Accounting Software

As the economy suffers, some afflicted vendors are regearing pricing models to “go high or go low.” Accounting solutions consultants are no different.

Given that there will be less money on the table to fund accounting system software implementations, some accounting services consultants will aim to stay profitable by upping the ante on companies still in a position to spend. The targeted end result is fewer but more lucrative contracts.

In this scenario, look for offerings containing all types of grandiose “needed” accounting software add-ons and services to justify the additional expense.

The second model is akin to a fire sale. Figuring that budgets will be very tight, consultants will cut their pricing to remain competitive. Of course, since their profitability requires maintaining some type of margin, this model presupposes accounting software implementations “on the cheap.”

In this scenario, expect a low level of accounting software service commensurate with your expenditure.

Neither model properly serves the accounting services client. To avoid being victimized, following are some initial steps to consider:

1. Get a baseline from which you can assess/evaluate additional options. While not foolproof, one relatively reliable technique is to find out how much a web-based consultant will charge for particular projects, updates and customizations.

Besides the fact that web-based services are growing in scope and sophistication, they tend to stay more stable pricewise in the face of adversity. They already are geared, at least somewhat, to high volume and lower prices. And, because so much that once was the sole purview of an on-site consultant is now available via self-directed training and rapid implementation tools that come with the accounting software, web-based assistance may fulfill remaining needs admirably—and affordably.

You may find that the web-based provider is adequate to do the job, or you can use the information to compare and contrast with other providers—on-site or online.

2. Get updated about the accounting system software you’re using. If you’re not already up to speed on the latest and greatest related to your accounting software, do some research. Three primary research tools are:

a) online—search via objective web, blog, and news sources for information about the product or process you need. String together consistent findings from these searches to help complete the jigsaw puzzle;

b) talk to an accounting software-savvy trusted advisor who can help you cut to the chase;

c) gather accounting solutions information from a trade association or organization dedicated to your industry.

3. Redouble efforts to get accounting solutions references. To help make sure they’re valid, attempt to locate two or three yourself, rather than just pursuing ones offered by the accounting services vendor.

Stay alert and attuned to pricing quirks. You’ll come out way ahead in the long run.

The BNET business dictionary defines forensic accounting as, “the use of accounting records and documents in order to determine the legality or otherwise of past activities.”

These activities can be tied to a government investigation, client inquiry, employee dispute, vendor issue, or just about any other challenge activity you can imagine.

In a basic sense, anyone who’s culled receipts and other documents out of one or more shoeboxes for an IRS audit is doing forensic accounting. Now, imagine multiplying the challenges by thousands or millions of accounting software transactions; and multiply the complexity to include in-depth analysis as well as review of data.

Plus, you’re now looking at zealous auditors anxious to find fault in the coming era of re-regulation and “cleaning up of America.” Newly appointed Illinois governor Pat Quinn already has announced that he wants to “fumigate” his state’s government.

So, would you rather defend yourself with shoeboxes full of financial records, or bring robust accounting services to the table?

Depending on the size, shape and sophistication of your company, you may feel you can “get by” with entry-level accounting solutions. Here are some reasons to rethink that position:

1. A security breach is only a keystroke away. An employee or hacker intent on stealing accounting software-based information is going to have a much easier time getting through one layer of security (typical of entry-level applications) versus eight (Microsoft Dynamics® GP accounting system software, for example).

Besides investigations, data theft can destroy public confidence in a company. And, there are the expensive and potentially ruinous steps needed to remediate such a breach (e.g., the company notifying holders of all compromised records, offering free fraud notification subscriptions, and the like).

The cost of many mid-market accounting solutions is justified by this one issue alone.

