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Top 5 Signs You Have Outgrown QuickBooks

Read on for signs that growing businesses should consider options beyond QuickBooks.
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QuickBooks Online (QBO) is one of the most popular cloud-based accounting software programs for small businesses. With low subscription costs and a very user-friendly interface, many businesses find it the best option to track their income and expenses and manage their financials. QuickBooks is a simple, affordable option with a large user base and robust costumer support. At one time, QBO might have been the best option for your business; however, if your business has grown or experienced other changes, QBO may no longer best serve your accounting software needs. If you are using QBO but finding it increasingly challenging to effectively manage the accounting of your business, you are not alone! We frequently assist clients in evaluating if QBO is the best avenue for their business or if they need to upgrade to a more robust accounting system to better fit their needs. Below we discuss five areas of considerations and signs that you may have outgrown QBO.

Need for Industry Specialization

For a business operating in an industry with an increased need for specialized process or reporting, QuickBooks may be falling short on options to provide these required features:

  1. Inventory Management – Businesses with complex inventory needs, such as manufacturing, assembly, or robust tracking requirements, might find that QBO inventory features are limited. Inventory features in QBO depend on the subscription plan you use; the more advanced inventory capabilities are available with the Plus and Advanced subscriptions. Careful consideration of your inventory management needs is a good idea prior to selecting your accounting solution.
  2. Nonprofit Accounting – Larger or more complex nonprofit organizations often note difficulties using QuickBooks for grant management, such as inability to release restricted funds and create a net asset rollforward.
  3. Job Costing – Businesses in construction and real estate (CRE) need to track and analyze the cost associated with specific projects, jobs, or contracts. While QBO offers job-costing capabilities that are adequate for many small and midsize business, larger companies may require dedicated project management or construction management software for comprehensive job costing and project tracking.
  4. Manufacturing – Manufacturers with complex requirements for production scheduling, detailed manufacturing cost analysis, and shop floor control will often need specific manufacturing software solutions to better meet their needs.
  5. Allocation – Many organizations have a need for distributing expenses across multiple categories or accounts. QBO lacks an automated feature allowing organizations to do this, and businesses have to allocate expenses manually through journal entries using classes or locations outside of the system in Excel or other third-party solutions.

Organizational Structure Complexity

As business operations expand into a different geographical area or industry or to meet various legal and tax considerations, you may have a need to work with multiple entities and provide consolidated reporting across all business units. QuickBooks is not set up to handle multiple entity consolidations within the system. Recording of intercompany transactions adds complexity as well as manual entry. Each entity needs a separate QuickBooks instance and subscription. Accounting data has to be either exported and manipulated outside of QuickBooks or a third-party solution (requiring an additional subscription and extra cost) has to be utilized. Multi-entity consolidation often becomes a huge drain on resources when your system lacks automation and the ability to consolidate directly.

Internal Controls Challenges

QuickBooks’ simplicity, affordability, and accessibility sometimes comes at a cost of less than adequate internal controls. While there are measures system administrators can take to prevent users from posting to closed periods, editing, and even deleting transactions, these controls are not automatic and require manual setup. The most common internal controls challenges are:

  1. Limited audit log – QuickBooks provides a canned audit log report. This report is not user-friendly as it relates to a selected time period and includes all transactions within the time frame with all changes ever recorded. It is time-consuming to zoom in on a transaction in question.
  2. No approval workflows – QuickBooks lacks any approval workflows for posting transactions or approving journal entries. Documentation of approval has to be either attached to a transaction in a separate file or documented outside of the system.
  3. User limits – Each QuickBooks subscription level includes a certain number of user accounts, which sometimes creates constraints on the number of team members who can work in QBO at the same time. This may even lead to sharing credentials among employees or other users, which poses security risks, opens the door to improper transaction recording, and may lead to an increased risk of fraud.

To help mitigate the risk, it is essential to establish good accounting practices, reconcile accounts on a regular basis, and perform internal mini audits of the software. More advanced accounting platforms provide robust built-in solutions that assist with maintaining adequate internal controls.

Increased Reporting Needs

When businesses deal with increasingly complex transactions and require highly customized or specialized reports for strategic management analysis, QuickBooks may not be able to provide satisfactory results. Frequent signs of insufficient reporting capabilities include:

  1. Increased reliance on other software – Frequent editing and manipulation of data outside of QuickBooks for reporting and analytics (in Excel or with the help of third-party solutions)
  2. Insufficient analytical features – Inability to import statistical data for KPI/metric reporting and analysis
  3. Lack of customization – No user/role-based dashboards
  4. Inability to provide real-time reporting and business visibility
  5. Limited dimension tracking – QBO only tracks categories (general ledger codes), classes, and locations; no additional or custom dimensions are available

Businesses and organizations should always anticipate any future reporting needs to assess if QuickBooks is the right solution. Considering compliance reporting to meet industry regulations and standards also should be taken into consideration.

Limited Technical Functionality

Many QuickBooks users are familiar with creating workarounds due to the lack of automation QBO provides for certain processes. Most common items to note include:

  1. QuickBooks does not support complex accounting workflows like dynamic allocations
  2. Lack of customized workflows 
  3. Limited data import capabilities 
  4. Reliance on manual processes – Entering data into QuickBooks and then re-entering, which may lead to errors and duplicate data entry

Ultimately, deciding whether QBO is the best option for your business’s accounting software is dependent on several factors. Your industry, the size of your business, the complexity of your accounting workflows, and your future reporting needs are all crucial factors to consider. If you are currently using QBO but are getting frustrated with its limitations and its inability to meet your financial management needs, contact our team. Our Outsourced Accounting Services professionals at Forvis Mazars can help you evaluate what accounting system is best tailored for your business’s current and future needs. Accounting software assessments and conversions can be daunting, but we are here to assist, providing the tools and resources needed to help prepare your business for future success.

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