When Is the Best Time to Change Accounting Systems?

Getting acquainted with your accounting software can be a challenge, especially if you’re a new business owner. Once you’ve gotten the hang of things and reached a certain comfort level, you may find that your system doesn’t do everything you need it to, or you’ve outgrown its capabilities. As things become harder to handle and track, making the decision to switch is inevitable. How do you determine the best time to get it done?

• Beginning of your accounting year- Most experts recommend the best time to change your accounting system is at the beginning of your accounting year. While this may look attractive because you get to start fresh, consider all the other companies that are thinking along these lines. That makes a huge difference. If you’re trying to get your system online with hundreds, or even thousands, of other businesses, the resources available to you may be limited.

• When it’s not very busy- Another suggestion may be to switch during your lean times. Your business won’t be as busy and you won’t interrupt valuable time needed for other accounting functions. A switch during year-end closing could be a headache you don’t want to deal with.

• Tax time- You’re already getting the paperwork together for your accountant, so why not switch your system before you file? This will give your team and your accountant time to get acclimated to a new system, and you’ll flow seamlessly into the next chapter of your growth.

You may also consider switching right after you file, so you’ll know how accurate your financials are, and your accountant will be able to input everything from where the company currently stands.

• Immediately- If you and your accountant are still trying to figure out what accounting software would work best, you should take your time and make a list of what your business actually needs. If your current system cannot handle your volume, this may be your best option.

There are pros and cons to every scenario, whether it’s at the beginning of your accounting year, during your downtime, before or after you file taxes, or right away. Every one of these options can be hectic if you don’t have the resources or manpower to support your needs. A few things to consider while you’re making this decision:

- Do you have an accountant?

- If not, will you be getting an accountant to work on your financials?

- Is your staff trained, and will you be able to schedule training for them?

- Is your hardware up to par?

- How long will it take to implement a new system?

- Is a cloud accounting system right for you?

Once you have the answers to these questions, you will be able to make an informed decision that will benefit your organization. Assessing your wants while being realistic with your needs will give you the information and leverage you need to move forward.

This process doesn’t have to be hard. If you don’t have an accountant on hand, soliciting their advice would be a good idea. An accountant can review your current financials and provide recommendations on systems you may not have considered. In some cases, you may end up needing a customized system that is tailored to meet your current needs while being able to scale in the future.

The most important factor to remember: Don’t rush it. Making sure your financials are in a good place and able to make a transition in the event your systems are down for a few days is key. Your in-house financial team and any other consultants you use should be able to help make the transition seamless, now and in the future.


Tim Murphy, CPA writes for CountingWorks, an accounting news and advice website. Reach his office at [email protected].

 

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