2. Data mining deters threats, identifies inconsistencies. Price Waterhouse Coopers addresses this issue very intelligently in a document entitled, “The DNA of a forensic accountant.” Excerpting from their writing, “Data mining is the art of analyzing large amounts of data in a manner that detects obscure facts, trends, or inconsistencies in a complete and efficient manner utilizing ‘intelligent’ computer applications. Conducted properly, data mining can be used to proactively detect fraud before a company becomes a victim experiencing material losses making them the next headline scandal. Once data such as journal entries, employee, customer and vendors master file data, as well as check registers are obtained in electronic form, a series of procedures can be performed to identify high-risk and suspicious transactions.”

Mid-market accounting system software generally will provide highly accurate and robust data repositories, which can be more efficiently mined than entry-level accounting solutions, which tend to bog down with too many concurrent users, data demands or report requirements.

3. Mid-market accounting solutions can be a deterrent to frivolous lawsuits. Sometimes, sue-happy litigants target companies where they think the consequent disruption and cost to the defendant will force settlement. Or, they seek out firms that will have difficulty defending their accounting software services. The better your accounting software reporting and accuracy, the less you will spend if sued, the less you will be disrupted, the faster you will be able to generate appropriate data in response—and the less you may be targeted in the first place.

Mid-market accounting software services such as Microsoft Dynamics give you a “built-in” protective edge over companies using entry level accounting solutions.

Combine a tough economy and opportunistic employees, and you’ve got the perfect recipe for fraud and theft in the accounting system software realm.

The Wall Street Journal addresses the latest employee “trend,” noting, “About 20% of employers polled last month said workplace theft has become a moderate to very big problem recently…Employers are hot targets for theft because workers ‘know their systems, controls and weaknesses, and they can bide their time waiting for the right opportunity’…”

Other stories reinforce the presence of increased theft in accounting services departments and elsewhere, due in part to tough economic times. An article in securitysolutions.com points out, “As many as one-third of all business failures annually can be attributed to employee theft, according to the U.S. Department of Commerce…The cost of theft and fraud to American business nationally hovers around $40 billion a year, and ‘some experts believe as much as 40 percent of the losses are internal,’ …The Commerce Department also says employee theft is on the rise, thanks to the recession…”

And, it’s not only Madoff-scale fraud that is occurring in accounting services and elsewhere. Employmentblawg.com adds, “…there are millions of smaller fraudulent transactions that go unnoticed every year…From stupid expense violations to ingenious travel scams…a serious problem that costs companies millions…”

So, what’s a company to do? Get top-notch accounting system software. Mid-market accounting solutions provide highly complex levels of security, offer sophisticated transaction auditing and tracking, and present a more daunting target to would-be internal thieves.

Among Microsoft Dynamics® accounting software protective elements, for example, is “RoleTailored” software. Microsoft describes it as, “Software that’s designed around the specific jobs people do…” One practical effect of this is to keep the types of information accessed on a need-to-know basis, limiting exposure.

Also characteristic of mid-market accounting software solutions are role-based permissions, where employees gain access to data based on their roles, locations and timing. A company can define locations, both on-site and remote, from which employees can access data, identify accessible hours and authorized computers—as well as define the scope of information based on the employee’s role in the organization.

Besides the actual protection afforded accounting services departments by this level of sophisticated security, its existence helps send a message that the company will do what is necessary to protect its data. Much like the thief who moves on to a car that appears to be “easier pickings,” so will many untrustworthy employees move on to a company accounting system software environment that offers more theft opportunity.

Just make sure that company isn’t yours.

Two headlines sum up the coming regulatory deluge that Wall Street and Main Street alike can expect from our Federal Government.

The first, from the Washington Post, states, “New SEC Chair Off and Running With Enforcement Measures.” The second, by contracting specialist Eric Sobota in the Federal Compass, notes, “Effective Investigations Key to Compliance with New FAR [Federal Acquisition Regulation] Ethics, Compliance and Mandatory Disclosure Requirements.”

Katrina and Iraq War government contracting fraud, coupled with myriad maladies on Wall Street, have jumpstarted the regulation machine. With the new Obama Administration and a Democratic Congress, expect it to accelerate to warp speed.

