There are many benefits gained from using QuickBooks. First, it is relatively inexpensive to purchase and deploy on a few computers. Second, most CPAs and other financial consultants already know the system and can guide your use of it. Last, it is easy to learn and navigate.
Talent in one area doesn’t mean talent in another. Make sure you match skills with needs. Courtesy of bniembarcadero.com
However, there are also some drawbacks to deploying QuickBooks. For example, it is basically bookkeeping software that provides rudimentary general ledger functionality. It is not GAAP compliant and does not support many internal controls. But the biggest drawback to QuickBooks is actually in financial management.
Limitations of QuickBooks Financial Management
The first limitation of QuickBooks is the system’s ability to forecast. Most CEOs and CFOs desire to have a forward-looking view of future financials. Because of the limited functionality within QuickBooks, it can only provide a hindsight view of the world. To remedy this, managers are forced to drop data into spreadsheet applications, aggregate it with additional sales pipeline data, and then try to arrive at forward-looking conclusions.
The second limitation is resource management. Although QuickBooks has a payroll component, it does not track the current skills, talents, and abilities of employees. Nor does it know to which projects they are currently deployed. Again, the inefficient work-around is tracking resource management within a spreadsheet.
The final financial management limitation of QuickBooks is around revenue leakage. As we noted before, there is a payroll option within QuickBooks. But that payroll option is not connected to the task management system where employee time is tracked, nor is the task management system connected to the revenue module where revenue is booked. The interaction between these systems takes place with, you guessed it, spreadsheets. Unfortunately, sometimes miss-keys happen and information from one system is not copied correctly into another. This leads to revenue leakage.
Professional Services Software Solutions: The Alternative to QuickBooks
There are better ways than QuickBooks to handle the financial management challenges. The best alternative is implementing professional services software solutions. Here is how a professional services software solution would handle the previously-mentioned scenarios:
- Forecasting – Professional services software solutions are designed to handle future or pipeline bookings in addition to past bookings. Future sales can be easily folded into financial reports showing current revenue and future revenue.
Don’t get caught making the same mistakes over and over and over again. Get the right tools. Courtesy of deviantart.net
- Resource Management – In the service industry, improved financial results are a direct result of resource maximization. Luckily, most professional services software solutions offer a resource management component that tracks the current deployment of resources as well as their abilities and skills. Using this information, managers can optimize employee’s utilization.
- Revenue Recognition Integration – Another important component of professional services software solutions is the integration with the revenue and payroll modules. This integration allows the time recorded in the task management system to automatically update the payroll system, bill the client for hours worked, and recognize revenue within the general ledger. With automation, the cash leakage problem is plugged.
There is a time and a place for QuickBooks, but that time or place is not a growing professional services or software company. Instead, increase your financial management abilities with professional services software solutions. If you would like to learn more, please contact us.
[subscribe2]