|
2. Define the challenge
|
| Understanding your business's
financial information capabilities and weaknesses is critical
to selecting the appropriate accounting software solution.
The more you know about the challenges you expect the
software to solve, the more informed decision you'll make. |
| Questions
to ask |
| What are some
of the challenges your organization currently is experiencing
with its accounting system? Questions you might consider
include: |
 Which manual tasks would benefit
the organization by becoming automated? |
| Where in the accounting cycle
are you experiencing the highest productivity loss and
the highest number of errors? |
| How are inaccuracies negatively
impacting your organization? |
| What information/reports are
being requested that currently cannot be created/delivered?
|
| How could your accounting solution
integrate with your e-business initiatives? |
| Make a list
of the challenges you are currently experiencing. Then
create a second list of what you'd like to do but are
unable to do now. This information should become your
core list of requirements when evaluating new accounting
software. |
| Prioritizing your automation |
| Most organizations
automate their business in the following order: |
1. Word processing
2. Billing, accounts receivable
3. Accounts payable
4. Inventory control
5. General ledger
6. Sales order entry
7. Payroll
8. Purchase orders
9. Desktop publishing
10. Spreadsheets, forecasting
11. Custom-management reports |
| Five years
after automating, companies were asked to rank applications
from most to least beneficial. Here's what they reported: |
1. Information
for management decision-making (spreadsheets, custom reports)
2. Information for cash flow planning/forecasting (sales
orders, purchase orders)
3. Billing and accounts receivable
4. Inventory control
5. General ledger
6. Payroll
7. Word processing |
| Notice that
what most people consider basic accounting (general ledger)
is way down the list of desired benefits. Information
management, on the other hand, is at the top of the benefits
list. |
| Other questions to ask |
| What information
do I need to make strategic decisions? |
| This could
include results from budgeting and modeling your business.
You probably want to predict which customers and products
are growing and which are declining. You may want to use
financial rations to measure your company's performance
against competitors. Your general ledger can show key
profit and cost center performance against plan group's
effectiveness. |
| What do
I need to accurately forecast and control my cash flow? |
| Because cash
is the lifeblood of a business, forecasting cash flow
should be a key element of your accounting system. Sales
order and purchase order tracking will also be invaluable,
since they provide advance information about future cash
inflow and outflow. Other elements that effect cash, which
must be accurately monitored, include manufacturing workflow,
shipping, receiving workloads and the movement of materials. |
| What information
do I need to manage my assets? |
| Accounts receivable
and inventory are often the principal financial assets
of a business. Most of your company's cash is tied up
in these assets, so small swings in the amount of either
of these two can have a huge impact on your cash flow.
Your payback from exerting more control over your assets
is easily visible and immediately apparent. |
| What should
I automate to grow? |
| Many businesses automate
for the wrong reasons, or computerize functions that offer
little payback. First, apply your resources to the areas
with the most benefit to your bottom line. You can determine
these areas through careful study and analysis of your
accounting system. |
| How flexible
can we be? |
| It makes sense to consider
accounting software that has been created specifically
for the general size of your business. Even following
that general guideline, however, realize that few organizations
use accounting software "as is." Most businesses customize
one or more aspects of their accounting software. Those
organizations that are most adaptable and attempt to integrate
the most customization and flexibility will receive the
most out of their accounting software solution. You shouldn't
have to change the way you do business to suit your accounting
package. Make sure the accounting solution you choose
is flexible enough to adjust to your business requirements.
|
| Suggested Planning Schedule |
| The following
is a simple five-step process to successfully analyzing,
selecting, Implementing and using a new accounting system.
|
| Step 1: Preplanning
|
| This includes a review
of your current system's capabilities, strengths and weaknesses,
as well as the initial list of what you wanted to do with
your new system but were unable to do with your old system. |
| Step 2: Intelligence
gathering |
| Step 3: Analysis |
| Careful review of the
information gathered is necessary to make sound decisions.
Please note that this step may include actual software
demonstrations, visiting organizations with the software
already installed, and perhaps even a visit to the software
publisher's headquarters. |
| Step 4: Implementation |
| Once a software solution
has been chosen, implementation should begin. This may
last weeks or months, and includes data conversion, user
training and other elements. |
| Step 5: Post-implementation
review |
| This step includes the
ongoing monitoring and review of the system. Is it performing
as expected? What elements need to be modified, changed
or customized? What optional elements can be added to
further enhance system performance? |