To avoid being run over by it, get on top of it. Get ahead and stay ahead of this new regulatory business environment by reviewing every aspect of your company’s accounting, tracking, and reporting structures—in departments ranging from accounting services to CRM.

If you don’t do it now, here’s a taste of what you may be subjected to later:

• From the Washington Post SEC story, quoting incoming SEC chairman Mary Schapiro: “The new chairman also said she would speed up the process of launching formal investigations into potential acts of corporate crime… ‘Those who break the law and take advantage of investors need to know that they will face an unrelenting law enforcement agency in the SEC.’”

• From contracting specialist Sobota: “Contractors must now deal with increased oversight and requirements that many are not well-prepared to face…The new rules carry a heavy penalty for noncompliance…”

Think you’re immune if you don’t contract with the Federal Government or have much interaction with SEC-related realms? Think again. Quoting the Post story, “Schapiro also said the Financial Accounting Standards Board, the independent panel that sets accounting rules for U.S. companies, is exploring changes to rules that require firms to mark the value of assets on their balance sheets to whatever the market is paying.” Don’t expect FASB accounting services reforms to stop there.

Sobota notes, “…the Federal Government is becoming increasingly impatient with the perceived lack of effort exhibited by contractors towards meeting their procurement integrity obligations. We advise contractors to take a fresh look at their practices to ensure they are prepared to meet this new heightened level of scrutiny.” You may not contract with the Federal Government, but expect scrutiny nonetheless.

In the accounting software realm, start your review by checking the following:

1. How does your accounting system software provider track regulatory updates?

2. How fast can accounting system software be updated to comply with new regulations and requirements?

3. How will you be notified of accounting system software updates? Will you need to be proactive and check the accounting software purveyor’s website or other information repository? Or will your accounting software provider notify you in a timely manner?

4. How will needed accounting software updates be available? Will the accounting system software user have to go to the website to request or download new accounting solutions updates, or will the purveyor push these updates out to their subscribers? If it’s the latter, how—a link to a website download area, sending of a CD, other processes?

5. Besides actual accounting software updates, how proactive will your purveyor be in keeping you “in the know” about regulations and requirements affecting the accounting services world? Again, will these be pushed out to you, or will you need to go get them on an accounting software website?

These are issues you must become knowledgeable about, to make sure your accounting services can handle the coming deluge. For those inclined toward procrastination, just remember that if you stick your head in the sand now, it’s going to be that much harder to get out later—once the deluge has turned it into quicksand.

Instead of frantically searching for prospects to shore up business revenues in these tough times, mine one of the most valuable business development tools out there—your accounting system software. There is a treasure trove of data that can be mined using today’s robust and comprehensive accounting solutions.

Presuming you have accounting services capable of generating accurate and sophisticated reports, you can pursue all types of opportunities. Following is a starter list of ways that accounting system software can be used to enhance your business:

1. Identify upward-trending (and timely paying) customers via your accounting software. Where you find companies that have been spending ever-greater amounts of money, reach out and determine what other upselling opportunities may exist. Generally, these companies will be financially healthy relative to many others in a downturn.

If, when discussing new opportunities, you discover that they are on the verge of a cutback because of economic conditions, you may be able to forestall and limit the damage by being proactive. Offer incentives for certain revenue thresholds; possibly reward the customer with more favorable payment terms. Even though this won’t always result in a revenue increase, it may stop a substantial decrease—a win in its own right.

2. Identify downward-trending (and timely paying) customers via your accounting software. Find out why they’re trending downward. Be proactive to see what, if anything, can be done to turn the tide on their revenue stream. If you determine that some type of incentive is warranted, offer it. Regardless of the outcome, a constructive and positive discussion initiated by you will generally be favorably received. While it may not have short-term payoff, it well could pay off down the road.

3. Establish a set of accounting software metrics comprising your most valued customers. Then, thank them with an elegant gift or other token of appreciation. In contrast to the first two suggestions, this should be low-key gesture that speaks for itself—not a sales pitch.

