5 signs you've outgrown your accounting software
Small-business accounting software is genuinely good, and "we have outgrown it" is said far more often than it is true, usually by someone selling something bigger. But the ceiling is real, and most businesses hit it some time before they admit it.
Here are five signs that are hard to argue with, and one honest check to make before you conclude you need new software.
The five signs
1. You run the business from spreadsheets
Everyone uses spreadsheets. The sign is when the spreadsheet becomes the version people trust, and the real stock figure or the true margin lives in a workbook on somebody's desktop.
The test: if your accounting system and your spreadsheet disagree, which one does your team believe? If it is the spreadsheet, you have already migrated, just not deliberately.
2. The same data is keyed in more than once
An order arrives and someone types it into the sales system, then into the accounts, then into a stock sheet. Every one of those keystrokes is time you pay for, and an error waiting to surface at month-end.
This is the most measurable sign. Count the re-keys in one week. The total is usually bigger than anyone expects, because no single instance feels significant.
Key PointRe-keying is the easiest sign to measure. Count it for one week before you decide anything else.
3. Month-end takes days, not hours
A slow close is rarely a people problem. The team is doing manual work the software should be doing: exporting, reformatting, reconciling two places and rechecking figures nobody quite trusts.
We cover this in detail in why month-end should not take a week, and our guide to speeding up the month-end close has the practical steps.
4. You cannot see stock, cash or margin live
Making decisions on last month's numbers rarely causes a visible disaster. It causes a series of slightly late, slightly wrong decisions that never get blamed on the software.
The question to ask: how old is the newest number you would be willing to base a big decision on?
5. Growth makes things worse, not better
Good systems scale with you: more volume, same effort. Outgrown systems scale against you, and every new product line, site or person makes the workarounds heavier.
If your last growth spurt made the back office harder rather than just busier, that is the ceiling.
Watch OutCheck your current plan before you blame the product. Some features only come with a higher plan of the same software.
On Xero's UK pricing plans, for example, using multiple currencies is listed on the Comprehensive and Ultimate plans rather than the entry plan.
Before you conclude you need new software
Plenty of businesses that feel they have outgrown their system have simply never finished setting it up: unmapped dimensions, an unhelpful chart of accounts, reporting nobody built.
Those are cheaper to fix than to replace. If the problems are about reporting and process, it is usually setup. If they are about what the software structurally cannot do, such as several companies, real stock control or proper job costing, that is a genuine ceiling.
Our guides to the signs you have outgrown your ERP and ERP versus separate tools help you weigh the two.
Pro TipWrite down the three things you most need the system to do next year. If your current software cannot do them at any plan or configuration, you have your answer.
Frequently asked
How many of these signs do I need before it is time to move?
Two or three that persist over several months. Any one on its own is usually fixable within your current system.
Is it cheaper to add bolt-ons instead?
Sometimes, at first. The risk is ending up with several bolt-ons and the integrations between them, which is the disconnected-tools problem in a more expensive form.
What happens to our history if we move?
Plan for it. GOV.UK says a limited company must keep records for 6 years from the end of the last company financial year they relate to, so decide early how the old records stay available.
Find out where you stand
Our free ERP Health Check asks where your system is letting you down and sends back a short report on where to focus first, with no obligation. You can also talk to our team. For independent guidance on finance systems, see the ICAEW technology resources.
