As an accountant who was auditing clients at a big four accounting firm for three years, I was often satisfied with using pure-play accounting software like QuickBooks Online or Xero. After all, both were user-friendly, simple and feature-rich from an accountant’s point of view, and I didn’t know better.
As I subsequently took on roles where success was dependent on having both a comprehensive oversight and a granular understanding of the business, such as mergers and acquisitions (M&A) at a multinational corporation (MNC) or being a co-founder of a start-up that is expanding regionally, the shortcomings of pure-play accounting software became apparent.
SAP Business One Prepares Smaller Companies for Expansion (and Exit)
Pure-play accounting software no doubt includes features for bookkeeping, payroll and payments, but small businesses and start-ups quickly discover its limitations as their number of customers, orders and inventory, and the volume of business data increase – for three reasons:
- When businesses expand into new territories and allow their local offices or subsidiaries to procure their own accounting tools, each office often ends up with its own siloed accounting system. Reconciling or consolidating local reports from these systems to produce a global view is then time-consuming and prone to human error.
- Taxation, reporting and other financial regulatory requirements are in a constant state of flux. Small changes in one location can have an unforeseen impact on business conducted with partners and customers in other places. Disparate accounting systems make it difficult for the global business to keep up and make the necessary adjustments to continue operating in accordance with various local accounting and legal standards.
- Business and financial operations encompass more than just accounting, they also include elements like supply chain and inventory control, and customer relationship management (CRM). If the accounting module does not integrate well with the tools used by other business functions for information to flow swiftly and consistently through to executives, decision-making is slowed down or ill-informed.
For many start-ups or small businesses, there are ambitions to scale globally, become listed or eventually be acquired. This brings us to the next point about M&As. As organisations seek faster growth in the digital age, we have seen a significant uptick in M&As. These organisations buy companies for strategic or operational reasons to expand into new markets or acquire new technologies.
On that note, sound accounting is the basis for successful M&As and IPOs and this process should be clean, straightforward, compliant and streamlined – and the foundation for this should have been implemented well beforehand.
Start-ups and Small Business’ One Source for Financial Truth
Most pure-play accounting software solutions just aren’t built to keep up with the complexity of business growth. Being a part of this process – whether it’s helping to make acquisitions or ensuring the foundations are being laid for eventual acquisition – has helped me understand the benefits of using a global, cloud-based Enterprise Resource Planning (ERP) solution from the get-go.
An ERP solution like SAP Business One (SAP B1), if deployed right, serves as the ‘central finance’ system that becomes the single source of truth for an expanded organisation. Its benefits include:
- Scaling with growth and being able to handle large databases, including transaction archiving
- Automatically handling all key accounting processes, such as journal entries, accounts receivable, accounts payable, etc.
- Accurately managing cash flow, tracking fixed assets, controlling budgets and monitoring project costs
- A virtual fixed asset function that frees you from repetitive manual data entry
- Quickly processing reconciliations, bank statements, and payments from various methods, including cheques, cash and bank transfers
- Creating standard or customised reports from real-time data for business planning and audit reviews
Beyond Accounting: What is SAP Business One?
Funnily enough, founders of fast-growing small businesses and start-ups like myself often ask for ‘upgraded’ accounting software. We soon learn that what we are really looking for is an ERP system.
This common misconception stems from the idea that ERP software is just another fancy name for accounting software, but it is not. To put it simply, an accounting software’s capabilities are a fraction of what you can find in a full-blown ERP software.
For example, SAP B1 is an ERP or business management software specifically intended for small and medium-size businesses. It was designed with the idea that smaller companies need ERP software to help integrate key functions like financials, operations and human resources (and across markets if they operate in more than one country), but not the kind that large and complex organisations need.
SAP B1’s modular functions extend to most departments within an organisation, including sales, financials, inventory management, vendor management, CRM, project management, planning or budgeting, and financial reporting.
