Is your startup outgrowing Quickbooks?

Quickbooks has become the go-to accounting software for small- and medium-sized businesses, but its utility is limited for fast-growing startups. As your company expands its operations, hires more staff and creates subsidiary entities, it becomes increasingly likely that you’ll need a more robust system to handle your books.

If your startup is already growing by leaps and bounds, Quickbooks probably won’t be able to meet all of your needs over the long term. And if you’re seeing some or all of the signs we’ve listed below, you may need to consider upgrading from Quickbooks to Sage Intacct.

1. You’re Struggling with Financial Planning and Forecasting

One of the biggest signs that your startup has outgrown Quickbooks is an increased difficulty handling your financial planning, projections and forecasting.

Because startups are such a dynamic business model, they grow much more quickly than a typical small business. And as they scale, they experience vastly different stages in rapid succession, like:

  • Idea validation
  • Bootstrapping
  • Rounds of funding
  • Scaling and exponential growth

A small business can get away with maintaining their status quo for years at a time, but all of these stages come with a unique set of cash flow goals and challenges. 

To navigate them successfully, your finance team needs to be able to seamlessly track past transactions and analyze what that means for the future.

While Quickbooks is well-equipped to handle the basic financial reports like annual balance sheets and income statements, startups need to capture deeper insight.

You’ll need to plan for multiple scenarios, analyze variances between your budget and actual results, and regularly produce relevant financial metrics. Unfortunately, Quickbooks just isn’t capable of handling those needs.

If you’re spending hours each month organizing your accounting transactions in Quickbooks and manually creating complicated spreadsheets in Excel, it’s probably time for you to upgrade your software.

2. You Have Subsidiary Entities and Intercompany Transactions

Intercompany activities can be a nightmare to deal with in Quickbooks. The software is ideal for one entity per account, but multiple companies and consolidation activities are beyond its scope.

If your startup has evolved to the point of creating one or more subsidiaries, it’s definitely a sign you need to leave Quickbooks behind. Otherwise, you only have two options:

  • Multiple entities’ activity in one file: Quickbooks Online doesn’t allow this, so you’ll have to use the desktop version if you want to have multiple entities on one file. Even if you did, you’d have to manually switch back and forth between each entity and enter intercompany transactions separately on each.
  • Separate accounts for each entity: This will allow you to use Quickbooks Online and easily distinguish between your entity’s activities. But you’ll still have to enter intercompany transactions separately and consolidate your companies by hand. It’s also, obviously, more expensive to pay for multiple accounts.

By contrast, Sage Intacct can access all your entities at once and book intercompany transactions automatically, making consolidations a breeze.

3. You’re Outgrowing Quickbooks When You Run Out of Licenses

Quickbooks comes with only 30 licenses, which means that only 30 individuals can access a file at any given point.

That can work for small businesses when they only have a handful of employees or a single department that needs to work in the program, but it can become a real bottleneck for startups as they expand their staff.

If your accounts receivable team, external bookkeepers and financial planning department all need to access the account at the same time, you’re probably going to feel constrained by that limit pretty quickly.

When your team begins to exceed the number of licenses available, you’ll have to take turns, which can lead to:

  • Delayed business functions
  • Conflict between competing teams
  • Mistakes due to poor communication between departments

On the other hand, Sage Intacct places no limit on its total user count. As your team grows, you’ll have no difficulties with competition over access to the resource and can scale upward as much as you need.

4. Your Startup Has a Large or Complex Inventory Function

An estimated 24 million eCommerce startups are operating across the world today. All of them need to find some way to house their inventory cost-effectively, which isn’t always as simple as it may sound.

If your startup sells physical goods and has a large or complicated inventory system, Quickbooks may not be the best program for you anymore:

  • Multiple warehouses: If you store your product in multiple warehouses and need to track your inventory in each one separately, you’ll need to upgrade to more advanced software. Quickbooks is capable of monitoring one location fairly well, but it can’t track shipment orders to and from multiple warehouses.
  • Total inventory size: Quickbooks can only keep track of up to roughly a million inventory items. If your startup approaches or exceeds that inventory level, you should probably use another software to track it. Quickbooks won’t be able to monitor everything, let alone missed or partial shipments.

But Sage Intacct offers a cloud-based inventory management software that’s fully capable of dealing with multiple warehouses, different units of measure and large quantities. Its real-time system allows you to see across locations, products and inventory status.

5. Its Cloud Capabilities aren’t Meeting Your Needs

Quickbooks comes in two forms: Quickbooks Desktop and Quickbooks Online. The desktop version offers more and better features, but it doesn’t come with any of the benefits of cloud-based services like:

  • Reduced IT costs: By using the cloud, you can drastically reduce your IT spending. You won’t have to retain any in-house tech experts or even hire a contractor when things break down (because they won’t). And since you won’t need any of the equipment that’s normally necessary to manage and maintain a local IT team either, you can save a considerable amount of money upfront.
  • Better collaboration: Cloud-based services are designed to promote collaboration. Your whole team will be able to work on projects simultaneously and communicate with each other more easily. Cloud-based systems are also a secure way to share confidential company data and financial information, which you’ll need to do with your accountant and finance team. 
  • Scalability: With the cloud, your business can easily scale its needs up as the business grows. If you’re using a local version of Quickbooks, you’ll have to download the product onto every employee’s laptop, which can get pretty tedious. Cloud-based software means you never have to worry about software updates or excessive download times again.

While Quickbooks Online is cloud-based, the software leaves a bit to be desired. The interface is less intuitive than its desktop counterpart and the available functions are limited.

But Sage Intacct was developed specifically for the cloud and allows you to take advantage of all the benefits we discussed above without having to deal with reduced program utility.

How to Handle Outgrowing Quickbooks

All in all, Quickbooks can be an effective option for small- and medium-sized businesses or the very early days of your startup, but its capabilities aren’t scalable.

The faster and larger your startup grows, the more likely it will be that you’ll need to upgrade to a more advanced, cloud-based accounting system.

If you’re experiencing any of the signs we discussed above, it may be time for you to make that switch. Sage Intacct directly addresses many of Quickbooks’s biggest limitations and is a great option for any startup.

Need Help?  Schedule a FREE consultation with a CPA!