Some businesses purchase highly respected accounting systems but then fail to implement or operate them properly. This often results in employee frustration, management disappointment, and a poor return on investment. To help your company avoid these setbacks, this article describes seven common accounting system implementation and operational mistakes and provides suggestions for how companies can save themselves from committing them.
1 Failure to recognise flawed systems
Companies sometimes don't realise that their accounting systems aren't running correctly, so they continue to operate these flawed systems. In this article, "accounting systems" refers to applications such as QuickBooks, FreshBooks, and Xero as opposed to the accounting modules of full-scale enterprise resource planning systems such as SAP, PeopleSoft, and Lawson. To assess the condition of your accounting system, start by answering these two basic questions:
- Does it produce timely financial statements and reports?
- Are those financial statements and reports accurate?
Answering "no" to either question means you have a serious problem that needs addressing.
Solution: Ask yourself these two basic questions periodically throughout the year and be honest with your answers. If material errors creep into financial reports, or reports take too long to produce, take the appropriate measures to put your accounting system back on track.
2 Failure to rally the troops
The ultimate success or failure of any accounting system implementation depends on the employees who will be using the system. If the employees aren't committed to the implementation, aren't properly trained on the system, and aren't steadfastly committed to accuracy in financial reporting, then the systems will likely fail no matter how diligently the vendor and/or any consultant(s) work to get the new systems up and running. Negativity amongst the ranks can undermine the will of employees to properly embrace and learn the new system.
Solution: Leadership is needed to unify employees and management toward the goal of successfully implementing and converting to the new system. Management should explain why the new system is needed and convey how everyone in the company will ultimately benefit. Management should fully support the consultant(s) (who are almost always vendor representatives) in implementing the new systems and work to foster a positive attitude amongst all parties involved.
3 Lack of implementation training
Sometimes management views the process of installing and implementing an accounting system as merely installing the program files, configuring the settings, inputting beginning balances, setting up printers, and granting permissions to individual users. While these tasks are certainly necessary, this list leaves out end-user training, which in my opinion should make up roughly 90% of the implementation engagement when done properly. Specifically, employees should be trained in numerous ways, including:
- How to extract and organise data from the old systems.
- How to input the initial data into the new systems.
- How to access and navigate the new system.
- How to enter data, new vendors, new customers, new inventory items, and other items.
- How to enter and process financial transactions, including invoices, payments, bank deposits, adjustments, and other transactions.
- How to produce financial statements and reports, including how to edit and customise those reports.
Management personnel should also be trained on how to access and use the systems and how to produce and read the financial statements and informational reports.
Even when management is on board with the proper amount of user training, some vendors often downplay or forgo user training, perhaps to minimise their time and effort on the job, or perhaps so they can charge the customer more money by cleaning up the resulting system problems. By contrast, other vendors work hard to provide the necessary training to ensure end users are sufficiently able to operate the system with minimal support down the road. Without adequate user training, the accuracy of your accounting system will likely wander off course soon after the consultants' departure.
Solution: Don't skimp on user training. Each employee should receive plentiful training — usually 16 to 40 hours at a minimum (the right amount of training depends on many factors). Before signing your implementation contract, make sure it includes an ample amount of user training, and check to ensure the consulting trainers assigned to your job by the vendor or implementer have excellent skills and trainer ratings (if available) for your particular system.
4 Replacing a system when it's a people problem
Accounting systems will never produce accurate results or function properly if your bookkeeper(s) continually enter transactions incorrectly, misuse the system's functions, or fail to catch and resolve their own errors. Some companies don't recognise their own employees' inadequacies as the key problem and opt to replace the accounting system instead. In my 31-year career of installing accounting systems, about half of my 275 or so clients that had decided to replace their systems were able to make their current systems work fine without replacing them. Generally, the process for making current systems work (ie, produce clean trial balance numbers) includes the following four steps:
- Conduct a professional compilation, review, or audit of the trial balance.
- Enter correcting or adjusting entries into the systems.
- Review and adjust the accounting system's configuration and default settings.
- Provide extensive and proper systems training.