4. Conduct a widespread accounting services review to look for overall trends that may dictate a fundamental business shift. For example, if revenues are down across one industry sector and up in another, you may opt to shift industry focus for new business development. Or, you may discover that diversifying products or services may warrant consideration.

5. Use your accounting system software to cull out a manageable group of “representative” customers that you can survey to determine likes, dislikes, and projected future needs. This can become a valuable marketing research tool to rework business development strategies and approaches as appropriate.

Sung to Pete Seeger’s “Where have all the flowers gone?”

As I watch reports of Pres. Obama’s meeting with Republican leaders over the next round of bailout—excuse me, “stimulus”—money, my confusion over accounting double standards continues to soar.

Let’s see, it’s okay for the Feds to parcel out $700 billion, $800 billion, a trillion dollars or more without clearly accounting for its use. At the same time, SMBs in this country struggle mightily to comply with existing accounting services regulations—and brace for a new round of regulatory “structure” to keep corporate America in line.

Memo to these SMBs: Don’t follow the example set by the Federal Government (at least thus far), or you could wind up in jail.

Like it or not, small to medium sized businesses in this country will pay the heaviest price for the irresponsible deals struck by big businesses—sometimes in cahoots with the very regulators charged with being public watchdogs.

So, the best move for the Main Street, USA business community is to be compliant, compliant, compliant. Go above and beyond minimum accounting requirements and regulations. Show that you mean business; and know how to run one. Here are accounting system software tips to help set the stage correctly:

1. Buy software you can grow into. Entry-level accounting solutions make much of the fact that larger accounting system software products—such as Microsoft Dynamics® GP—offer a dizzying array of features, many of which are superfluous at this stage of a company’s existence.

That may be true now, but what about in a year? What about introduction of new government regulations mandating accounting services controls and reporting that go way beyond today’s standards? What happens if mom and pop USA suddenly start getting scrutinized under the same microscope as much larger companies?

Be safe now, so you don’t have to be sorry later. Besides, as we’ve all learned with such robust programs as Microsoft Office, you can pick and choose what you want to learn and use now, and leave the rest alone. Once you get accustomed to accounting system software basics, it’s easy enough to proceed without all the advanced features—until down the road, when you need them.

2. Be secure, be secure, be secure. I keep harping on this because it’s so critical, and it’s one of the most overlooked issues in the SMB marketplace. Dynamics GP has eight—count them, eight—layers of security. Most entry-level accounting solutions have one. Do you want to trust your company’s lifeblood to one “guard” able to be compromised or relatively easily taken out, or do you want an army of guards at your accounting services door?

3. Don’t wait to be up to date. Entry-level accounting software tends to bog down after accommodating just a few simultaneous users. This slows productivity and disrupts important, time-sensitive processes. Implement accounting services that virtually eliminate this problem from the get-go, so you’re not needing to reinvent or restructure your accounting software as you go.

Bloomberg recently reported on a Denver-based jeweler citing SAP ERP cost overruns and delays as contributing factors to its Chapter 11 filing. The problem is all too pervasive across all types of ERP deployments, including accounting software product lines and processes. Accounting solutions in principle too often become accounting software nightmares in practice

Quoting from the story: “SAP, the world’s biggest maker of business-management software, took almost three years to install and implement the system instead of one year, while costs ‘ballooned’ to $36 million from a projected maximum of $10 million, Shane said in papers filed yesterday in U.S. Bankruptcy Court in Denver.

“Shane, based in Centennial, Colorado, became ‘substantially overstocked with inventory, and with the wrong mix of inventory’ when Walldorf, Germany-based SAP finished the system in September 2007, according to the filing. The software ‘adversely affected sales’ through the first nine months of 2008, it said…

“The SAP system didn’t become ‘stable and functional’ until the fall of 2008 and still doesn’t operate as initially planned, Shane said in the court filing. The retailer now employs eight contractors to modify the SAP system and ‘bring it to full functionality,’ it said.”

