The Hidden Costs of QuickBooks: Why Now is the Time to Graduate to Modern Accounting Software

Executive Summary

Most small businesses start their financial journey with Intuit’s QuickBooks. With over 80% market share, QuickBooks is the leading and most popular small business accounting application. It’s familiar, user-friendly, and functional for businesses at their inception. However, as businesses grow, QuickBooks often fails to meet their evolving needs. It wasn’t designed for organizations with complex, dynamic requirements that demand advanced financial management capabilities, such as automation, real-time access, internal controls, customization, and integration with other critical applications.

This paper provides a framework to help organizations assess the hidden costs of continuing to use QuickBooks and the financial benefits of switching to a modern financial management and accounting system. It aims to help you:

• Determine the best time to transition from QuickBooks to a more robust, cloud-based system.
• Identify the hidden costs associated with continued use of QuickBooks.
• Evaluate available alternatives that will grow with your business needs.
• Compare the cost of maintaining the status quo with the benefits of switching.

Understanding the Costs of the Status Quo

Organizations accustomed to spending extra time managing QuickBooks workarounds may not realize the inefficiencies embedded in their daily operations. These inefficiencies become routine, and with no immediate cash outlay, doing nothing may seem like the best or only option. However, using QuickBooks incurs a range of hidden costs.

Impaired Financial Visibility from Information Silos

Many companies do not integrate QuickBooks with other key business applications, leading to lots of manual integration points. While manageable with small volumes, this becomes a productivity killer as the business grows. Finance teams must manually research, re-enter, and verify data already captured elsewhere, resulting in lost productivity, data entry errors, and revenue leakage, making it nearly impossible to achieve a 360-degree view of the business.

Identifying Pain Points and Hidden Costs

A study by Armanino, the largest independent CPA firm in California, highlighted several factors that slow down the monthly accounting process:

• Over-reliance on manual, paper-based processes.
• Lack of integration between financials and other critical business applications.
• Decreased staff productivity due to inefficient, non-automated processes.
• Inadequate data and lack of business insight.

These bottlenecks are common as organizations outgrow QuickBooks’ functionality.

Continuing with Error-Prone Manual Processes

Manual processes are inherent with QuickBooks, increasing the likelihood of duplication and data entry errors. This makes it difficult to gain an integrated, real-time financial view of a company’s end-to-end operations.

Using Spreadsheets to Manage Complex Processes

Organizations with sophisticated accounting needs often develop workarounds due to QuickBooks’ lack of capabilities. This includes exporting data to spreadsheets, creating dummy accounts, and additional journal entries. These workarounds can lead to errors, inefficiencies, and lack of control and compliance.

Increasing Data Volumes and System Performance Issues

As businesses grow, QuickBooks often struggles with increasing data volumes. Signs of outgrowing QuickBooks include menu and screen delays, longer report generation times, and system crashes, leading to wasted time and potential data loss.

Letting Technology Do the Heavy Lifting

Eliminating Old-School Options

Traditionally, upgrading from QuickBooks involved expensive and risky investments in mid-market financial software, requiring servers, databases, IT staff, consulting services, and ongoing management. The upfront costs were substantial, leading many businesses to stick with QuickBooks longer than they should.

Moving Financial Management to the Cloud

Cloud computing has changed the dynamics of upgrading from QuickBooks. With cloud-based financial software, the vendor assumes all IT costs and risks. All that’s needed is a web browser and internet connection, eliminating the need for significant technology investments.

Understanding All Your Savings

Despite the inefficiencies and hidden costs of QuickBooks, many organizations hesitate to switch due to perceived costs. However, today’s cloud computing-based systems are cost-effective. Automating critical processes and eliminating spreadsheets can often pay for the new system within months. Organizations can compare the full costs of continuing with QuickBooks against the benefits of a new cloud-based system, revealing a significant positive ROI.

Conclusion

Using a framework to assess the hidden costs of QuickBooks and an ROI analysis comparing the status quo with the benefits of switching can help determine the best time to graduate to a modern cloud-based financial management system. Cloud-based systems like Sage Intacct offer improved visibility, flexibility, effective process management, and significant cost savings.