An accounting system is usually chosen when a business is small and then left alone while it grows. The software still works, the BAS is still lodged and nobody has time to look underneath. Yet the system quietly determines how quickly the organisation knows where it stands. The question is not whether to review it, but how to recognise when the time has come.
The signs it is time
The clearest signals come from the people doing the work rather than from the software. When effort is rising faster than activity, the system is being asked to do something it was not set up to do.
- Information is re-keyed by hand between systems: point of sale to ledger, job management to invoicing, timesheets to payroll.
- Important numbers live in spreadsheets outside the ledger, such as stock, job costing, deferred revenue or payroll adjustments.
- Month-end takes weeks, so reports arrive too late to change anything.
- Payroll errors recur: award interpretation, superannuation calculations or Single Touch Payroll reporting that has to be corrected.
- Nobody receives timely reporting, or the reports that do arrive are not trusted.
- The business has added entities, locations or staff, and consolidation or inter-entity transactions are handled manually.
- An audit, a lender, a grant acquittal or an investor now requires management accounts and an audit trail the current set-up cannot readily produce.
Any one of these is worth noting. Two or three together usually mean the review is overdue.
What a review looks at
A useful review examines the whole flow of financial information, not only the software licence. It begins where transactions enter the system and ends with the report a decision-maker reads.
Chart of accounts. Does it reflect how the business is actually managed, with the divisions, locations or service lines that matter, and without hundreds of unused codes? A chart designed for the tax return often cannot support a management report.
Workflows and approvals. How does a purchase move from request to payment, and a sale from quote to cash? Who approves bills, payroll and bank payments, and can one person raise and approve the same transaction? These questions matter as much for control as for efficiency.
Integrations and data quality. Which systems are connected, how reliably do they sync and where do duplicates or gaps appear? Unreconciled accounts, suspense balances, unapplied payments and duplicate contacts are symptoms of an integration or a process that is not working.
Controls and reporting. User access, bank rule design, change logs and back-ups are the digital controls that protect the data. Reporting is the output that justifies all of it: what is produced, when, for whom and whether it is read.
Running a review without disrupting the business
A review does not need to stop the business. Most of the work is observation and conversation. Spend time with the people who process transactions and map what actually happens rather than what the procedure says.
Set a clear scope and a sponsor who can make decisions. Time the fieldwork away from BAS lodgement, payroll runs and year end. Rank the findings by the effort they cause and the risk they carry, and fix the quick items first so the team sees a return before any larger change.
If the outcome is a system change, plan the transition rather than the switch. Clean the data before it moves, choose a cut-over date such as the start of a quarter or the financial year, run old and new processes side by side for a short period where the risk justifies it, and train people before they use the new tools live.
Fix, extend or replace
Not every problem needs a new system. The decision usually falls into one of three categories.
Fix. Many issues are configuration and process problems: a poorly designed chart of accounts, bank rules that were never reviewed, approvals that exist on paper but not in the system. These are resolved within the current platform and are the least disruptive.
Extend. When the core ledger is sound but a function is missing, an integrated application for inventory, job costing, expense management, payments or reporting can fill the gap. Cloud accounting platforms are designed to be extended this way, and the ledger remains the one record everything else reconciles to.
Replace. Replacement is warranted when the ledger itself cannot handle the business as it now is: multiple entities needing consolidation, transaction volumes it cannot process, foreign currency, or a product the vendor is no longer developing. It carries the greatest cost, including staff time, and should be chosen because the capability is genuinely absent, not because the current system was never set up properly.
Whichever path is taken, the test is the same. Will the finance function produce reliable, timely information for the next two to three years without the workarounds that prompted the review? Reliable decisions depend on reliable information, and the system is where that information begins.
Where to start
- Write down where time is lost each month: every spreadsheet, re-keying step and correction. That list is the beginning of the review.
- Ask your accountant or adviser to map the current chart of accounts and workflows against the reports the business needs.
- Sort the findings into fix, extend and replace, and deal with the fixes first.
- Plan any larger change for the start of a quarter or the new financial year, with data clean-up completed beforehand.
This article provides general information only. It does not take into account your objectives, financial situation or needs and is not a substitute for professional advice. Speak with a qualified adviser about your circumstances.