Upgrading your accounting software? Read this before you do.

If you work with a start-up or early-stage company, chances are that you have experienced “doing a lot with a little.” When initial investment is low, rationing your cash is critical. Accounting becomes a lower priority and budgets include the bare minimum to meet record-keeping requirements. Enter: QuickBooks. Thousands of businesses use and highly rate the software for its ability to perform the most essential bookkeeping functions. At just a few hundred dollars a year, it may seem like a no-brainer. But what happens further down the road?

When a company is rapidly growing in sales and production, its accounting growing pains quickly become clear. A large volume of transactions makes it impossible to manually process customer and vendor invoices. Investors’ and lenders’ financial reporting requirements to prepare financial statements in accordance with US GAAP or IFRS accounting standards go well beyond the simple bookkeeping that software like QuickBooks provides. Suddenly, your old accounting system just can’t cut it.

It’s at this stage that companies knee-jerk upgrade to a more sophisticated accounting system or enterprise resource planning (ERP) system, such as solutions provided by NetSuite, SageIntaact, or Microsoft Dynamics. However, these provide features far beyond what companies really need, and come with a hefty price tag of tens of thousands of dollars per year; this is before costly projects to implement the software. The good news is that there are more cost-effective options to consider before making the jump to the next level of accounting systems.

Option #1: Enhanced QuickBooks Products

Many companies associate QuickBooks with its most basic and cheapest product – the cloud-based QuickBooks Online program. However, take a look at its additional options for mid-size businesses. For instance, QuickBooks Online Advanced offers additional automation features and QuickBooks Enterprise enables a business to tailor their software based on their needs, such as inventory management or advanced analytics and reporting, much like more sophisticated solutions like NetSuite or Oracle. The good news is that even with more functionality than the basic version, the more advanced versions of QuickBooks have significantly lower fees from other companies.

Option #2: Integrated Third-Party Solutions

One of the most convenient benefits of using an established system like QuickBooks is that it offers nearly seamless integration with other software or SaaS products. These include other products within the Intuit family such as TurboTax and other third-party solutions. If you prefer not to use the payroll offering within QuickBooks, other providers like Gusto may offer the more comprehensive service that you need. Or, if QuickBooks’ capabilities for approval of and processing vendor payments may fall short, providers like Bill.Com may close the gap. Even with multiple providers, you may be able to assemble a combination of programs that integrate with each other and are still cheaper than an all-in-one ERP.

Option #3: Custom Automated Solutions

In some cases, QuickBooks may still be able to handle a high volume of transactions, but perhaps it’s unable to prepare financial statements in compliance with US GAAP standards. In this situation, the most cost-effective solution may be to perform simpler automation tasks, such as automating an Excel sheet by building formulas or using other Microsoft tools like Power Query or PowerPivot. This isn’t a one-size-fits-all solution, but there are many cases where simple automation is relatively simple for a motivated employee to learn – and will suffice for the company’s current needs.

The fact is, as a company grows, the need for a more sophisticated system will become clear as day. However, your business might still be at a level where only a few additional features are needed. Or maybe you’re not ready for a significant investment in a robust accounting system or ERP. Whatever the case may be, don’t forget that there are other cost-effective paths to consider in supplementing your existing QuickBooks system for your needs.

What other alternatives have you found helpful to avoid the need for a new ERP?