According to a survey by Sage Intacct, over one-third of financial executives are actively searching for finance and accounting software alternatives. Whether you are on QuickBooks, or Xero, you may be experiencing some limitations of the finance & accounting software you implemented early on in your startup days. But when is the right time to migrate to a new, more advanced solution?
Our panel of experts discuss the major signs an organization has outgrown its current finance and accounting software and provide suggestions on what alternatives industry peers are using. We will also be speaking with a finance leader who has recently moved off QuickBooks, and why.
The Challenges of Scaling Finance and Accounting
Businesses often start with tools like QuickBooks, which serve well in early stages. However, as complexity increases, these systems’ limitations can hinder growth:
- User Limitations: Restricted role functionalities as team sizes grow
- Manual Processes: Reliance on spreadsheets increases inefficiencies and error risks
- Industry-Specific Needs: Difficulty meeting specialized accounting requirements
- Growth Hurdles: Systems fail to handle data or provide insights needed for scaling
1. Revenue Recognition Limitations
Businesses frequently outgrow basic accounting platforms like QuickBooks when facing complex revenue recognition challenges.
Key indicators include:
- Inability to handle subscription-based revenue models
- Challenges with ASC 606 regulation compliance
- Manual tracking of deferred revenue in external spreadsheets
- Extensive time spent reconciling revenue data across multiple systems
Example: A company with complex subscription models may find QuickBooks unable to track future bookings, requiring extensive manual work in Excel.
2. Reporting Constraints
As businesses scale, they require more sophisticated reporting capabilities for real-time, actionable insights, which basic systems often fail to provide.
Critical limitations include:
- Lack of real-time reporting functionality
- Inability to generate management and operational reports
- Manual compilation of financial data from multiple sources
- Increased risk of data entry errors
- Potential negative impact on company valuation during due diligence
Example: Transitioning to a robust Finance as a Service (FaaS) platform allowed department heads to access real-time budgets, improving decision-making and efficiency.
3. Internal Controls and Audit Risks
As businesses grow, internal controls and audit readiness become critical. QuickBooks and similar entry-level accounting systems pose significant compliance challenges:
- Easy to override and modify accounting records
- Lack of robust internal control mechanisms
- Absence of proper segregation of duties
- Quality of earnings reports often flag QuickBooks users for inadequate systems
- Potential loss of investor confidence due to data inconsistencies
- Increased anxiety about financial data integrity
Example: During an acquisition, potential errors and inconsistencies in financial data managed outside QuickBooks can put a deal at risk in the due diligence phase.
Real-World Perspective: A Case Study
Allison Wasserman, co-founder of True (a software solutions company), shared her experience of outgrowing QuickBooks:
- Extensive manual work outside the accounting system
- Inability to track key metrics like client churn and upsell opportunities
- Challenges in generating meaningful management reports
- Limited capability to manage budgets across departments
Moving off QuickBooks: Upgrade Options
Businesses typically have two primary paths when outgrowing their current system:
1. In-House System Implementation
- Time-consuming: 9-18 months to complete
- High risk of implementation failure
- Requires significant internal resources and expertise
2. Outsourced Finance and Accounting Solution
Providers like Consero offer pre-defined solutions tailored to business needs, which includes bookkeeping, FP&A, and CFO-level services for strategic growth.
- Faster deployment: 30-90 days
- Leverage existing best practices and infrastructure
- Access to specialized expertise
- Reduced implementation risk
Key Takeaways
- Proactively assess your financial system’s capabilities
- Look for signs of manual workarounds and limited reporting
- Consider investing in infrastructure ahead of anticipated growth
- Evaluate solutions that can scale with your business
When to Consider an Upgrade
To future-proof your business, assume your success and invest in scalable systems early. This proactive approach ensures smooth transitions during growth and avoids costly delays later. Experts suggest upgrading your financial systems when:
- Current software cannot keep pace with business complexity
- Manual work dominates financial processes
- You lack real-time visibility into financial performance
- Data lives outside the core system.
- Compliance and audit risks become increasingly challenging
Outgrowing finance software is a natural part of scaling a business. Identifying the signs early and transitioning to more robust systems or outsourcing can save time, reduce risks, and enable strategic growth. Don’t wait until inefficiencies hinder your success—ensure your finance and accounting processes remain efficient, compliant, and strategically aligned with your business objectives.
