Is your staff spending hours creating and updating spreadsheets that are out of date moments after they’re saved? Have you had to rely on consultants to craft custom code to accommodate for features missing from your current accounting solution? That excess time and money devoted to coping with clunky on-premise options and stagnant spreadsheets could be better spent adding strategic value to your business.
If you are tired of wrestling with the limitations of your aging and inflexible system, it may be time to embrace a new breed of financial software that harnesses the power of the cloud to provide instant access to financial data.
However, despite the benefits, implementing a new accounting system can be a challenge for any size business. Below is a five-step, best-practice-based process for selecting the right solution designed for an always connected, rapidly changing world.
1. Contemplating a Change
The first step in the journey to a better accounting process is recognizing the need for a change. There are plenty of red-flags that can signal issues with current systems, but some are much harder to ignore than others. If you are experiencing the following pains across the various levels of your business, it may be time to reevaluate your accounting and financial software.
- Increased costs and resource requirements associated with operating and maintaining on-premises hardware and software
- Reduced productivity and user satisfaction to compensate for existing technology limitations
- Lack of real-time access to financial data
- Challenges integrating multiple locations, business units, or currencies due to growth and expansion
- Limited visibility to accurately manage cash and budget
- Increased manual effort to access critical financial information and reports
- Increased exposure to a breakdown in controls
- Reduced ability to provide strategic vision while bogged down in manual accounting tasks
- Increased usage of spreadsheets with limited functionality
- Limited integration between systems, causing manual data re-entry
2. Defining Your Functional Requirements
Once you have recognized the need for a change, it’s time to decide on the functional requirements for this new accounting software—particularly around its ability to support your organization’s unique needs.
In addition to in-depth and real-time insights, any system you choose should enable you to manage these core financial and business processes:
- Period close
- Time and expense management
- Revenue management
- Project accounting
- Fund accounting
- Financial and management reporting
Additionally, don’t forget about these non-traditional, but still important capabilities to look out for:
- Multiple entities with drill down, organizational hierarchy, workflows and charts of accounts, and real-time consolidation of data
- Real-time GAAP, IFRS, FASB, SOX, and other regulatory and compliance reports
- Multiple ledgers (e.g., AR, AP, order management, project, and cash management) that can process transactions independently without degrading GL performance
- Simultaneously keeping books on an accrual and cash basis
- Multiple operating dimensions for all transactions
- A statistical book of measures, such as headcount, locations, and contracts, not captured in a standard ledger
- Self-service reports and custom dashboards with real-time updates and drill-down capabilities
3. Defining Your Technical and Operational Requirements
After the key features have been nailed down, you will need to decide whether you want to go with on-premises or cloud-based solution.
Every business is different, but a cloud-based accounting system can help lower IT costs, reduce technology risks, and improve productivity across the board. Using the cloud also gives you flexibility to easily integrate with other leading software solutions to best address your needs in each business area—unlike suites, which primarily focus on ensuring that applications within the suite are integrated.
4. Conducting a Thorough Evaluation
With your key requirements in hand and a focus on which architecture will work best for your organization, the next logical step is to assess which product will provide the best fit.
Follow the tips below to kick-start your evaluation process:
- Create an RFI/RFP that includes your unique requirements
- Prioritize “gotta have” capabilities over “nice to haves.”
- Check references
- Look into cloud vendors’ infrastructures and business practices
- Research the vendor’s reputation online
5. Identifying ROI Opportunities
Getting to this point isn’t easy, but it will definitely be worth it. Typically cloud-based financial management and accounting systems achieve a 75% to 300% annual return on investment (ROI).
Between increased business visibility, revenue gains, and cost savings, there’s no good reason not to retire your old, error-prone accounting solution.
Get a more in-depth breakdown of how to evaluate financial management solutions in the full “Best Practices for Choosing the Right Accounting Software” eBook.