Outgrowing QuickBooks and Peachtree

Millions of small businesses that use accounting products from QuickBooks or Peachtree are afraid to make the jump into more complex and expensive software. So I asked Chuck Langenhop, a director at CFO Advisory Services, when companies need to consider upgrading. Langenhop helps companies decide on the proper ERP software on a consulting basis, and sometimes acts as interim CFO for clients.

“Companies don’t realize the time to consider upgrading is when things are going well,” says Langenhop. “You can’t re-engineer business processes and put in new software at the same time.”

Does this mean people often wait too long to start looking? “I think so,” says Langenhop. “They go into a state of denial and overlook the limitations in their current system.”

Warning signs include errors causing returns and angry customers, duplicated databases, and struggling to accommodate new services like e-commerce. When accounts payable and purchasing have two different databases, even though they deal with the same suppliers, you need an upgrade.

How does Langenhop calm down users who start shaking at the mere mention of ERP? “ERP is just a grown up accounting package with multiple interfaces for various modules like sales order entry, inventory, and customer management,” says Langenhop. “If you’re not adding manufacturing support, think of the software like advanced accounting.”

Be prepared to write a check. While QuickBooks and Peachtree systems start around $500, stepping up will put you into the $2,500 to $12,000 range. Costs include both software and implementation, which includes installation, configuration, converting your existing accounting master files, and training.

Popular vendors of Tier 3 packages (QuickBooks and Peachtree are Tier 4) include:

* Cougar Mountain

* Sage Accpac and MAS 90

* Microsoft Small Business Financials

* SAP BusinessOne

Langenhop works with CTSGuides and recommends them as an information resource. I asked Langenhop how managers should approach finding the right software.

“Look at the current state of your business and estimate where you will be in three to five years. I call this gap analysis because we look at the gap between where you are and where you want to be,” Langenhop says. “Are you going multinational? You’ll need to handle multiple currencies. Going to start assembling products? You’ll need modules for Bill of Materials and the like. Going to have multiple locations? You’ll need to roll up transactions from each location with a combined report module.”

Pick a product that will last you at least three to five years, but be realistic in your analysis. If you’re doing $5 million in total sales now, you won’t need a package built for a $100 million company in three years. Buying such a package will cost you more money and time (in training) than necessary.

Langenhop promises the software packages are much more user friendly than in the past. Many have screens following the Microsoft Outlook model, with folders down the left and work areas on the right. Common reports are built in, so customers don’t have to buy extra report packages or hire programmers. Some have basic workflow defined, so a customer tracked in the CRM module flows easily through Sales Order Entry, where the order goes through Inventory automatically and lands in Accounts Receivable.

For your first ERP application, Langenhop suggests a suite of software from a single vendor rather than trying to choose the “best of breed” modules from different vendors. “You certainly don’t want to pick one vendor for accounting and another for CRM,” says Langenhop. Such choices mean integration programming and extra costs.

If all this seems like too big a step, check with your current vendor and ask about modules from third party vendors that add only the extra capabilities you need. Your heavy expansion into e-commerce may be handled by a module that uses QuickBooks or Peachtree as the back-end accounting master program. Such a package will let you handle your new business situation and avoid jumping into the ERP market for another year or maybe more. Just remember that growth means change, and change eventually means new accounting software.