Is Your Accounting Software an Asset or a Liability?

3. Does your accounting system have integrity? This is not such a strange question.

There are two key components of software integrity. First is access security, assigning access to the system and its modules. Security experts estimate that as many as 30 percent of employees steal. As the number of employees in your company grows, you’ll want to be able to designate who has access to the various modules of your accounting software. For example, you do not want a cashier or data entry clerk to be able to delete transactions. You may want sales staff to look up customer information, but do you want them to be able to change it? And what about the CEO? He (or she) may want to look into the general ledger and print off some reports but is she (or he) safe with a journal entry? Entry level packages may have access security to the system, but not individual business functions.

Another way to judge the integrity of your system is the audit trails. If you can delete a transaction and have no record of it ever existing, you have serious problems. Let’s look at an example that is a common way to steal from an employer using some entry level systems. A customer comes into your business and buys something for cash. When the customer leaves, your employee deletes the invoice and pockets the cash. Without an audit trail, you have no record of the transaction. The customer has the goods, your employee has the money and you have the cost! Unfortunately this is an extremely common story.

Are you confident in the integrity of your accounting software?

4. How flexible is your software at period and year end?

A fundamental principle of accounting for most businesses is that you match recorded income and expenses when the transaction occurs. If you received some goods last month from another vendor but the invoice didn’t arrive until the 15^th of this month, when will your accounting system allow you to recognize the transaction? If you reply last month, give your system an A. If not, you might consider a change. The reality of life should not force you to have incorrect accounts. Clearly, you may want to block transactions to prior periods, but that should be your choice.

There is a year end closing process that is essential to keep your accounts in order. But you should be able to continue your business in the new year while still being able to make those year end adjustments to your General Ledger.

The Cougar Mountain General Ledger is driven by the transaction date. Each transaction is applied to an accounting period based on the date. You can block previous periods from receiving postings and then re-open them if the need arises.

5. Can you easily get data in and out of your system?

Most accounting software packages allow you to export data, but few allow you to bring data back in. Let’s think about when this would be useful. It’s 60 days until year end and you want to work in next year’s budget. You have several planning assumptions and you want to try different scenarios and export the current year’s period actual figures out to your spreadsheet. Once you have modified the data the way you want, what next? Can your system import that data back in as next year’s budget or must someone spend a half day, or more, entering the budgets by hand?

Another situation is where a supplier gives you their retail catalog on disk. Can you import that information and create inventory items? These scenarios are not uncommon. However, only a few packages, like Cougar Mountain, allow data import.

6. Have you noticed any slowing in performance?

Some entry level software is limited in the number of transactions it can handle. Some vendors have provided the option, and actually recommend turning off the audit trails to improve performance. Do you want to compromise your system integrity for performance? It should not be a choice you have to make! Other factors such as hardware and networks can also affect performance, so check into those before you make a judgment. If you’ve experienced a performance slowdown, don’t compromise. Move up to more robust software like Cougar Mountain.

7. Is your software easy to use?

Have your employees found it easy to learn and intuitive to use? Most people think their system is easy to use, but let’s look at a common task. You are in the middle of taking a telephone order from a customer. They say they cannot remember the model of equipment they have but they bought the same filter from you about a year ago. Can you look up the part and what they paid for it without leaving the order entry screen? Can you see their credit status and history? That ability to drill down into your accounting information is ease of use, and allows you to provide great customer service.

Now think about your software. Would you still say it’s easy to use? Is it enhancing your customers’ experiences with you?

8. When you enter data in one module of your system, does it automatically post to General Ledger, Inventory and other integrated modules?

Some software “interfaces” with other modules, but in the end, the user still must make entries in more than one module. This is particularly common with point of sale systems. Even when point of sale systems are from the same vendor, few are really “integrated” with the rest of the accounting function. Often, a person on the sales floor who uses the point of sale system is looking at a “snapshot” of the inventory that was created at the end of the previous day. In the back office, you have a sales person making direct entries into your order entry system that is connected live to your inventory. As each one of them enter sales during the day, neither system is accurate until they sync-up at the close of business. What if some of the inventory sells out during the day? Somebody is going to be making a promise to a customer that cannot be kept.

Does this scenario sound familiar to you? If “real-time” information is important to you, then you should not tolerate an interfaced system when you need an integrated one.

9. Are you spending too much on outsourcing payroll?

We recently obtained two quotes from major payroll processors on the Internet based on a company of ten employees paid twice a month. Over five years one service would cost $5,700 and the other quote was over $8,000. That monthly fee adds up to real money!

The payroll service providers are perpetuating some myths about payroll. Just think about it. It certainly is not cheaper; we have already shown you that. You still have to get them the information to set up each employee, unless of course they provide you the entry screen to do it. You also have to provide them, or enter for them, the hours employees worked, so you are not saving much time. The liability to pay your taxes on time still rests with you. Finally, they require you to pay them well in advance of the payroll date. In fact, one payroll processor made $365 million in interest last year specifically from holding their clients’ money. Wouldn’t you rather have your money working for you?

10. Are you alone?
Since implementing your current software, have you stayed in touch with the vendor or their reseller?

Most software vendors publish a yearly update to their software. They use the releases to fix errors, provide additional functionality and where appropriate, keep you current with any legislative changes such as tax rates. Subscribing to software maintenance is important and the effect of not keeping current may only be realized when you have a problem. That is too late. Continuing that relationship is important to the continuity of your business.

Resellers often play an important role in a successful accounting implementation. After all, you only implement your software once every three or four years. They help businesses like yours get the most out of the software each week. Maintaining that relationship will ensure that the software is configured to meet your business needs and that it helps you meet your business objectives. Almost every software vendor provides telephone support. However, many resellers can also provide you support. Often they are local and they know your business. Wouldn’t it be nice to have local support?

In addition to a comprehensive support program, Cougar Mountain has a network of over 200 “Business Partners” to work with you locally.

In Summary

So how does your software stack up? Even if you are satisfied right now, an annual review 30-90 days before your year end is prudent. Making sure that your accounting software is truly an asset is important.

Just as businesses can outgrow their original storefront or office, so too can they outgrow their software. Accounting software must allow your company to meet its targets. If your software isn’t growing with your company, it may be slowing your company’s growth.

You may wonder, with all the end of year activity that takes place, is it really a good time to replace your accounting system? We think it is. You start the year fresh and build your data from the beginning of the financial year. That means as you do reporting through the year, you don’t need to look at two different systems to get the detail behind the numbers. In future years, you will have a complete year’s history to do year on year comparisons.

At Cougar Mountain, we have been supporting growing businesses for 22 years. We take great pride in providing extensive functionality at a price you can afford. You will not find similar functionality at similar prices. It would be our pleasure to discuss your business with you and how Cougar Mountain can become an asset for your business.

* This guide was created by Cougar Mountain Software Support. November, 2005