7 Signal’s Your Company Is Outgrowing Its Accounting Capabilities

Upgrading, changing or making new integrations to your current accounting and bookkeeping system can seem daunting to some organizations.  We know because we’ve worked with many San Diego businesses that resist change so long they even realize their old desktop systems — things that worked fine in the early stages of business — were actually hindering growth.  Information technology lies at the heart of your small business. The right IT architecture can provide your business with a flow of information – about procurement, production, schedules, delivery, financials, even compliance – that seamlessly keeps you going and growing at optimum pace.    

It is recommended that each year, management or IT take a hard look at your organization and if you recognize any of these warning signs, consider whether it’s finally time to update how you’re handling your accounting processes.    

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Here are 7 Red Flags to be on the Lookout for:

    1. Your books close late.
    2. Your accounting processes dictate your business processes.
    3. As a business owner, you’re handling the “sensitive” accounts yourself.
    4. Accounting activities are costing you money.
    5. Payroll mistakes are causing headaches and distract employees from primary business activities.
    6. You’d like some business advice you can’t get from current employees.
    7. Your business is growing like gangbusters.

These issues are quite common, and it’s almost too easy to say “comes with the territory” when running a small, growing startup.  But in fact, accounting problems can cost your company money, curb your growth, and even lead to business failure.  Are you ignoring any of these in your company?

  1. Your books are closing too late.

So maybe your in-house accounting team are stressed out and overwhelmed. Or they’re over their heads with things to do. Or your current software systems are simply outdated and overloaded.  Closing the month late is a sure sign or indication that something’s wrong with your accounting process.

  1. Your accounting processes dictate your business processes.  

If you are offering a new service to clients, but have not figured out how to analyze its profitability or every account requires a manual adjustment, then you are not only wasting time, you are also running a business without actually knowing your real numbers. As Jeremy Piven’s character in the movie PCU said, “don’t be that guy”.  

  1. As a business owner, you’re handling the “sensitive” accounts yourself.   

This is not unusual for a small business, but it is a very clear sign you’re not comfortable with your current accounting processes or personnel managing your company finances.

  1. Accounting activities are costing you money.   

If your payroll, AP, and collections duties are combined and delegated to one person, then mistakes and delays almost certainly occur regularly. Of which both cost your business money — money that could be invested in new products, services or upgraded equipment.   

  1. Payroll mistakes are causing headaches and distracting employees from primary business activities.

Even a tiny error on a paycheck can be a very big deal to the affected employee.   Obviously, making corrections takes time — not all mistakes (especially when they’re in the employee’s favor) are reported. And whether it’s a few hours short or unrecorded paid time off, it’s for sure to be a distraction that creates concerns among your staff.    

  1. You’d like some business advice you can’t get from current employees.

Where do you go for meaningful key performance indicator (KPIs) financial metrics?  Who do you trust and rely on for managing monthly and full-year forecasting?   What about actual vs. budget reporting and variance analysis?  If the answer to any of these questions are “ I do it” or worse “I don’t know,” then you are not taking a data-driven approach to managing your business by the numbers.    

  1. Business is booming.   

This one is a sleeper, but it’s very important to recognize. If your startup is evolving quickly, the needs you have this quarter will be different from those you have next quarter. In-house accounting staff, working to keep up with a growing number (or size) of customer accounts, are unlikely to recognize the necessary changes in time to correct you’re accounting and financial processes and maximize your company’s growth opportunities.  

Conclusion    

Thomas Huckabee, CPA is committed to being at the forefront of technology to help and support our clients as they grow, by designing and delivering scalable cloud-based general ledger accounting solutions,   We are a certified QuickBooks ProAdvisor and a registered NetSuite partner. We have designed systems for startups to multi-billion dollar enterprises, as well as for government contractors that were information rich and DCAA Compliant.  We provide an extensive range of financial accounting and reporting services with a comprehensive industry-focused approach.  Contact us for a free consultation.  

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