Choosing the Right Finance System — with Jason Kirkbride
What do you have to consider as a finance leader, when deciding on a finance system?
I think the first consideration for choosing a system is: What is your objective, what type of business model do you run and what are the system costs?
- Cost — Consider what stage your business is at, your projected growth and the scalability of those systems.
- Location — If you’re working in one territory, for example just in the UK, then you’re probably going to go more towards Sage or Xero. Xero is quite cheap and you can add apps to the base system as the business grows. SAP is probably gold standard, but that comes at a very high cost, especially if you need to customise it to your business. If you’re looking at an international aspect and cost effective, you may want to look at something more like Microsoft Business Central. There are certain limitations to where you can open the subsidiaries on certain systems, for example, in Hungary, we could not utilise Xero at the time because Hungary requires the accounting system to be linked to the government’s tax portal, so that they have real-time analysis. So,you need to be aware of where you want to take the business long-term.
- Accessibility of tech system expertise — We use Microsoft Dynamics Navision, and there’s not many people out there that actually know the system, at least in Hungary. So that’s a key consideration, when you’re looking at a system. There seems to be lots of people out there that know Xero, QuickBooks or Sage, at least in the UK, and having large scale access to expertise is invaluable and will allow you to get the most out of your system.
- Compatibility of any add-ons — Most systems have some level of automation and AI built in now, but it depends on what level you want to get to and how tailored you need to make it, as to whether you’ll require additional add-ons. So for example, Xero has a very basic PO approval process but can’t do multi-level approvals and overlay numerous flows without additional add-ons.
How about Founders that are also doing the Finance Leader role, are their certain systems that would benefit them?
I quite like Xero, I think it’s a very basic but strong system, with a very low monthly cost, but you have the ability to add to it as your business grows and inevitably gets more complex. You can probably use it with limited finance experience, as Xero’s free training is pretty good, they have some basic automations built in, for example once you’ve signed up you have a specific email address suppliers can email invoices to and the system imports them and inputs the relevant details, reducing the amount of data entry and manual work.
How long would it take you to transition from Xero to a more appropriate system if you are looking to expand from a steady business to a hyper-growth business?
It all depends on complexity, when we looked at putting a complex Microsoft system in place, we were looking at 9 to 12 months to be honest, that includes manufacturing, material resource planning, warehousing, supply chain management and Ecommerce though, with some very complex process flows relating to purchase order approval, product barcoding and tracking and intercompany transactions.
I think if it’s a relatively vanilla business, it shouldn’t take too long. It’s all to do with setup and setup is key to building a good future. If you have the foundations wrong in the system, you’re going to have some big issues later down the line. So, it’s better to take more time and have a professional assist you that understands your business and where it is going and also understands the full capability of the system being implemented.
If as a Founder, you’ve got a lot of confidence about the growth of your company, the product and the fundraising, do you go for something slightly more sophisticated first time, instead of starting with a simple system that will need updating?
It really depends where the business is at in terms of ability to invest in a system now. Having the right system for the future now, will definitely save you time and money in the long run, but will that investment provide a better return else where in the short term?
You also have to bear in mind, a more complex system, will generally come with more expensive staff and system consultants. There is no point having the best system if you cant afford someone that can use it and get out of it what the business needs. That also goes for the processes and procedure development outside the system too.
So, it’s a very difficult question to answer to be honest, I think business owners need to first understand where the business is likely to go and then speak to a professional that can advise which system will provide the best return, now and in the future.
Jason Kirkbride — Group Chief Financial Officer at Teqball
This article is taken from our event ‘Developing a scalable & forward looking finance function’ in partnership with Seedrs. You can watch the full interview here. If you wish to be notified about any future events we host, sign up to our mailing list here.
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