As a company grows, it quickly outgrows the basic accounting software it started with and needs to adopt a more robust solution like NetSuite. In fact, the fastest-growing software companies use NetSuite. To give you an idea:
- 88% of Bessemer’s “Next Cloud Unicorns” use NetSuite
- 56 of the JMP 100 Private Software Companies use NetSuite
- 65% of the last 100 Tech IPOs use NetSuite
- 22 Wall Street Journal “Billion Dollar” Start-ups use NetSuite
Why are these fast-growing companies adopting NetSuite? Well, the results are predictable.
In a recent study by SL Associates, software companies reported stunning improvements in key performance metrics after switching to NetSuite’s cloud-based solution.
In particular, these companies:
- Experience a 50% to 80% increase in self-reported actionable insights
- Increase order processing efficiency anywhere from 45% to 75%.
- See finance staff productivity increase between 20% and 50%.
- Reduce finance close time between 40% and 70%.
- Reduce compliance support time between 25% and 45%.
- Decrease their IT support resources between 45% and 70%.
The Hidden Costs of Basic Accounting Software
Changes in the workplace are accelerating at an exponential rate, affecting all sectors. To survive in this fast-paced world, organisations must be able to quickly respond to changes in market conditions, market opportunities and evolving customer expectations.
Although most businesses recognize the need to innovate, many of them have a hard time finding business application solutions that can meet their demands while also being efficient and cost-friendly.
Small and medium-sized businesses have had to rely on a hairball of wildly unreliable spreadsheets and systems that are too limited.
The relatively low cost of running those systems hides the cost of inefficiencies in routine tasks like the monthly close or, more importantly, the dissemination of reliable information upon which business decisions can be confidently made in a fast-paced environment.
Let’s look at software companies as an example. How can spreadsheets handle sophisticated revenue recognition and fluid price changes? How can “make do” accounting systems support strategic questions like:
- What was the new business Annual Recurring Revenue (ARR)?
- Did we expand ARR through customer upsells?
- How much ARR was lost through downgrades?
- How many customers were churned?
These demands are often placed on accounting teams but without adequate tools.
The Pains of Basic Accounting Systems
In many situations, basic accounting software was a good and inexpensive solution. However, they now bring with them a slew of hassles. Here are some of the biggest problems faced by companies today.
It’s difficult to find out what’s really happening across the business in real-time
Most systems are built for a time when companies could wait until the end of the month to obtain the data they require. It’s not the case today – when consolidated views and real-time reporting can make the difference between thriving and barely scraping by.
Team members waste time playing “Hunt for the Spreadsheet”
Finance staff use spreadsheets to bridge the information gap since data may be found in so many disparate systems. They are frustrated by the amount of time they spend looking for information rather than actually processing it and making decisions.
Financial consolidation takes ages
Cross-posting business data from system to system is time-consuming, and the finance team works late every month to consolidate financial reports.
However, weekly and monthly reports are never completed on time.
Sales forecasting and budgeting processes rely on guesswork, rather than facts
Since obtaining historical data in the proper form and in a timely manner for trend analysis is difficult, employees fill spreadsheets with educated guesses.
Despite the fact that the actual data exists somewhere, finding and extracting it is too difficult.
More accounting is done outside of the financial system than in it
Basic financial systems are built to automate a limited set of accounting activities.
As a result, it restricts how businesses conduct their operations. Companies lack the agility and speed to keep up with changing market conditions and customer expectations.
They try to adapt their processes to fit the software, rather than having a system that is flexible, scalable and can accommodate growth.
When a firm has more customers, vendors, or inventory items than many stopgap systems can realistically manage, it’s easy to run out of headroom.
It is too difficult to add new sales channels, product lines or revenue streams
Every time there’s a shift in the company, employees must work extra to figure out how to adapt to it.
Financial systems of this nature do not have built-in support for everyday functions like making simple changes across matrix SKUs, adding new sales tax rates, or handing bills of materials, kits and assemblies for manufacturing inventory.
Processes that cry out for automation have to be done manually or from spreadsheets.
How Cloud-based Financial Systems Are Different
Cloud-based financial systems are designed for today’s business environment, where agility and speed are important. They support growth with flexibility. This is why more and more young companies are switching their core financial systems to cloud-based accounting software.
There is a world of difference between software designed for the cloud and software designed for the legacy world.
NetSuite has never been a desktop product. It has always been a multi-tenant solution. In contrast, many basic accounting solutions still come in a desktop version.
So what are the benefits of cloud-based systems like NetSuite over basic financial systems? Here are some quantifiable ones!
Lower Finance and Operations Headcount
Finance and operations tasks are automated, which frees up employees’ time to focus on revenue-generating strategic projects and allows the company to scale while keeping headcount flat.
Revenue Recognition and Subscription Models
Cloud-based systems have been designed to stop the potential for revenue leakage and identify upsell opportunities. This allows young companies to gain insight into their financial dealings.
All revenue centres are linked to the appropriate set of transactions, making it easier for organizations to cost-effectively adjust pricing or packaging strategies on the fly.
Streamline Billing and Invoicing
Teams can now reduce manual data entry and avoid errors with automated billing and invoicing. They can also collect cash faster and reinvest it back into the growing business.
Reduced Financial Close Time and Manual Data Entry
Automate and regulate approvals on transactions ranging from Accounts Payable Bills to Journal Entries, speed up period-end close by using system controls, improve financial accuracy, and reduce month-end processing costs and time.
Lower Audit Costs
With the ever-changing compliance standards, the heavy use of spreadsheets is time-consuming and subject to risk for small accounting teams. This can lead to higher audit costs or longer audit processes.
Platform for Innovation
Cloud-based systems allow you to easily launch new business models and expand internationally. This type of platform evaluates all possible ways to scale and increase revenue. It supports multi-currency, multi-entity, and different accounting standards.
If you’re dealing with any of the pains described above, where basic accounting solutions may be stifling your business growth, NetSuite’s cloud-based solutions might be worth considering.
Moving your company to NetSuite’s integrated suite of cloud-based solutions allows for more efficient and effective business operations—essential for growing an organisation and enabling employees to react to client and organisational needs in real-time.
To implement this, you’d need to hire a partner to help with things like data migration, training, performing checks and balances before the system goes live, ongoing support, and generally a smooth transition.
You can book a call into our calendar and our team of NetSuite experts will help you evaluate your business needs and develop a roadmap to support and grow your organisation.