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Ensuring Your QuickBooks Account Scales As Your A/E Firm Grows
October 28, 2021
There’s a common misconception in the architecture and engineering (A/E) industry that QuickBooks is a good tool for small firms but that organizations can’t continue using it as they grow. The reality is that QuickBooks is great for general accounting tasks for firms of all sizes.
But the myth persists, partly because some firms that use the software do run into problems with it. What we discovered in talking with outsourced accountants who use QuickBooks with the clients they serve is that there are some commonalities in the success stories and in the stories that don’t have a happy ending.
Grab and Go: The Common Denominator Among Firms Unhappy With QuickBooks
A/E firm owners and accountants are busy people. So, it’s no surprise that when they decide to use QuickBooks for their accounting, they’d like to simply implement the software and start using it. Maybe there’s a little bit of A/E-industry-specific training that happens, but more often there’s not.
Unfortunately, trying to use the software in its simplest form puts most firms on the path to disillusionment down the road. Now, there certainly is some benefit to using QuickBooks that way, in that most small A/E firms don’t have a lot of financial background, so simpler is better. But fairly quickly that benefit vanishes.
It's not Supposed to Do That
In some cases, the misconception that a firm has outgrown QuickBooks as an accounting package doesn't lie with the accounting functions at all. As firms grow, they may see the need for software solutions to help manage projects, track assignments, and report on operational aspects of their business. In this case, scaling up from QuickBooks to a "one-size-fits-all" software that endeavors to handle both accounting and operational functions is a trap. You're better off finding an industry-specific solution to help with those non-accounting functions, allowing QuickBooks to do what it does best, and integrate the two. We have a whole blog post about this misconception here.
Implementing QuickBooks Today With an Eye Toward Tomorrow
It’s been said that change is the only constant. So, it’s no surprise that A/E firms that implement QuickBooks exclusively focused on the organization’s needs today tend to regret that decision later.
Allowing the firm’s requirements to exceed QuickBooks’ capabilities (as you’ve defined them) can be a problem. It’s virtually impossible to get your accounting system back on track in that scenario since doing so would require you to halt your business operations temporarily—and no firm can afford to do that.
What most firms do when they exceed the software’s capabilities is implement a new system. The thinking is, “QuickBooks isn’t working for us anymore. We need a new system.” However, that’s generally not true. What the firm is experiencing is failure to set QuickBooks up properly or keep it ahead of the organization’s needs.
How do you avoid this dilemma? You take a forward-looking approach to setting up QuickBooks. (Note: We recommend QuickBooks Online Plus. The Professional version and its payroll function aren’t a good fit for A/E firms, in our experience.) Your focus with your implementation should be where you see your business 3-5 years from now.
"The reality is that QuickBooks is a great accounting tool for A/E firms of all sizes."
3 Key Considerations for Getting the Most From QuickBooks
To get all you can out of QuickBooks and to ensure it meets your needs for years to come, keep the following three tips in mind:
- Your initial QuickBooks setup should leverage insights from someone with in-depth, industry-specific accounting expertise. Engaging your accountant for a short-term project advising you on your implementation is well worth the cost.
- Be sure that your setup considers not just the flow of information within QuickBooks, but also the way information moves through your firm in the course of day-to-day operations. Will you do timesheets weekly? Will you pay employees every two weeks? Will you bill monthly or continuously?
- Recognize the need to understand QuickBooks’ capabilities in financial reporting versus cash flow management. In order to track who owes you money, who you owe money to, etc., the software must be set up to work in cash accounting mode. However, to track the metrics necessary to operate your business effectively, the system must be able to function in accrual accounting mode. QuickBooks can toggle easily between accounting modes, but you’ve got to be sure you’ve set the software up to get you the information you need in both modes. Here again, your outside accounting resource can help you understand the implications of how you set the system up.
Proper Setup vs. After-the-Fact Assistance
Transitioning to a new accounting package can be challenging and costly. Consequently, we advise firms that are using QuickBooks to stay with it as long as it can meet their needs.
Provided that you’re following sound accounting principles and recording information completely and accurately, an outside accountant can help you untangle the data if necessary, so that you can remain on QuickBooks. But a better approach is getting input from your accountant upfront and setting up QuickBooks “with the end in mind,” so that the system continues to meet your needs even as your firm grows and evolves.
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