As a government contracting business, you rely on your accounting system to be reliable, accurate and encompass all your accounting needs. For most government contracting businesses first starting out, QuickBooks is a simple and affordable accounting system. But what happens when your business grows exponentially, and you go from a company making thousands of dollars to millions and your business has outgrown QuickBooks? Now what?
Let’s look at how to know if you’ve outgrown QuickBooks, what other accounting system options your business can use and the myth behind turning to higher priced systems such as Deltek before you’re ready for that step.
How quickly your business outgrows QuickBooks really depends on its size and pace of growth.
QuickBooks is a great solution for when you’re first starting out, but like every other accounting startup system, it has its limitations. If you have long-term business goals of growing and expanding your government contracting business, then QuickBooks will not accommodate your needs forever.
Let’s look at some of the signs your business has outgrown QuickBooks.
QuickBooks will not allow your business to do much more than perform basic accounting processes. If you are just using QuickBooks for check writing and basic accounting reporting, then the time has come to leave QuickBooks for a more robust Enterprise Resource Planning (ERP) system.
This will allow you to run your entire business with better automation and processes while still having the capability to plan. Additionally, if your transaction volume is increasing and you can benefit from a system that can integrate your processes with those serving your customers, then it’s time to leave QuickBooks.
As your business grows, so does the volume of data you need to handle. If your staff is spending time entering data into QuickBooks and then re-entering it into other systems or Excel spreadsheets, then QuickBooks is hindering your business’s efficiency.
Some accounting systems will update data in every aspect of your business whenever you make a change. This gives you, the owner, the ability to see the latest financial record or document version across all aspects of your business.
Unfortunately, QuickBooks only offers basic financial analysis and reports. To really get more in-depth analysis of your financials, it happens in some other software or a spreadsheet.
For example, I had a client who used a spreadsheet to track an in-depth analysis of their cash flow on a weekly basis instead of reaching into the system to pull out a simple cash flow report. This can result in a high chance of user error and more time spent creating the report than making the process more automated.
If you are using multiple systems or drowning in spreadsheets to get the reporting job done, then you should consolidate all the processes into an all-in-one solution that will increase your efficiency.
If it is difficult to determine your true cash balance, your business has outgrown QuickBooks.
Additionally, with many government agencies requiring different billing requirements (e.g., progress reports), it would take you too long to bill your government clients using QuickBooks.
If you need to consolidate financial reports from multiple divisions or you are concerned about meeting the ASC 606 requirement, then you should switch systems. Your new solution will be able to support various report formats, multiple currencies and multiple divisions.
QuickBooks only allows up to 25 user licenses. For a startup or small government contractor, this is probably sufficient.
At some point, though, your business will probably need more people to be connected. The best solution is to have a system in place that will grow with your business and remain familiar to employees without requiring a new system implementation, which can be time consuming and costly.
QuickBooks was designed to handle a small volume of data and can get easily overwhelmed if presented with too much data at one time. If data is becoming corrupted or the software is taking too long to load, you probably hit the system’s functional limit — another sign you’ve outgrown QuickBooks.
The most surefire way to create more efficiency with accounting tasks related to payments and billing is automation. QuickBooks can only automate routine banking and payment transactions. The software often breaks down at scale, and errors can happen when using the most basic automation features with QuickBooks. Those errors can then create inefficiencies within your business, causing countless wasted work hours and thousands of dollars in false payments.
Now that we’ve shown the telltale signs of a business outgrowing QuickBooks, let’s review the benefits that an ERP system can bring to your business.
So, what is an ERP system? An ERP system is a software system that helps businesses manage and automate core processes, such as accounting, procurement supply chain management (i.e., inventory) and more.
Once you outgrow a simple accounting system such as QuickBooks, an ERP system offers you powerful automated and efficient solutions, such as the following.
By centralizing data and automating processes, ERP systems can help your business become more efficient, reduce costs and increase collaboration between departments and divisions.
ERP systems can collect data from multiple sources and be a single source of information. This can help eliminate data duplication and ensure data accuracy.
ERP systems can provide insights across every aspect of your business and allow for accelerated reporting in real-time.
These systems can integrate financial information into a single system, helping to simplify order management, inventory and accounting.
When using an ERP system, most include customer relationship management (CRM) tools that can help your business track customer interactions.
These are just some of the major benefits an ERP system can bring to your government contracting business. Now let’s look at what your business should consider when choosing an ERP system.
When deciding which ERP system is the right fit for your business, there are several factors to consider for government contracting businesses.
These are just several factors to consider when choosing an ERP system. You should explore multiple ERP systems to evaluate which one is the best fit for your government contracting business. Psst — Deltek is not the only ERP system in town.
Unfortunately, there are some ERP system consultants and implementers who push business owners toward a system that has much more functionality (and a higher price tag) than what’s really needed.
For example, you don’t have to move your business to a system such as Deltek Costpoint right from QuickBooks. While Deltek Costpoint is a great system, it can be very costly to purchase, implement and customize. For a business that has just outgrown QuickBooks, Deltek is likely too big of a leap.
Consider the analogy of shopping for a new car. If you currently own an older model compact car that gets you from point A to B, you might want to upgrade to something a little larger, and with a few bells and whistles — perhaps an affordable newer model SUV. You wouldn’t jump from your budget-friendly compact car to a Lamborghini or Porsche. Your upgrade should be something practical that meets your needs and remains affordable.
As alternatives to Deltek, there are several affordable ERP systems that can help your business achieve both short-term and long-term goals. Those systems include:
There are many more affordable ERP systems, but these are a few that offer affordability and can still give your business a much higher level of functionality than QuickBooks. These systems will grow with your business without breaking the bank.
I once had a client who thought they had to jump to Deltek right from QuickBooks. The reason? Deltek was the only ERP system they had heard of. Their business was growing out of QuickBooks and needed a much more efficient and automated system. While Deltek has a reputation as one of the premier ERP systems, its many bells and whistles were simply too much for a small government contracting business like my client. A system like Oracle NetSuite, as an alternative, still provided the ease of use and functionality while being affordable for them. The same can be said for the other systems mentioned above.
As your government contracting business grows, QuickBooks probably isn’t the software system that will help you achieve your ultimate long-term goals.
You want your system to grow with you and your business as you continue to flourish, not one that restricts your expanding business.
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