If your company has highly respected accounting software that's not functioning properly, then it is almost always cheaper and easier to fix the problems plaguing your current system than to purchase and learn a completely new one.
Solution: Before deciding to replace your accounting system, make a concerted effort to correct the problems in the current system. This effort may include bringing in a consultant (or consultants) with expertise in your system to help identify and address the various problems. This process should certainly include rigorous end-user training on the system. Your consultant may also identify other necessary procedures, such as upgrading your accounting software or operating system, reconfiguring your software system's settings, and having accountants compile, review, or audit, and then correct general ledger account balances.
5 Failure to convert mistakes into teaching points
As errors and problems are identified within your accounting system, you should correct those mistakes and use them as teaching points to train employees how to avoid those same errors. Without ongoing end-user training, the problems and mistakes you've identified and corrected are sure to be repeated.
Solution: Document all accounting system errors and problems and then train your employees in the correct procedures, making sure to explain how to avoid those same issues in the future. This training is best delivered one-on-one but might also be delivered via online conferencing, email, video clips, or in a classroom setting. You should maintain a perpetual document or logbook tracking user errors, along with their related solutions, to share with new employees who move into those bookkeeping and accounting positions.
6 Ignoring your system's advanced features
Without sufficient training, many employees default to using the bare minimum number of system features to get the job done. When this happens, these employees — and their employers — miss out on using the system's most powerful functions. I have witnessed many cases of companies doing tasks manually that their systems could automate. Following are a few examples:
- Some companies manually calculate and bill past-due charges by hand because they are not aware the system can do this automatically.
- Some companies print and mail paper cheques because they are not aware that electronic chequing is built into the system.
- Some companies calculate and input discounts manually because they don't understand how to set up automatic discount calculations in the system.
- Some companies export multiple financial statements to Excel and manually combine them (or filter them) because they are unaware that their system's reporting function can be set to combine and filter reports automatically.
Solution: To ensure you are capitalising on your system's complete functionality, consider these measures:
- Assign at least one employee the task of mastering your accounting system's full set of features and functions. Make sure the employee shares this knowledge with the entire team of system users regularly.
- Watch educational YouTube clips or training videos featuring your accounting system.
- Purchase and read professional "how-to" books about operating your accounting system.
- Read blogs and online professionalreviews about your accounting system.
- Read through the vendor's end-user support pages to identify problems and solutions other users have already encountered and solved.
- Schedule and attend user training online or in a classroom setting.
- Have at least one employee attend your system's annual conference to obtain the latest information about your product and about third-party add-on products.
7 Failure to keep your accounting system current
Keeping your accounting system current ensures that you have access to the latest product enhancements. It also helps to ensure that your system will be compatible with the latest computer operating systems, computer components, and attached peripherals. However, the most important reason to keep your system current relates to security. Consider that in mid-2017, many companies and organisations worldwide experienced the wrath of the WannaCry and Petya ransomware attacks. These attacks were designed to target computers running older versions of Windows, rather than specific accounting applications. However, they underscore the importance of keeping all your computer BIOS systems, operating systems, and software applications — including your accounting system — up-to-date for maximum security protection.
Solution: Where possible to do so, configure your computers, operating systems, and applications to install updates automatically upon release. In addition, assign your IT employee(s) or consultant(s) the task of double-checking to ensure your systems are properly updated on a regular basis.
Get the most out of your system
The companies with the best opportunity to maximise the value of their accounting system are those that understand the system's capabilities, recognise and correct errors in the system, inspire employee faith in the software, and provide those employees (and managers) with the proper training to get the most out of its operation. Avoiding these common accounting system mistakes can save your company from many headaches and bring efficiency, effectiveness, and maybe even a little more joy into your accounting operations and financial reporting.
J. Carlton Collins, CPA, (firstname.lastname@example.org) is an accounting systems consultant, a continuing professional development conference presenter, and an FM magazine contributing editor. To comment on this article or to suggest an idea for another article, contact Jeff Drew, an FM magazine senior editor, at Jeff.Drew@aicpa-cima.com.