Have you outgrown your accounting system?05 February 2013 by FinancialForce.com
Whether you are a young start-up, a thrusting and ambitious mid-sized business or a fully fledged multinational looking to go public, every business, whatever its stage of maturity, faces the organisational, technological and economic challenges of growth.
It is this excitement that motivates entrepreneurs, business owners and professional managers to recast ideas and dreams into business plans and action. All businesses progress through well defined stages of maturity, commencing as a 'start-up' (based in the garage and dining room table), taking on the first fulltime employee, moving into proper premises, the first bookkeeper, accounting package and so on.
But as an organisation matures and grows, the first cracks often start to appear. Are stress fractures appearing as your company grows?
The entrepreneurial skills that drove initial success become stretched. More formal human resource procedures, audits, regulatory compliance and banking covenants take owner managers into unfamiliar territory and away from running the business.
At the same time, rapidly growing volumes and diversification of the business mean that proprietors no longer have personal knowledge of every business deal or visibility of cash flow, new prospects, the order pipeline and processing backlogs. Errors start to creep in.
Some purchase invoices may have been paid twice in error and the company's auditor expresses concerns for the first time about controls. Gaping holes in processes start to appear as the company's systems struggle to keep up with the demands. The business is showing signs of distress and is running faster to stand still. With every advance in growth, your managers scream for more staff to increase capacity.
Most critically of all, nobody seems to have the time to introduce better systems and processes. Ironically, the business probably planned when and who it was going to hire, its new premises, the products and the markets it was going to attack - but it didn't consider fully the systems and processes it needed to underpin and sustain scalable growth. So how do you avoid a crisis? How do you know when you have outgrown your accounting system?
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Have you outgrown your accounting system?