Many small businesses and nonprofits start out using QuickBooks or other entry-level accounting software solutions. When they start to grow, they inevitably struggle with the software’s limitations—but they also struggle to accept the cost of more advanced, cloud-based financial solutions like Sage Intacct.
When faced with this dilemma—staying with entry-level software that doesn’t meet all your needs, or upgrading to better but seemingly more expensive accounting solutions—it is important to calculate not only the hard costs of upgrading but also the opportunity cost of not upgrading.
What is the real cost of entry-level software?
The opportunity cost of entry-level software is the cost of missing out on the benefits of upgrading to a better solution.
One significant opportunity cost associated with entry-level accounting software relates to time. If, for instance, you could perform your month-end close in just five fewer hours per month, that’s 60 hours per year of “savings”—time that employees could instead spend on more business-critical work.
Likewise, if employees have to manually create budget reports or schedules in Microsoft Excel, they are spending hours of time on a task that more advanced software could perform in minutes.
Another opportunity cost is the high risk of error that comes with manual accounting processes. At a minimum, errors can lead to rework, but depending on their severity, they can also have more severe consequences, from lost business to regulatory penalties.
Perhaps the most significant opportunity cost is that if you continue to rely on entry-level software, it’s likely that you will inhibit your ability to grow. When you want to onboard new employees, add new products or programs, or expand to new locations, entry-level accounting solutions often create bottlenecks.
Software-related hassles, delays, and awkward workarounds make growth more difficult and potentially slower. Typically organizations end up being forced to upgrade their software in the midst of high-growth periods, which is difficult to do and may further stifle growth.
Software that Grows with You
The experts at Michaud Accounting Solutions can help you explore the total cost, including the opportunity cost, of entry-level versus more advanced financial management systems. We offer insights into Sage Intacct accounting software and other solutions that can help your organization grow at the pace that’s right for you.