Changing accounting systems is something most of us do just once or twice in our careers. It is a daunting task but sometimes a necessary one. This article is not a full checklist of all features you may want in an accounting system. But, more some thoughts on how to better understand the risks of changing  accounting systems. To work through some detailed accounting system features, review Which Cloud Accounting Software.

In supporting your decision making, we wanted to draw attention to some key points that a Calxa user may need to focus on. We have put together 3 key questions you should ask before changing accounting systems. This will help you during your evaluation process. Above all, it will ensure that your new system meets your needs.



Risks of Changing Accounting Systems

Firstly, you need to understand the risks of an accounting system migration. How can this affect your business? Without a well thought out plan, you may run into problems when changing accounting systems.

Incorrect Data Migration, for example, can have a real effect on your cash flow. It could cause you to:

  • Send out incorrect customer invoices or miss some altogether
  • Double pay your suppliers.
  • Break links to your front-end systems, stopping your team from receiving payments.
  • Lose ongoing job or project history that require progress payments.

Other risks of changing accounting systems include:

  • Inability to meet tax office compliance
  • Loss of historical data necessary for an unforeseen audit

Looking at some of these risks, it pays to have a plan and ask some questions before changing accounting system.



1.Which Integrations Do I Need?

This is especially important when moving to an ERP system. Part of the motivation is to do everything in one system. We have seen organisations make the mistake of assuming that because they have paid $100k+ for a system, it will do everything. Do your due diligence and make sure it will.


Look for A Reporting Module

Yes, most high-end accounting systems have a reporting module, often a sophisticated one. But do you want to rely on your consultant to write a report every time you need something new? Or you make some change to your requirements?


Consider Your Budgeting Needs

As an example, most ERP systems include some sort of budgeting module. Some are very sophisticated, but others appear to be an afterthought. Think carefully about what you need and check that your new system can deliver it. We’ve yet to see an ERP system, or, to be fair, any accounting system, produce a decent cashflow forecast. The future is often out of scope when it comes to accounting!


eCommerce Integrations

Make sure you consider integration to your website, your ecommerce store, your inventory management system or anything else that will remain outside the new accounting system. Many of these other apps and systems have built integrations to the high-volume accounting systems like Xero, QuickBooks, MYOB or Sage. It’s not often worth their while to do the same for the lower volumes of high-end systems.

Lack of a direct integration does not mean you should abandon your change. The overall benefits of the change may outweigh the need to do manual exports from one system and imports to another once a month. The point is that you should know up front what to expect, what you can and can’t do.



2.What Are My Reporting Requirements?

If financial reporting forms a crucial part of the organisational governance, then you need to check your requirements. It’s sad but true. We have come across organisations in the past who have gone to great expense, both in cash and time and effort. They have changed their accounting system and then found they cannot get the necessary reports they need.

To avoid this kind of scenario, start with a detailed analysis of your current reporting.

  • Does that meet your needs?
  • If not, where is it lacking?
  • What else do you need to report on?
  • Is it detailed enough?
  • Do you need to summarise or group information in different ways?

It’s important to involve your whole organisation in this needs analysis. The finance team may be the supplier of reporting to other managers and teams, but they do not always know everything. Just because no-one is complaining, does not mean they wouldn’t like something better if it were available.



3.What Features Will I Lose?

Every accounting system has something that it does much better than everyone else. If you move, can you live without the benefits of your old system? If you had 1000 classes in Reckon or 1000 jobs in MYOB, how will you cope with the tracking category (soft) limit of 100 in Xero? We have helped Xero users report on 1000 or more Xero tracking category options but you need to plan this in advance and set things up right.

ERP systems are less likely to have those numerical limits but ask the questions.

  • Specify how many accounts you have or will have.
  • Can the new system handle the quantities you need to handle?
  • If you are dealing with large numbers, you need to make sure it will manage transactions of $100,000,000 and balances significantly more than that.
  • If you deal in multiple currencies, can your new system manage the quantities for all of them?

It is important to review your current system and understand what it does well. Yes, it is frustrating that it won’t do everything you need, but it’s likely that it does do some things well. Consider if your new system will do those just as well. Sometimes, it’s OK if it doesn’t.

Mick Devine, CEO at Calxa shares his experience.

“Many years ago, I installed MYOB Exo for a warehouse business. The general accounting functions like payables, receivables and general ledger, were much more cumbersome than the old system. But the time saved in inventory management was phenomenal and management had much better, more timely reports on movements of stock in and out of the warehouse.”

Change sometimes requires compromise but it’s important to weigh up the costs and benefits up front. Don’t be surprised by the downsides afterwards.



Final Thoughts on Changing Accounting Systems

The most common reason for failure in the switching to a new accounting system is lack of preparation. To get your project started, educate yourself and get information where you can. The preparation will create a foundation to your plan.


Talk to your Peers

When you are ready to switching to a new accounting system, the chances are that some of your peers have been there before.

  • Ask around amongst your friends in the industry.
  • Touch base with that random stranger you met at a conference last year (or maybe it was the year before!).
  • And, in the 21st century, we have access to a myriad of online communities who will only be too willing to share their experiences.

Don’t be put off by all the negativities. Often the loudest people in online communities are those whose migration failed because they did not do the right preparation. Listen and read their feedback but try to understand its context as well.


Collaborate with a Consultant

Not everyone has the skills and knowledge to do the necessary analysis and planning well. So, if you don’t, you will know enough to hire someone independent to advise you.

Most consultants are generally honest. They mostly would not sell you a system that doesn’t meet your needs. The problem is that they do not always fully understand your needs. Unless you tell them, they won’t know everything that you want. The good ones will ask the right questions and draw the answers from you.


If you are prepared, you will not wait for them to ask. You will ask yourself the right questions first.