A harsh lesson

 

Too often decisions on accounting systems are made from a position of ignorance. These days most suppliers allow you to use their systems for a trial period. The period is usually too short by itself - but you can enter transactions for several months - so DO. NEVER assume anything.

 

A debit is a debit and a credit is a credit. So surely accounting systems are all the same - right? Choice usually comes down to marketing, experience, reputation, fashion, cost and other factors not directly related to the key question: how well will a system fit my needs.

 

There are differences between systems. Some include stock, others offer limited stock handling, and others do not deal with it at all. Some include debtors but not creditors - a seemingly trivial issue but one which requires additional work at least annually. And so on.

 

Generally we understand at least some of these - but it is well worth looking at how these actually fit your business and personal style. Saying a system handles stock isn't the same as saying it will fit the way you work.


A lot of attention today is on cloud systems. For most on this site, that probably doesn't raise too many issues. But if you spend say an hour a day in your desktop accounting system, how long would you spend in a cloud system to achieve the same things?

 

Recently a new client had an issue with our friendly IRD ?. I could not use his system to deal with it - so I started with a different system. He soon decided to switch to an alternative product from his existing supplier, allowing me to perform my task, while still allowing him to complete his current accounting and GST tasks. It made sense not to duplicate our efforts and the end result would be consistent with regular reconciliation (a word we accountants love).

 

There were delays at his end (including the effects of an earthquake) - but when he finally got into the detail, he found that it simply wasn't going to meet his needs - at least not without significant extra effort on his part. The thought of all this extra work each month led to him returning to his old system.

 

This was not a great result for anyone, and wasted much time - but at least I have learned (again) another valuable lesson. I have a habit of effective learning following trial and error (especially error). So I thought I'd share this little episode with others who could benefit rather than repeat the same errors.

 

If you're thinking of "upgrading", talk with other users, read their experiences, listen to your accountant (although make sure they're not influenced by other factors such as their own preference, or dollars), but most of all, try it for yourself.

 

Approach the trial (don't wait until the last day of the trial - plan this before the trial period starts) with a list of all your tasks. Make sure this covers more than one month so you can try monthly as well as daily tasks. If you're small you could duplicate the last couple of months. Otherwise choose examples that should test all aspects of the system.

 

The system we chose for our personal use in 1998 is still the one we use today. But we do review that decision periodically, even coming close to changing at one stage. We have a better view than most since we have support arrangements in place with four different firms and deal with clients' in a wide variety of circumstances.

 

Naturally all the vendors want us to recommend their products above the others - but accounting systems are not the same - and NO accounting system is universally "better" than everything else in every aspect. It's worth getting it right for your business.

 

Contact us

Email results@businessacademy.nz

 

Skype PhilANZ

 

Phone 04 920 0911

 

P.O. Box 30-545, Lower Hutt 5040

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