically to new enterprises. They entice users with low costs, easy installations, and intuitive features – all the things new firms need to get accounting off the ground.
At first, the situation seems ideal. Firms can focus on their core business objectives and trust that accounting is being handled correctly and consistently. Meanwhile, the accountants tasked with those responsibilities have the tools they need to manage the fundamentals, at a minimal cost to the company. Over time, however, a solution that once seemed perfect starts to become a major obstacle.
The Tipping Point for Old Accounting Software
The problems only become apparent when firms reach one of the first major milestones – transitioning from a new business into a growing business. At this point, the priority of the firm has evolved from “getting established” into “sustaining success.” Drastically different expectations for accounting accompany that evolution.
Growing firms must think about more than just budgeting and payroll. They also need to take complex accounting responsibilities like producing insightful financial reports and in-depth audits. Simultaneously, accountants must perform to higher standards for efficiency, compliance, and financial foresight. Accounting needs fundamentally change after the first few years in business.
What often doesn’t change is the accounting software the firm relies on. Whatever tool was in place at the start – Excel or QuickBooks or most likely both – is still in place. The workflows feel familiar and new software seems expensive, so there’s little motivation to find a replacement. Wanting to stick with the status quo is entirely understandable, but it’s also extremely problematic.
The True Cost of Inefficient Accounting
Inadequate accounting software is a bigger drag on a business than many people realize, even accountants. The reason is quite simple – introductory software is specifically designed for the newest and smallest businesses. These businesses have simple, basic accounting needs, so software like QuickBooks comes with simple, basic tools. It’s fine to start, but it’s fundamentally inadequate for firms with larger accounting obligations.
The symptoms of outdated, underwhelming accounting software show up everywhere. Routine workflows end up taking hours or even days because so much data must be entered by hand. Due to all those manual inputs, errors and omissions show up throughout the accounting data. Perhaps worst of all, the overall lack of visibility and control makes it difficult to guide the finances of the firm in a way that supports growth. It’s not an overstatement to say that the wrong accounting software holds firms back from fulfilling their full potential.
For a specific example of these issues in action, consider what it takes to provide reliable records to banks or venture capitalists. A tool like QuickBooks forces users to hunt down each document, manually compile the data, and painstakingly reconcile any errors or omissions. The process is inefficient at best, and at worst it compromises the relationship because the records are unreliable.
Does this situation sound familiar? Have you outgrown your current accounting software? If so, contact Madken Advisors to usher in the next era of accounting.
