“When it was just me and five other employees, I knew what was what.”
The CEO of a high-end cosmetics company recently told me. “Now I spend most of my time trying to figure out what’s going on. It’s frustrating.”
Alert: QuickBooks is Not ERP!
Circumstances had changed a great deal for her since the inception of the company. Instead of five employees, there were now forty. Instead of a handful of boutique cosmetic products, her company was now selling close to a hundred. In addition, she was planning to expand sales into other countries.
Her problem was that she was using a tool that had been the right one when she’d first started, but it was no longer doing the job. QuickBooks and other Tier 1 accounting solutions have their limitations – and these become abundantly apparent when companies transform and grow.
Big Lesson – QuickBooks is not ERP
You know you are ready for ERP when start to experience some of the symptoms of QuickBooks fatigue such as:
1. Experiencing File Size Limitations
As businesses grow, data requirements grow and depending on your version of QuickBooks you will constrained as the number of Accounts, Customer, Vendors, and Items. Once a file has grown too large you will not get a warning and your data may be corrupted as the software starts to slow.
2. The Number of Users that Need Access is Growing.
Each version of QuickBooks has its threshold of User – with QuickBooks Enterprise hit the magic number of 30 and you’ll have to become more creative by sharing licenses or taking turns. Not exactly the best way to get the most from your team.
3. Warehouse Requirements are Getting More Complex
QuickBooks loves one warehouse location where you can stock all of your inventory – as long as it isn’t too large. QuickBooks is not adept at tracking large amounts of inventory across multiple sites and warehouses and if you need to rely on co-packers or other outside facilities it will becomes invisible to QuickBooks – now become the time to start thinking creatively!
4. Formulations that Require Lot Tracking can be a Challenge
Once you enter the world of process manufacturing and the use of components and recipes or formulas that require Lot Traceability you’ll have to turn to your trusty spreadsheets to create processes that can be manually maintained to support Lot Traceability and don’t even think about functionality to support a Quality Control process – it isn’t there.
5. Getting a Grip on Item Costs is a Headache
QuickBooks uses the weighted average cost to determine the value of your inventory and the amount debited to COGS when you sell inventory. The average cost is the sum of the cost of all of the items in inventory divided by the number of items – very straightforward unless you have other valuation methods in mind and then it may be time to look elsewhere.
6. Where are the Dashboards and Advanced Analytics?
Don’t get your hopes up. Yes, we all need insight into key areas of performance after all “Data is King”, but this cannot easily be supported by QuickBooks. In order to generate a management dashboard of such matters as profit-and-loss, customer profiles, sales by SKU, you will have to look elsewhere and subscribe to another product solution that will accept data exported from QuickBooks. Every time you want to run a report, you must go through the process of exporting your QuickBooks data into this other system. Alternatively, your employees are manually entering QuickBooks data into spreadsheets, possibly introducing errors and certainly wasting time.
Don’t get me wrong, Millions use QuickBooks with great success but I think even Intuit would agree that QuickBooks is NOT ERP.
As your company grows, transition to a solution that can support your current, and maybe more importantly, your future needs.
Rubenstein / Justman Management Consultants (RJMC) assists mid-market companies to evaluate, select, and implement ERP solutions. Extraordinary support from skilled and experienced consultants. To find out if your business is ready for a change, give us a call at 310-445-5300 - we know ERP.