Obviously, the typical SMB Microsoft Dynamics accounting system software implementation is far less expensive than the millions of dollars cited in this story. But, the Shane deployment highlights key issues that can affect any ERP level accounting software deployment. Among them are:

• Lack of detailed and well-organized pre-accounting services deployment planning. Obviously, the client and ERP supplier weren’t on the same page. It makes me wonder if they skimped on deployment and training expenditures in an effort to keep overall costs down—a surefire recipe for disaster. Inventory overstocking and lack of full functionality add to my belief that there may have been a full court press to get this up and running, without dedication of resources needed to meet objectives.

• Substantial delays. Time is money—three years versus one is disruptive, demoralizing, and obviously financially damaging. Can you imagine having an empowered workforce and positive accounting system software employment environment amid these types of delays?

It doesn’t take an accounting software guru—or any type of math maven for that matter—to see that no matter how sophisticated or robust the ERP system is, success ultimately resides in the details of accounting services deployment.

Now, the jewelry company faces bankruptcy while a corps of eight contractors tries to repair the damage. Begins to sound a lot like “Humpty Dumpty” to me: “…all the king’s horses and all the king’s men couldn’t put Humpty Dumpty back together again.” This is no time to play Humpty Dumpty with accounting system software.

A recent LinkedIn question about “concrete ERP return on investment” got me into a “let me count the ways” frame of mind.

Overarching “concrete” ERP return on investment depends on how you mix and apply the concrete. Such ERP powerhouses as Microsoft Dynamics® GP can provide huge ROI if properly implemented and utilized. Benefits are myriad and span the entire spectrum of technology—from sophisticated security to ability to track receivables and payables with pinpoint accuracy.

While ROI is ongoing, it also can be episodic. For example, one regulatory audit can wreak havoc on an unprepared company—both in terms of use of the in-house workforce to assemble needed information, and payments to outside financial and/or legal counsel. Appropriate accounting software can eliminate many of the headaches—much like being prepared for a tax audit ahead of time, instead of having to gather together needed documents and data.

Following are just 10 of the ways that robust and reliable accounting system software can bring about solid ROI:

• No data entry redundancy;

• Rapid report assembly and printing;

• Up-to-date, accurate financials for forecasting;

• Elimination of time-intensive, costly “build as you go” accounting system software functionality in such areas as security, scalability, and currency;

•Facilitating reliable and straightforward employee use, thereby saving time and enhancing morale;

• Enhancing employee training on accounting solutions with clear and comprehensive step-by-step self-directed learning protocols;

• Improving employee retention programs, thereby reducing exorbitant costs related to rehiring and retraining;

• Improving employee recruitment efforts, because prospective employees view robust and reliable accounting software as a valuable employment benefit—this results in a more focused and effective recruiting effort, in turn leading to more productive hires;

• Serving as a valuable business development tool, because stellar accounting services provide one bedrock indicator of a stable company capable of providing accurate and timely information.

Of course, the ultimate key to success lies in intelligent deployment, consistent management and maintenance, and timely updating of accounting system software to address changing rules, regulations and functionality. Since it all starts with installation and accounting software training, make sure your ducks are in a row—and are able to move nimbly without getting mired down in soft concrete.

As companies downsize in response to economic difficulties, some are looking at taking their accounting software with them. Some cite simplicity as a reason. Others bemoan “exorbitant” consultant management and maintenance fees. Before going into a downsizing frenzy, consider these important accounting software issues:

1. Decide whether your present accounting software is overly complex—or just comprehensive. For example, consider Microsoft Office. It’s a comprehensive application, and often the user doesn’t need many of its features. But the user can fairly quickly learn basic functionality, and go as far as needed or desired. In this sense, Office is straightforward; the learning curve is basic, and complexity isn’t forced on the user.

Among accounting solutions, there are definitely systems that fall into this Microsoft Office category. Microsoft Dynamics® accounting software, for example, offers comprehensive capabilities—but the basics are fairly straightforward. It doesn’t force users to go through complex training ordeals to gain basic proficiency.

