Harley, Blue Dog, and Change

Harley is a Bichon Frise we rescued when his second owner rejected him. Besides being adorable and sweet in so many ways, he is also the most anxious dog I have ever met. My husband calls him PITA, which stands for Pain in the A____. He is 11 years old, and he has been with us most of his life. 

Mindy Barker | Barker Associates

Harley loves to play with his toys, with and his favorite is Blue Dog. It is challenging to identify Blue Dog as a dog at this point, as you can see from the picture above. 

Blue Dog is to Harley like a work process is to most business people, including accountants. Harley wants his Blue Dog, and we want to stick with the same comfortable process.  

Our resistance to change is one of the core reasons most accounting system implementations go bad.

~Mindy Barker

Pushing an existing bad process into a new system is a plan for disaster, yet I see it happening all the time. As the investment market increases pressure on companies to produce fast results, companies try to ramp up the speed to implement new systems to deliver faster results. The compressed timeline does not allow for sufficient planning and training of staff on the new system.  

I also frequently find that the system selected is not right for the company. Software cost ends up being the deciding factor over functionality when deciding whether to upgrade software. A comprehensive analysis of software capabilities to support scalability, growth and control turnover is often a critical missed step in the overall selection and evaluation phase of the project. 

How can software selection control turnover?

Accountants today are in high demand. Accountants who are responsible for the day-to-day processing of accounting transactions are not interested in performing vintage-style repetitive data input and cumbersome processes when more automated options can be implemented. Talented and well-educated accountants at this level are contacted by recruiters a minimum of 2-3 times a month. The career-path accountant wants to be challenged to create more efficient processes. You will lose them if you force them to continue to deal with antiquated systems.  

When evaluating new financial management systems, QuickBooks may be included as the incumbent system for businesses who started as a small business but have grown over the years. 

I have a very complicated relationship with QuickBooks. On the one hand, I have a tremendous amount of respect for what they have accomplished from market penetration in the business world. The result is the low tangible cost for maintaining the system, which (here’s where my relationship gets complicated), creates a barrier for leaders to open their minds to more robust ERP systems. Leaders resist taking the plunge to move up a level to a more strategic system until they are forced to do so as a result of a financial transaction with a lender or equity financial backer. I have seen businesses with annual revenue of $50 million still using QuickBooks, which drove off great staff and created chaos.  

Besides the internal turmoil caused by the failure to evolve technically, there are implications to enterprise value. Financial reports that fail to provide clarity during due diligence are limiting factors to monetize the Enterprise Value of the business. Understanding the quality of earnings or completing an audit are other critical functions that require precise, succinct financial reports. 

The ease of using a system such as QuickBooks can equate to Harley and Blue Dog. I don’t think our household will suffer (much) if Harley ever has to replace Blue Dog, but I am not so sure about fast-growing businesses who continue to rely on QuickBooks. The lack of functionality and ease of integration can prevent you from seeing the entire story of the company for which you have responsibility.  

Consider the following indicators that you need to review your financial ERP system:  

  1. Experiencing a high turnover in the accounting department. 
  2. Month-end close takes more than seven days. 
  3. Reconciliation of Bank Accounts takes more than 30 minutes. 
  4. Customer collections are not timely. 
  5. Lack of clarity of profit of specific services or products. 
  6. Personnel expenses by department not readily available. 
  7. Processing of corporate credit card transactions requires more than an hour of an accountant’s time. 

With the right financial story, you are empowered to grow your business. Take an honest look at your situation using the factors listed above. Barker Associates helps our clients with a balanced look at their position and the path to financial clarity, and we are happy to help you, too. Contact us today to schedule a free consultation – cfo@mindybarkerassociates.com.