How to find the right software to manage multiple entities as your business grows

Growth is the reason most businesses exist.

Expansion, acquisitions and new ventures should be exciting prospects. But they can also cause severe headaches for the people who have to worry about producing a comprehensible set of accounts at the end of it all.

Whether the growth in your organisation has been organic or achieved by acquisition, it may have produced a complex group of related entities which are difficult for the finance department to keep track of and manage.

That’s especially true if different parts of the group are using different software and none of it works together.

Bill-paying, VAT returns and simple transactions between one part of the group and another can require the finance team to laboriously extract data from one system and input it somewhere else.

Intercompany eliminations – the process of stripping out of trading between different companies in the group – can be pointlessly time-consuming.

And extracting figures for monthly management reporting can become painful.

What is complexity costing you?

The technology exists to make all these processes simple and easy, but many businesses stick with the arrangements that have grown up haphazardly over the years.

Often, there is resistance to spending more money on software. But it’s likely your existing software is costing you more than you might imagine.

It may be that parts of the group are using entry-level programs that served their purpose at the time, but which are now costing £30 or £40 a month even though they don’t integrate with other systems. If so, the existing arrangements might not look so cost effective.

As the company has grown, it’s likely that more money has been spent on licences for more people to use basic software that is starting to creak.

In some cases, a management team looking for more control over the system will have paid for different add-ons to improve control and reporting.

If they have done that across different software platforms for different entities, the costs will have grown hugely. This can also rule out the efficiencies that could have been gained by centralising areas such as accounts payable and accounts receivable.

On top of this, you need to factor in the staff time involved in all the duplication and manual work that these disparate systems involve. The work entailed in handling intercompany eliminations can itself run into multiple days per month.

There’s also the cost of mistakes, which are much more likely under such complicated arrangements. If an error is made in inputting information, or a figure is duplicated somewhere in the system, finding that mistake can take up inordinate amounts of time.

When you consider all these things together, it’s almost certain that the rational decision will be to invest in simplifying matters.

What to consider when you’re looking for group accounting software

If you’ve got to the point of wondering why you have all these companies and all these software packages, and how you could simplify things, here are a few points to consider.

Do you want to make your multiple existing systems work together, or just get something new? There are tools out there that can save you time by making some of those complex processes more efficient and eradicating common errors.

But will it be better to add a tool like that to your existing arrangements, or to replace the whole lot with a new product that serves every part of the organisation?

Can you get a better overview? Take one of those unnecessarily complicated situations, such as having to log in and out of different systems to process intragroup transactions. Choose the right solution and you could get a bird’s eye consolidated view of your entire group in real time.

Can I benefit from automation? Find the right product and you’ll end a lot of duplication. You’re looking for a system which will allow you to process a transaction once and have the software take care of all the related transactions in other parts of the organisation.

So those intragroup transactions can be handled with one press of the button for the whole group – and those intercompany eliminations can be handled automatically and efficiently.

What is the value of time saved?  As we’ve seen, when software is no longer serving you well, the cost to you is much bigger than the price of all those licences or subscriptions. Put a value on that time saved and it’s likely to shed new light on the options.

How long will it take for the investment to pay off? If you’ve examined all the relevant facts, you’ll start to get a sense of how long it will take to reap the benefits of spending on software.

It’s easy to underestimate how much the inefficiency in your existing system is costing you – so when you work it out thoroughly, you may find you’re recouping your investment in one year, rather than three.

What about the future? You really don’t want things to get this complicated again. So consider how well your chosen arrangements will cope with future growth. You need a system that will allow you to easily add new entities into the group. Such acquisitions will accelerate even further the repayment of your investment in a new system.

No more growing pains

As we’ve seen, the right software will make that web of connected entities simpler for the finance team to manage. But it will also establish systems that are future-proofed and ready for further expansion.

Make a wise choice and you’ll avoid the risk that your people will be secretly dreading growth rather than relishing it.

By Paul Sparkes, Commercial Director of award-winning accounting software developer, iplicit.

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