Choosing the Right General Ledger Software
Over the years, I have been involved with scores of general ledger ERP system searches and implementations at companies ranging from high technology (internet), medical device manufacturing, automotive service, specialty pharmaceutical and multi-location retail. In each and every one of these projects, we had to go through extensive requirements planning to make sure that the GL software we chose would match the company’s needs and future growth and lead to a significant value-add to the company for all the time and resources these projects take.
At this time, there are many strong general ledger software programs that are available in the market and almost all of them offer cloud (SaaS - Service as a Software) capability meaning you no longer have to require the internal IT infrastructure of servers, equipment and maintenance to run the program as this is all provided by the software provider. In this article, I will go through the different criteria you should consider as you try to decide which program is best for you. These criteria are the same that are included in our GL Software Decision Tool on this site that compares your responses to these criteria against 15 of the most popular and renowned systems in the market today. After you read this article, we recommend you go through our GL software tool to see which of these programs best meet your needs as it would be a great jumping off point for you to narrow the list down a bit before you reach out to the software providers for discussions and demos.
Are you ready for a new general ledger system? There are many reasons why you may be considering a new GL system. Here is a list of common reasons companies make the change to upgrade to a stronger system:
Company growth - as companies grow, the volume and value of transactions can out-grow the initial GL systems the company started with. The growth of the company also provides more resources to allocate to better accounting and reporting systems so that you can better steer the company to improving performance and profitability.
Complexity growth - over time, companies will many times become more complex with multiple locations or even multiple legal entities. These types of changes will lead to quickly out-growing GL programs such as QuickBooks which are not as capable of consolidating or reporting on multiple locations and certainly not on multiple legal entities.
Timely & actionable data - Another common issue is that your current GL system is not robust enough to allow your accounting staff to close your books and produce financial results in a timely fashion due to the number of steps they have to follow or “outside of the system” routines they have to complete in order to produce basic statements.
Need better reporting - It is also very common that your current GL system simply does not provide the built-in reporting that you need. Your staff is most likely having to spend considerable time build “outside of the system” reports as the current GL is unable to provide this information seamlessly and as quickly as a new more robust system would be able to. The timeliness of data and actionable information could be improved considerably if you find and implement the right system for your company.
Investors & Lender Requirements - You may have also now grown to the point that you have outside investors or lenders that require specific reports at specific times each month that support board reporting or lender bank covenant reporting which are critical to maintaining these critical lines of financing for the company. You can no longer rely on a patch-work of reporting that is not centralized in the system and requires far too much time and external reports (even in Excel) to complete these reports.
Centralized System Financial Reporting - I believe it is critical to get your reporting out of any manual Excel worksheets and “built-in” to your GL system as this removes many opportunities for mistakes and dependency on the staff that must manually create them. The reporting capabilities of today’s GL systems can absolutely free you from manually created Excel reports where you are dependent on these “outside the system” routines and related staff to complete them.
Key GL System Criteria to Review
If you are now at the point that you believe you need a new GL system and are ready to consider moving forward on selecting a new system, you will need to consider the following criteria (at a minimum). It is very possible that your company or industry have even more specific requirements or compliance guidelines that are not on this list but these criteria cover nearly all companies and will still be important to yours in addition to any other more specific requirements you may to add to it.
Budget - One of first items you need to consider is how much dollar resources you are willing to commit to this new GL system both in terms of the initial implementation as well as ongoing annual software license fees and additional possible user license costs. The reality may be that you are not quite ready to allocate enough to this project that it may require. That being said, the cloud computing market has gotten quite competitive and you may be surprised how much you can get with a less than stellar budget at the start. Many companies also provide tailored pricing where you can get started with a program and only take on the base modules you definitely require while waiting to add others in the future when you can justify and afford the expense. Our GL Software Decision Tool starts out with your general budget range and you can play around with different starting budgets to see the different various software programs that are out there based on this criteria.
Multi-location & Entity - Nearly all GL systems can handle multiple locations and even multiple legal entities. The difference is that some of them are much better at producing fully consolidated reports as well as being able to quickly move between entities. As your company adds locations and entities your current GL system may struggle to handles these activities. Inter-company transactions are very common and the lower level systems do not handle these well and require your staff to open multiple entities in order to record both sides of the transaction. The better systems have this capability built-in and will only require one input to properly record transactions between entities.
