When to Upgrade to a New Accounting System

When first starting out, most organizations begin with relatively basic accounting software, with many nonprofits specifically choosing QuickBooks.  As your nonprofit grows and expands, it may face a number of challenges as you hit the limits of accounting functionality inherent in particular accounting packages.

Some software is simply not designed to provide specific financial management capabilities.  For example, some growing organizations may require increased visibility into financial and operational performance, such as automating key processes.  Others may not provide universal access, support multiple locations and integrate with other critical applications.

So, as a nonprofit organization, how do you know when it is the right time to upgrade to more robust accounting software?  Which software options should you consider, and furthermore, how do you know if a new system is worth the investment?  Overall, you need to understand the hidden costs of your current system and be able to identify the need for additional productivity before you can make the decision about whether or not to upgrade.

The Hidden Cost of Your Current System

Growing organizations that continue to use basic accounting software may find that they are spending an increasing amount of time doing work outside of their accounting system.  This scenario impacts organizations whose operational requirements outpace what their system can manage.  For example, organizations with sophisticated accounting requirements, such as a grant tracking and purchase order tracking, often find the need to develop “work-arounds” because their system, including Microsoft Excel, a legacy software product, or both, doesn’t provide built-in capabilities for these complex processes.  Work-arounds can lead to duplicate entry errors or reports based on incorrect or stale data, and fixing these errors consumes additional time and resources.

These inefficiencies and work-arounds impair dy-to-day business operations, yet over time often become part of the overall process.  Using an antiquated system does not immediate impact an organization’s cash outlay, so it often seems as if doing nothing is the most cost-effective option.  However, organizations can incur a broad range of hidden costs, the largest of which is employee time.  Nonprofit organizations are typically very lean, functioning with the limited staff members, many of whom wear many different hats.  With a limited amount of employee bandwidth, organizations need to employ efficient processes in place to maximize employee output.

Identifying a Need for Increased Productivity

While it is clear that work-arounds can slow down an organization’s operations, some basic accounting software is perfectly adequate for certain organizations.  There are nonprofits that have and will only ever need to use QuickBooks, for example.  However, basic accounting software and legacy software systems are not designed for growing organizations that need additional functionality to manage sophisticated processes.  To properly plan and forecast, organizations need to budget for technology changes.  For example, growing organizations should not be limited to manual reporting, using Microsoft Excel.  Microsoft Excel and legacy software limitations drive the need for most organizations to eventually graduate to a more robust system.  Organizations want flexible reporting with built-in multidimensional architecture that delivers accurate and timely reports with relevant insights into data.

Is it time to upgrade?

Leading applications enable organizations to easily assemble systems that provide them with the flexibility and information they need.  When considering an upgrade, many organizations conclude that it is smarter to keep their current system.  However, some systems can be extremely cost effective as the time they save an organization is well worth the monetary cost.

See how Microsoft Dynamics GP is helping Non Profits by visiting here.  How to buy?  Call Accountnet at 212.Dynamics.

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ERP professionals providing insight and advice for not for profit organizations.