A recent white paper from a company called Tribridge highlighted 15 ways culled from real companies in in which those companies’ accounting system was hurting their business. As we reprise a few of them here, it’s amazing to see how many similar situations we’ve run across with our own clients over the years. How many look familiar to you?
- Unstable system, slow performance. This is the most common one. Reports run slowly, the system locks up regularly and error messages are common. Modern systems today are built on solid transactional databases, mostly SQL in the PC world, complete with transaction rollback capabilities to minimize corruption. Newer systems – once properly installed and finely tuned – will run everything faster, from daily transactions to month-end reports. (While the Tribridge report skews toward Microsoft Dynamics as a solution, it’s not the only good one out there.)
- A growing paper problem. Manually entering invoice data into the system. Tracking down and matching up invoices. Searching for old orders or payment history. And so on. With an automated Accounts Payable system, you eliminate much of the office paper flow. As well, invoices can be coded intelligently or by approvers during a rules-based approval process.
- Production schedule delays. Delays, inaccuracies and frequent rush orders (with extra freight charges to expedite) are tell-tale signs of the problem. Modern systems allow for full integration of EDI integrating them directly into production scheduling, thus eliminating many of the human errors that plague so many distribution and manufacturing companies. Yes, it takes time and effort and patience to set it all up, but once you do, it just runs.
- Inaccurate cost calculations. Whether it’s losing a contract due to inaccurate pricing, or building in a cushion, or high raw material costs due to poor inventory tracking or simply the unending burden of manual, time consuming reporting – these are all common results of inaccurate costing. Costing is tough, to be sure. They comprise many of our own most complex implementation issues for clients. But they must be tackled, in modern systems they can be, in order to ensure peak performance, accuracy and ultimately profitability.
- Time wasted having employees create reports manually. Employees often find themselves compiling report data from three, four, even five separate sources. They often have to wait for others to compile their contribution. And then there’s the number/data double-checking, the occasional Excel formula error (or change). All lead to laborious, redundant and often inaccurate reporting. Financial reporting need not be that difficult – once you have your system implemented properly, well-tuned and honed by trained users.
- Selling out-of-stock products. When accounting is disconnected from inventory, the warehouse or the e-commerce platform you might sell by, you may end up managing stock keeping units in more than one system. In-stock quantity errors are not uncommon. Mistakes happen. You can end up buying out-of-stock items on rush orders for the wrong price. You lose visibility. When everything is disconnected, you lose money.
We’re not half-way through Tribridge’s list (white paper here), so we’ll look at a few more and wrap up in the following post. Stay tuned.