There are many great Accounting Software or Enterprise Resource Planning (ERP) systems in the world today. They all have flashy websites promising to integrate with all your systems, provide beautiful dashboards at your fingertips, and fix all of your problems.

Unfortunately, what is sold and what becomes reality after spending a bunch of money are often not the same.

This guide is to help you avoid some of the most common pitfalls to help you select the right system for your business at the right price point.

Step 1.) Determine why and if you need a new accounting system.

The first thing you should do is to make a list.

Write down all your current annoyances, your biggest problems, and goals that you hope to achieve with a new accounting system.

Then sort the list by your highest priority to lowest.

Also accept that very few accounting systems or ERP’s will do everything that you want. A list will help you sort through the trade-offs.

After making your list, you may find that your current system is adequate for most of your needs and there are only a handful of time-consuming tasks that it does not do within the system. This could be an opportunity to explore process automation techniques that augment vs entirely replace an existing system. A lot of times this is a better choice, and much more economical.

If there are many features that you want which your current system won’t do then it’s likely time for an upgrade. When evaluating different systems be aware that there are different sales models that vary by vendor. Some companies will sell you a full solution, one software package that does everything. Others will sell a core system with add on modules for things like warehousing or manufacturing. Be aware of this when getting quote from software vendors and consulting companies. If you really need a warehouse management solution, make sure that it’s being included in the cost estimates to avoid a nasty surprise down the road.

Step 2.) Understand how software companies operate

This is one of the most widely confused areas of implementing a new accounting or ERP system. A common thought process looks something like this:

“We’ve used XYZ system for 10 years, and we’ve made the decision to upgrade. I’m going to contact XYZ company to help me upgrade to the newest system because we’re already familiar with how to use it and it’s worked okay so far.”

On the surface this makes sense. You would assume that there is a standard upgrade path to bring you features that didn’t previously exist and update you to the newest infrastructure.

Unfortunately, most accounting software providers grow by acquiring smaller software companies.

What this means to you is that there really is no true upgrade path.

You will be implementing a brand-new system, that has zero relation to the one that you are currently using other than having the parent’s company brand name thrown on it.

So, if you’re going to be implementing a whole new system, why not explore all the options that you have available to you? Implementation will be a similar amount of work on your end regardless of the solution, but you may be able to save thousands or tens of thousands of dollars.

Step 3.) Understand how software and consulting companies work with each other

A lot of accounting and ERP software companies that build and sell the software don’t do their own implementations. This is especially true in the small to medium sized business space. The software companies typically want to sell you the software, collect the licensing fees and hand off the implementation to a third-party consulting or accounting firm.

The implications of this are two-fold.

First, the sales rep that works for the software company probably lacks a depth of accounting and systems knowledge. Sometimes they may have a technical counterpart that helps answering more complicated questions. These resources are usually hit or miss on whether they have an actual accounting background or have any industry experience where they have worked in corporate accounting. Where this model can get you into trouble is when a sales representative unknowingly states that a feature exists, but it really doesn’t. Or they may say that a feature is scheduled to be released but doesn’t know the timeframe. This leave you in limbo, and a feature may never be released at all.

Second, be aware of which company you are dealing with. It’s easy to confuse the consulting company that works with a software partner with the software company themselves. It’s important to ask the consulting company a lot of questions, even if you already asked the software sales company. Consultants should be experts in their field and able to validate what software salespeople have told you on previous calls.

Step 4.) Know the Statement of Work (SOW)

Most of the time you’ll be working with a consulting firm to implement a new system. This is where the Statement of Work (SOW) becomes vitally important. It’s the document which governs what the consulting firm is legally bound to do in exchange for your money.

Don’t assume that new features will be implemented for you as part of the process. Do not assume that the consulting firm will do data transfers from the old system to the new system on your behalf. Do not assume that the consulting firm will do anything that’s not specifically listed on the SOW.

Clarifying the Statement of Work (SOW) before signing a contract will not only save you money, but it will ensure that the project gets completed to your expectations.

Step 5.) Determine what to put in your SOW

Using the list from step 1, prioritize what you want and negotiate with the consulting firm. Some features may be easier or harder to implement increasing or decreasing the cost of the overall project. You may have features that you can’t live without, others are not so important, determine those trade-offs before the project starts.

Step 6.) Know your project timing and your availability

It would be a gross understatement to say that implementing a new accounting or ERP system is easy.

The process will take a lot of your team’s time.
It will be highly disruptive
You will have to learn a new accounting system
Old Processes and Integrations will likely break

Our recommended approach is to get the minimum level of functionality required to support daily operations up and running. Then introduce new features over an extended period. This gives your team the ability to embrace the new system and prevents large scale business interruption.

For example, if you’re unable to close your books on day two of the month, its annoying. If you’re unable to invoice customers, the lack of cash flow can put you out of business.

Also think through the amount of time you must dedicate to the project. Some money can be saved by doing parts of the implementation yourself, such as re-formatting exports from an old accounting system to import into the new one. However, if you don’t have the time do it, you may want to include the step in your Statement of Work (SOW).

Step 7.) Some things to think about before you start

Once you’ve chosen a system and a consulting company to help you with your implementation it’s good to have a conversation early on about what decision points you’ll have. Some examples of this are:

How do you want to handle a different department or business unit structure?
How many years of prior data do you want to bring in?
Will you be importing GL line-item detail or only ending balances?
Can I import prior bill of materials and manufacturing routings?

There are ways to address all of these, but it does take some time to think through. By starting the conversation up front it gives you an idea of key decisions that will need to be made. When you start thinking about them earlier in the process it will be one less delay during implementation and will help things move along faster.