Good old Kiwi ingenuity has seen many businesses “tack on” and “patch up” their accounting software systems to enable them to keep operating without having to go through the expense of an upgrade. But at what expense?
For the past few years many businesses have "put off" investing
in their accounting system in favour of improving other areas such
as sales and production efficiency i.e. areas that ultimately have
an impact on their bottom line. Good old Kiwi ingenuity has seen
many businesses "tack on" and "patch up" their system to enable
them to keep operating without having to go through the expense of
an upgrade.
At a basic level upgrades are released to make our lives easier,
improve the customer experience or both. So why would you
continually turn you back on them? Without realising it, businesses
have increased their administration tasks and become reliant on
this "additional work" to function on a day to day basis. Many
companies extract their data into Excel to calculate and/or
manipulate the figures into a usable form. In some cases this has
been simply to undertake essential functions such as allowing for
GST at 15% and accounting for foreign currency transactions.
Believe it or not these types of inefficiencies are not only
holding you back, they also add up to a hefty dollar amount.
While some businesses still have a hangover from the recession,
low interest rates and a more positive business outlook appear to
be encouraging others to review their systems and invest in this
area. Businesses have also come to realise that their choice is no
longer restricted to choosing between an off the shelf accounting
package (that may not totally meet their needs) or an expensive
custom built accounting system. Systems have evolved over the past
five years and can now be tailored to meet a business' specific
needs and it won't break the bank.
Today business functions are intertwined and reliant on similar
information. Most businesses whether big or small realise the
efficiencies that can be achieved from a consistent data source. A
good operating system should, where possible, integrate data to
avoid duplication, inconsistencies and to minimise input
errors.
So what are the signs that your business is ready for an
upgrade? Here are a few key questions to get the ball rolling:
How easy is it for you to generate your financial reports
today?
Are your monthly reports always pushing your reporting
deadlines? Are you reliant on a team to combine/manipulate data to
enable your reports to be produced? While you may think you are
saving money on the upgrade and/or system review, you need to
consider the extra resources that you devote to the accounting and
finance function.
How much double/triple handing of data is there?
Does your month end process involve pulling data from one system
and re-entering it into another? Do you rely on Excel spreadsheets
for job-costing/work in progress calculations? You need to consider
how much time you or your team is wasting that could be better
utilised elsewhere in the business.
Has your business recently gone through an expansion
phase?
This may be a growing customer base, expanding into new markets
and/or projects or simply an increase in your staff numbers. A
small business can get by with a more basic accounting system.
However, as your customer base/number of locations and/or projects
and employee base grows, there is a greater need for access and
sharing of key data.
How do you assess sales, finances, and other business functions
to evaluate your performance?
If you rely on information pulled from all different sources
your data is bound to be plagued by errors caused by manual entry.
Tying up your resources and timeliness is also likely to be
an issue.
Is your financial data difficult to audit or unreliable?
You may rely on a few key team members simply because they are
the only ones who know how the system works. This leaves you
exposed if they go on extended leave or leave the business
completely. There may also be the risk of incomplete records or
discrepancies as it is unlikely their work has been reviewed
before.
It is important to remember that a new and improved accounting
system is not much use on its own. You need to ensure that your
accounting team have the right level of experience for the role and
that you provide them with training as required. However, we'll
leave that topic for another time.
You may recognise the above signs or have your own growing pains
that simply need to be dealt with. If you have identified the
symptoms, you might want to contact your Hayes Knight business
advisor or Amanda Billington to discuss your options.
Amanda Billington
Manager - Business Services
T: 09 448 3234
E: amanda.billington@hayesknight.co.nz