The Best Alternatives to QuickBooks for Growing Businesses

QuickBooks is an incredibly popular platform in the small business eco-system. Many small and startup companies use QuickBooks for their accounting (SMBs account for a very high portion of the nearly 7 million users worldwide). In fact, many high market cap companies with simple operations (such as private equity) use QuickBooks for their day-to-day accounting and general ledger.   You often see this when a company has a centralized accounting staff/team and basic payables and receivables with little assets and no inventories. 

Let’s face it: accounting is not “sexy”, nor does it get the attention it deserves–until one cannot report on performance or needs to rely on manual spreadsheets for basic accounting information.  Talk with any CFO/Accounting Manager of a growing small cap company on QuickBooks, and you will quickly learn about the manual efforts involved; plenty of late nights and weekends required to provide the numbers needed to support the business. 

Sound familiar?

So, what are the signs that you are outgrowing QuickBooks? This article outlines the challenges businesses experience when their needs have moved beyond QuickBooks. We’ll also cover some great alternatives that won’t break the bank, along with the risks you need to watch out for.

Indicators You are Outgrowing Quickbooks

Typically, companies under $10 million are likely to use Quickbooks, and in some cases larger organizations with very simple operations can use Quickbooks to meet their basic accounting and reporting needs. However, as organizations grow, they begin to experience pains in this process. Some of the most common areas for concern are:

1. Manual processes – Accounting is often relying on manual processes and spreadsheets to address issues like revenue recognition, allocations, adjustments, commissions, or other calculations just to book a journal entry into QuickBooks. These methods introduce a significant risk of errors in reporting.

2. Spreadsheet overload – Data for inventories, assets, transactions, etc. are sometimes maintained in spreadsheets between multiple users/contributors that become the basis of QuickBooks entries.

3. Multiple entries – Accounting teams find themselves using multiple entries to book one transaction or relying upon multiple journal entries because the application lacks the functionality to book the transaction.

4. Maintaining multiple entities – Consolidations and reporting are performed manually in spreadsheets while maintaining multiple companies in Quickbooks.  This complicates the month-end close process and reporting efforts while introducing enhanced risk of errors in the process.

5. Added products and lines of business – New streams of business or added revenue streams (such as subscriptions or additional products) have made revenue recognition manual and complicated, resulting in maintaining separate processes and creating manual journal entries.

6. Expansion internationally or regulatory requirements – The company needs to maintain additional entities and currencies.  In regulated industries sometimes separate accounting must be performed for the treatment of different types of revenue, products, assets, etc.

7. Lack of visibility – With transactions potentially occurring outside of the system, it is impossible to drill down in financial reporting to identify root causes, changes, or outliers.

8. Sales forecasting and budgeting are overly complicated – Budgets are maintained outside of Quickbooks. This creates a manual process for performing budget-to-actual or product forecasts that cannot be compared to actual sales.

9. Management reporting demands are growing – Greater analysis and performance metrics require manual reporting in Excel and cannot be performed in the application. This also makes it incredibly difficult to support the company’s key performance indicators (“KPIs”).

10. No Integrations – There are limited to no integrations with CRM, sales applications, payroll, or other company applications that could streamline business processes.

These are the common challenges faced in many growing businesses, but too often accounting isn’t integrated into necessary changes. They typically work more hours, add resources and create several workarounds (usually using spreadsheets to upload, extract and manipulate data). This is all valuable time that can be better spent elsewhere.

Things To Consider When Replacing QuickBooks

Once you’ve made the realization that your business can be better served by substituting QuickBooks, you should think through the following key aspects before making a software selection:

• Industry – What is your industry? Are there inventories to manage? Do you make something, or do you buy and resell, or both? Are you in the services business, with a need to track time and materials to bill customers?  Do you have various configurable product options?

• Functionality Needed – Ideally it is best to combine as much of your needed functionality as possible into one software application. Doing so will minimize additional integrations and separate databases of information. 

• Operations Model – How many users need to access the system? Where are they located? Do you operate multiple entities and different charts of accounts?  Are there intercompany transactions to consider?

• Growth & Expansion – What are your company’s plans for growth? Will you add entities? How about expanding into other countries? Will there be a need for other languages on invoices, etc.?

• IT Support – Do you have your own internal IT department or rely upon a managed services provider?

• Regulatory Compliance – Are there areas of your business that require a separate ledger? Do these entities have different accounting standards?

