When is the Right Time to Migrate from QuickBooks?

Kevin Lalor for Bi101 writes: The word “startup” conjures images of a small cadre of dedicated founders working together to hack together solutions that provide value to the marketplace. In today’s lexicon, “startup” is an almost romanticized term, bringing visions of employee camaraderie, casual work environments, and dedication to solving a problem.

But when does a “startup” stop being a startup? When does it just become a company?

When should a startup add more bureaucracy? Courtesy of businessincubatorsindia.blogspot.com

Adam D’ Augelli, an associate at San Francisco based True Ventures, claims that when “the company begins to have a more bureaucratic structure which results in processes that inherently make it less startup like,” then they should no longer be considered a startup.
Based on this definition, one sign that you are outgrowing the “startup” business is when you realize that QuickBooks is not provide the bureaucratic structure to support your business. Below are 5 indications that a startup is ready to add some bureaucratic structure and move beyond QuickBooks:

1. GAAP Compliant Financial Statements - Adding bureaucracy means recognizing the need to standardize processes, particularly within the financial department. This includes complying with GAAP accounting rules. But some of you may ask, “Is QuickBooks GAAP Compliant?” Unfortunately, by itself it is not. When startups recognized the need to be GAAP Compliant, then it is time to migrate from QuickBooks.

1. QuickBooks does not comply with all of the GAAP Accounting Rules. Courtesy of clockworkaccounting.com

1. Accounting is performed in Spreadsheets – Another indication that it is time to move beyond the “startup” phase is when most of the accounting is performed in spreadsheets outside the financial system. Accounting systems are supposed to make life easier by automating processes and ensuring that the right accounts are debited or credited. When more debits are tracked outside the system rather than in it, then it is time to migrate from QuickBooks.
2. Additional 3rd Party Software is required to Manage the Business – QuickBooks is great at creating invoices, paying a handful of employees, and tracking inventory. It is not great at project management, resource tracking, forecasting revenue, or calculating vendor specific object evidence of fair value. When you begin to need more of these services to stay on top of the business, then it is time to migrate from QuickBooks.
3. Reports take days to create – To stay nimble in changing business conditions, managers need accurate and timely information. But if most of the reports are created in an ad hoc manner within spreadsheets, management needs to question not only the timeliness of the reports but also the accuracy. If accurate reports are not timely, then it is time to migrate from QuickBooks.
4. Unnecessary Data Entry – This occurs when data is entered into QuickBooks but then also has to be entered into another system (like Salesforce.com). When employees spend most of the day reentering information into different system, then it is time to migrate from QuickBooks.

Aspects of the “startup” business should never disappear from a company, including the culture that you created, the focus on providing value for customers, and the drive to solve problems. But a little bureaucracy within the accounting department might actually make life easier.