What is a basic accounting system?
A ‘basic accounting system’ is specific software designed to automate various accounting tasks including invoicing, paying suppliers, setting up customer accounts, managing cashflow etc. Essentially, they are systems designed to meet the basic needs of an accounts team.
There are an assortment of basic accounting systems out there to help businesses streamline their sales, finance, and accounting processes, such as Sage 50, Xero, and Quickbooks. However, not all of these systems are as straightforward to use as others, and can often have limitations.
At Micross Logic, we’ve identified five common challenges faced by businesses using basic accounting systems, which can slow productivity and decision making.
Some of the more basic accounting solutions have certain limitations that may not affect your business to begin with, but could become problematic later on. Some systems will only allow a limited number of transactions, others will only allow one user in at a time if an error needs rectifying. These constraints can quickly result in the need for businesses to reinvest in a more substantial system down the line, meaning the return on investment from the original accounting platform not being of value to the business.
Some businesses find that after they purchase a basic accounting system, it doesn’t actually have all the functionality they need to improve business processes. Sometimes you can get increased functionality from additional integrations, but not all basic accounting systems will have this as an option. The more basic accounting software will also have a ‘one size fits all’ approach, which isn’t the reality of what businesses need. It’s important when searching for a new accounting solution to define what you need from the system. Some businesses will look for stock management integrations, whilst others may seek a retail management add-on.
Some accounting systems won’t have the capabilities to scale with your business, and if you look to migrate to a new system, others will struggle to have all the necessary information moved over to the new system. This is a common challenge for businesses that are growing, so it’s important before before purchasing a new accounting solution to think about where you want your business to be in five or so years’ time, to make sure your chosen system has the capacity to expand as your business expands.
4. Basic reporting
The more basic versions of accounting systems will have very minimal reporting capabilities that can often only be accessed when in the office. It’s important to understand the reporting functionalities of these basic systems to make sure they’re going to offer all of the insights your business needs to make better informed decisions. The likelihood is that if you’re seeking more sophisticated reporting capabilities, basic accounts systems won’t go far enough into detail.
With many basic accounting systems having that ‘one size fits all’ approach, more general training is often given. Users of the systems may need to find their own ways of working around the software to complete tasks that need doing, whereas a more substantial system would have the functionality already built-in, or would have the capacity to integrate a simple add-on.
Whilst basic accounting solutions can offer simple task automations, more intelligent systems like Sage 200 Standard present businesses with additional functionality to help support business processes, making it more than just another accounting solution. With Excel reporting on the go, Microsoft 365 integrations, connected users, and many more capabilities, investing in more intermediate enterprise resource planning solutions may offer a better return in the form of time saved and increased efficiency in the long run. Sage 200 Standard is the ideal stepping stone between a basic accounting systems and more sophisticated solutions, without the level of investment Sage 200 Professional requires, but with improved capabilities compared to Quickbooks, Xero, and Sage 50.
If you’re unsure of the accounting options available to you, or would like to know more about Sage accounting solutions, the team at Micross Logic have the expertise to point you in the direction of a solution that will align with your business needs. You can call us on 03300 240 688 or email email@example.com.