Many of these items lead companies to seek systems beyond QuickBooks. Whereas QuickBooks is typical of a standard accounting software, it lacks expanded functionality. As companies look to migrate away from QuickBooks, their needs are greater and often encompassed by the term “ERP”. ERP stands for enterprise resource planning and involves more robust features designed to integrate business processes with accounting, inventory management and customer relationship management (“CRM”).  ERP applications also enhance business reporting, KPIs and business intelligence tools. 

A Comparison of Leading Alternatives

As growing companies consider ERP applications, they will find a variety of formats:

1. Fully Cloud-based or Software as a Service (“SAAS”) – The application is hosted by the software provider and the software provider maintains the core application code. However, the customer’s data is their own, along with their configuration.

2. On Premise – The application is managed and hosted on your own servers.   These servers could be in your office, in a data center you own, or in a 3^rd party data center.

3. Hosted by a Provider – Some ERP software applications work with partners that host the software on their own servers and manage the application for clients. This is similar to fully cloud-based or SAAS options, except instead of the software providing the service, it is a partner company.

When it comes to companies that are growing and looking to migrate from QuickBooks to an ERP, the most common setup is fully cloud-based/SAAS.   This provides the fastest implementation, a lower cost model, and less maintenance requirements. The following chart by Nucleus Research outlines software providers most likely to replace QuickBooks for small business enterprises:

Key leaders (and commonly selected Cloud ERP applications) include NetSuite, Epicor, and Acumatica. Each application may be similar in functionality/features and costs but will vary in how they operate. This is why it is important to have a comprehensive selection process requiring the software provider to perform a scripted demo addressing your business processes.

The following is a brief synopsis of the three leading providers:

NetSuite

NetSuite, which is owned by Oracle, is a pure cloud based/SAAS application. NetSuite provides the most robust functionality and greatest integration of features from core ERP functionality to human resources management, CRM, and e-commerce.

NetSuite also has the greatest number of implementations across the globe and spanning industries. The solution is a leader for companies looking to expand internationally and grow across multiple entities. We believe it is ideal for businesses that operate services, resale/wholesale, or light manufacturing.

Acumatica

Acumatica was created with the traditional accountant in mind and has comparable features to NetSuite. Users say that the solution takes an accounting approach to transactions. Acumatica processes transactions in batch as opposed to real-time.

If your company is growing domestically (U.S.), you can rely on Acumatica to be more robust than QuickBooks and more competitively priced compared to other platforms.   However, if your organization is looking to expand internationally soon, it’s likely that you’ll eventually replace Acumatica. That’s because Acumatica works best in domestic operations of non-profits, services, and products companies with light manufacturing.

Epicor

Epicor was originally an on-premises ERP (and many of its customers still operate an on-premises version which may be hosted by one of Epicor’s many partners). 

Epicor was later enhanced to become a SAAS solution which was finished in 2019.  The company relies heavily on its internal solution partner network for enhancements and development of the software. Epicor customers use Microsoft SQL Server Reporting Services or SAP Crystal Reports which makes it popular with traditional Microsoft users.  This option is better for manufacturing than the other two software providers, but lacks functionality related to CRM, ecommerce and tax management.

Common Pitfalls to Avoid

Before embarking on a migration from QuickBooks, you’ll want to consider these common mistakes:

• Using multiple pointed solutions/applications to address every aspect of your business. This will only cause complexity, multiple sets of data, and costly integrations. Select a system that addresses 80% or more of your needs–not 100%.

• Not performing a software selection with a scripted demo of your business processes (with each potential software provider) could be a costly oversight.

• Not including key stakeholders in the selection and implementation process may result in poor user adoption.

• Not having executive level support and participation will lead to problems down the road.

• Underestimating the timeline and cost, and planning for contingencies. Back-up plans are important for a reason.

• Migrating legacy data at a transaction level which goes too far back historically. If possible, it’s best to only migrate account balances and open transactions.

• Not considering the long-term growth of the company. Focus should be on the future business model, not just the current environment. Don’t fall into the trap of what you did before (“we’ve always done it this way”).

• Adding project “scope-creep” in trying to address every need and business exception. Remember the 80% rule.

• Not involving key stakeholders/power users in the testing and implementation. Real buy-in can only be achieved once users understand how their day-to-day will be impacted.

Most implementations/migrations from QuickBooks to a cloud-based ERP application should take 6-10 months on average.  Having dedicated resources and project management greatly expedites the process, keeps things on track, and ensures that avoidable errors don’t derail months of effort.

Sagin LLC is a management consulting and IT managed services firm with independent expertise in the selection, implementation and management of ERP applications.   Should you wish to learn more about ERP applications and enhancing your business performance you can contact us at:  info@saginllc.com or +1.312.281.0290