Reporting & Analytics - As your company grows and requires better and more timely reports to manage it, this criteria becomes more important. As you review the more robust GL software systems you will begin to see how much better the reporting and analytics can be. Many of these systems allow you to build all of your reports (even very complex ones) right inside of the system rather than having to “massage” the data after exporting from your GL. This reporting and analytics requirement is many times the most important reason to upgrade your system.
Billing & Accounts Receivable - It is very common for companies to have a billing and AR system that is separate from their GL system. This is due to the fact that many industries require specific point of sale (POS) capabilities or third-party billing strengths that your GL system simply does not have. Of course the optimal solution would be to have your billing and AR module within your GL system to have these critical modules integrated in one system. That said, if this is not possible, there are ways to integrate the billing system to your GL with API (Automatic Program Interface) routines to solve this issue.
Fixed assets - Some companies may also have significant physical assets as part of their core activities that need to be tracked, depreciated and reported on within the GL system. Many of today’s GL systems have robust fixed asset modules and some are stronger than others. We have rated these software programs based on our actual use of some of them as well as researching reviews of others to rank them for fixed asset module strength. Several do not offer fixed asset modules so if this is a requirement or certainly critical to your company, they will drop off of your referred programs result if you answer “require” or “critical” on our GL Software Decision Tool program.
Accounts Payable & Vendor - Another area to consider in your search is your ability to manage and pay your vendors with your GL system. Some companies are already using an outside software such as Bill.com that handles all of your vendor activity, document scanning and payments. Bill.com and other systems like this will integrate to several of the cloud based GL systems and in some cases they are the preferred provider of AP processing for these systems (e.g. Sage Intacct integrates with Bill.com). If it is important for you to process all vendor activity directly in your GL system if for instance you also track your inventory in the GL system, then this criteria would be “required” or even “critical”.
Inventory & Purchasing - Closely related to the vendor module is the purchasing and inventory module. Many companies need robust inventory tracking and capabilities. For companies that manage complex inventories, it is critical to have a system that can provide the classic “3-way match” which is the ability to match your Purchase Order to your Receiving to your Vendor Invoice. This allows you to make sure that the price and quantity that your vendor offered in the beginning, matches the price they billed you on their invoice and that you received the quantity you ordered. It is not uncommon that the inventory and purchasing system provided in your GL system may not always be robust enough for what you need in your warehouse. An example is in the pharmacy industry which has very specific requirements for tracking and inventorying drugs. The optimal solution would be to be able to use the inventory module of your GL system so that you are fully integrated to your AP module in that same system but this may not be possible and you may have to consider API’s between systems for the best result.
Time & Expense - Another capability that your company may require robust time and expense reporting. This can be critical in companies that have considerable project tracking in which you need to collect this information to apply to a project or a consulting or legal company that bills out these charges to customers. Not all GL systems have these capabilities built-in as there are many third party programs that are used for these purposes that subsequently integrate to your GL. If you need this capability built-in to your GL system make sure to mark this criteria as “required” or “critical” so that our GL Software Decision Tool can weed out the programs that do not include this or are not strong in it.
Summary
Upgrading your GL software system is a big decision and one that will take time to research, review and implement. As we have noted above, there are items to consider to make sure you require this change as well as the criteria to consider when reviewing the systems that are in the market. However, don’t let this decision overwhelm your or scare you from making this change. There are many systems on the market today that have made this type of software upgrade and conversion much easier than it was just five years ago. The cloud based systems take away the hassle of maintaining the software on your servers while keeping your data secure and backed up which was a big challenge in the past. These companies also offer pricing plans that will allow you to only take on the modules you need at the start which can keep the solution within your budget range. They also have experienced VAR’s (Value Added Resellers) that will guide you through the implementation to move your data and requirements onto the new platform quicker than you may think.
To get you started on your journey to improve your company’s ability to acquire actionable and timely data as well as improving on the above criteria that are important to your company we have built a GL Software Decision Tool available on this site that compares the above criteria that are required or critical to your company against the following fifteen (15) popular GL software programs in the market today (in order of price range):
Intuit QuickBooks Oracle NetSuite ERP Microsoft Dynamics GP
Sage 100c & Sage 300c Financial Force Epicor Financial Mgmt.
FreshBooks Sage Intacct Oracle ERP Cloud
Xero Unit 4 Financials SysPro
Gravity Software Infor Enterprise Acumatica Financial
We welcome you to follow the link below to our GL Software Decision Tool to tell us what your requirements are so we can help you narrow your initial choices to those programs that match your requirements and critical needs. Let us know how this works for you and if added value to your search!
Wishing you a successful transition to a much more powerful GL system for your company!