2. Decouple accounting software from maintenance and management considerations. If you’re paying substantial maintenance and management fees for your present accounting software, make sure they’re justified. Too often, companies throw out the baby (perfectly useful accounting software) with the bath water (overpriced, unnecessary consulting). You may discover that it’s the consulting program, not the accounting software, that requires downsizing or rethinking.

3. Decouple accounting software from training issues. Today’s major accounting solutions offer myriad self-directed, e-learning and webinar accounting software training options. Even with such mid-market mainstays as Microsoft Dynamics, trainees can get up to speed quickly using these tools. If someone wants to sell you ongoing, instructor-led courses, dig deep to find out why. You may discover that much, if not all, training can be handled as part of the accounting software package—with little or no additional expense required.

4. Evaluate system change disruption and demoralization factors versus the stability of a system already in place. No matter how well it’s presented or packaged, change is daunting for many. In the current, rapidly-changing economic environment, a bit of stability and familiarity can go a long way with employee longevity and productivity. “If it ain’t broke…don’t replace it.”

5. Think long-term and next presidential term. When the economy ramps back up, you’ll want to be using accounting solutions that are robust and scalable enough to keep pace. Plus, potentially expanding government regulation with a new Administration inevitably will rein in and revamp much of the presently deregulated financial structure. As this occurs, companies will want to make sure that their accounting software is plenty comprehensive—to handle any regulatory reporting and auditing challenges coming their way.

Much is made of price disparity between such entry-level accounting solutions as QuickBooks® and mid-market stalwarts, including Microsoft Dynamics®. Often, this is comparing apples to oranges. Needs and challenges of a mid-sized company versus a very small business are typically different—and typically warrant different accounting solutions.

Given this scenario, comparing prices is a wasted exercise. Obviously, entry level pricing will be considerably lower than mid-market accounting solutions.

As the price comparison isn’t really a valid consideration, what does matter? Cost. The price paid for accounting software is the money outlay. Cost relates to additional expenditures made necessary because of accounting software shortcomings. Optimally, potential cost issues should be examined prior to buying accounting services—so that a cost/benefit analysis can be conducted. Areas that can become expensive quickly because of a poor accounting software include:

Human capital. If your people don’t take kindly to their accounting software, morale, productivity and longevity issues result. Besides the loss of productivity costs, you may have to hire in trainers and coaches to resolve issues. An employee who leaves often costs a company 70-200% of his/her annual salary for rehiring and retraining. Ka-ching #1.

Audits. Can your accounting software stand up to the typical IRS or other audit? If not, start calculating potential professional fees charged by CPAs, lawyers and other advisors to straighten out problem areas. I was struck by an Oregon newspaper article that stated, “IRS audit costs Sandy Fire District $10,000…The audit was one of the first in a ‘concerted nationwide’ crackdown of fire departments…” Given that our basic Microsoft Dynamics® purchase and implementation is less than $9,000, do the math. Of course, you can always argue that the accounting software wouldn’t have mattered in this case. Possibly.

But, if the IRS is moving to a “concerted nationwide” crackdown on fire departments, other industries are likely to be targeted—particularly as the Treasury Department ratchets up its efforts to find money anywhere to fund our economic bailout. While choice of accounting software can’t guarantee you won’t be audited, it can make a substantial difference. Ka-ching #2.

Security-related regulatory compliance. Entry-level accounting software typically has one layer of security. Mid-market accounting solutions generally offer many layers, and are much harder to hack. An article entitled, “How Much Does a Hack Cost?” pointed out, “According to the annual report by the Computer Security Institute and the FBI, the average loss per company due to security breaches in 2005 was about $167,000…Some rules of thumb say that $100,000 is a good starting point when measuring average loss per incident. Some say $200,000.” Do you really want your accounting system software to function on the low-end of the security scale? Ka-ching #3.

Oscar Wilde said, “A cynic is a man who knows the price of everything and the value of nothing.” Being price-conscious without considering the value of first-class accounting services is shortsighted and potentially very costly in the long run.