SAP Business One: Implementation, Support and Integration
SAP B1 can either be deployed in the cloud or on-premise – the former of which is a more attractive proposition for small businesses and start-ups. Its software is also available in 27 languages and sold exclusively through authorised SAP partners across 40 countries who can help you plan for its implementation and ensure it is pre-configured to meet your organisation and industry’s specific needs, be it manufacturing, healthcare, F&B, hospitality, financial services or agriculture etc.
Depending on your role within the company, you can customise a unique dashboard feature to completely manage and control your relevant business data and processes, with real-time updates, alerts, reminders, and numbers on desktop and mobile that are vital for your day-to-day operations.
What I find helpful is SAP providing its customers with a help portal where their users can find out how to configure, implement and upgrade the software on their own, including setting up permissions, generating reports and extending the software with add-ons when necessary.
Version 10 of SAP B1, currently in preview, is also set to be integrated with Microsoft Office 365 and Microsoft OneDrive, without the need for third-party add-ons, enabling seamless communications that span across business functions.
SAP Business One: Tiers and Pricing
The solution is generally available in four tiers, depending on the company’s needs:
- Cloud-based for about SG$80 per user per month, which is ideal for small and mid-size companies or start-ups that don’t have an IT department and do not want a complex system but need more than a simple accounting solution. It can be up and running in a matter of days.
- Simple on-premise implementation for approximately SG$15,000 to SG$25,000 for four user seats, which is usually more suitable for companies with an annual turnover of around SG$2 million. Implementation will take at least a week.
- Standard on-premise implementation for approximately SG$50,000 to SG$75,000 for eight user seats across finance, procurement, sales, inventory management and CRM, which is usually more suitable for companies with an annual turnover of around SG$10 million. Implementation will take at least a month.
- Complex on-premise implementation for approximately SG$100,000 to SG$150,000 for 20 user seats across all modules, which is usually more suitable for companies with an annual turnover of around SG$20 million. Implementation will take about three months.
Contrary to the conventional belief that ERP systems are only for very large organisations, it’s really the growing complexity of a business – and not its size – that makes it a viable candidate for ERP adoption.
Global ERP vs. Pure-play Accounting Software
Whether you are running QuickBooks Online, Xero, or another pure-play accounting software seemingly purpose-built for small businesses, it is important to recognise the following challenges as a sign that a global ERP system has become a necessity:
- Business data residing in disparate applications and making access difficult, with manual re-entry of data from one system to another becoming necessary and causing inefficiencies or affecting staff productivity
- Limited ability to ‘query’ or manipulate a report, so much so that you must tediously export data to a spreadsheet application for analysis – affecting your ability to make important decisions in real-time
- Inability to add new functionality or integrate with third-party applications as your business grows, to the point where manually importing and exporting data to and from applications increases the likelihood of data entry errors and duplicate records
- Lack of accounting controls like GAAP (generally accepted accounting principles) or SOC (system and organisation controls) as you expand operations and need to report to a growing number of stakeholders, or meet auditing requirements
- No support for industry-specific add-ons, such as when you find yourself stuck in the impossible task of finding a widget, plug-in or module for retail or warehouse management
- Without the ability to add more business functions like project management or other industry-specific features, you have resorted to purchasing additional third-party applications to meet your business needs
While the superior user interface of pure-play accounting software is a well-known plus point, the good news is that many ERP vendors like SAP are simplifying their user interface, user experience and workflow so that their systems are easier for non-IT staff to understand and navigate.
All in all, the ease of implementation and cost effectiveness of high-quality ERP systems developed specifically for the cloud makes moving to an ERP an even easier decision. Gone is the need for large capital equipment expenses, and to a certain extent, a large team of in-house IT support personnel.
As an accountant, SAP B1’s ability to streamline financial operations and accelerate the book closing process is perhaps not too different from what pure-play account software companies can provide at a local level. But for CEOs, procurement, IT, operations, sales and customer service, the ability to deliver a unified view of the business for enhanced decision-making, at scale, is where SAP B1 truly demonstrates its value.
Additionally, a proven solution from a trusted provider offers the peace of mind that your expanding business is operating in accordance with local requirements of staff, customers and regulatory bodies in multiple territories, thereby setting you up well for expansion – and perhaps an eventual and successful exit.