Can You Continue to Cope With QuickBooks?
High quality accounting and reporting for investment funds is non-negotiable and complex for private equity firms and hedge funds, which is why they have historically relied on dedicated industry-specific software solutions to optimize and standardize those processes. Their operational accounting, however, is often not as big of a priority, standards are often not as rigorous and firms make-do with low-cost, small business software and Excel.
Many firms start out using QuickBooks because it’s cheap, accessible, and user-friendly. It bills itself as the ultimate introductory accounting solution, and in most aspects it delivers. The problems with QuickBooks become apparent as firms grow and become more complex.
As things like budgeting, expense allocations, and cash management become more complicated, QuickBooks struggles to deliver the efficiency, productivity, or insights that firms really need. It’s possible to continue on with QuickBooks, but at a certain point it becomes less of an asset and more of an obstacle. Meeting evolving requirements with QuickBooks and Excel usually entails more headcount – and there’s nothing cheap about that.
If possible, it’s always better to think ahead and upgrade software before it’s absolutely necessary. With that in mind, look for these clear signs that you firm is outgrowing Quickbooks:
Too Many Manual Process
Working with QuickBooks requires accountants to manually key in data in multiple places and compile reporting from multiple sources. These processes divert a lot of time and resources that could be focused on other aspects of your firm. These manual processes also invite human errors which can lead to costly accounting mistakes. The solution to both problems is to automate the process that QuickBooks cannot.
Lack of Internal Controls
Growing companies need stricter internal controls, which are conspicuously lacking from QuickBooks. It’s difficult to implement access restrictions to prevent fraud and track changes in the system, and the inability to close periods creates an increased risk of financial misstatements leading to extra review, among other examples. Smarter financial management software gives managers total transparency and complete control into the inner workings of the system.
Trouble Consolidating Multiple Entities
Managing multiple entities within QuickBooks has its own challenges, especially when it comes to reporting. The system puts unavoidable obstacles between entities that cause routine processes to drag out longer than necessary. Instead of trying to work around e a system that is not designed for this type of accounting, move to one that is explicitly engineered to manage multiple entities and will continue to scale easily as your business grows.
Slow and Shallow Reporting
Private equity firms and hedge funds need fast, accurate, and in-depth financial reports to inform their decision making. QuickBooks offers very limited reporting tools, forcing many companies to use Excel instead. Reporting in Excel can become so time-consuming and prone-to-error that reporting processes are often slow, inaccurate, and unreliable. Superior financial management systems have reporting tools that easily provide you deeper insights from larger pools of data in less time.
Remember that an underwhelming accounting solution like QuickBooks when your firm outgrows it isn’t just annoying, it’s a liability. Additionally, if your firm expends too much effort on accounting, reporting, and related processes, it may be missing out on revenue, may be jeopardizing its client relationships, and may be inhibiting its ability to grow.
After evaluating these signs in your firm and understanding the inherent costs and risks of continuing to use QuickBooks, allow us to discuss the benefits of an upgrade with you. We will work with you to ensure your new financial management software gives you the ROI you are looking for and puts your business on a new path.
Please contact Madken Advisors for a free assessment.