Quickbooks reporting can kill your business

Is QuickBooks killing your business? QuickBooks might be a good option for some organizations, but there may come a time where you outgrow its reporting capabilities. While manual reporting in spreadsheets can be sustainable for a while, a reporting solution that doesn’t grow with your needs can actually stunt your ability to make quick decisions and the best strategic choices for your organization.

What are the downsides of limited reporting? Consider the impact of poor visibility into costs, profit and loss. This can result in decreased market share, and missed revenue and growth opportunities, as you don’t have the information you need to grow and react to market changes and opportunities. Lacking real-time data, you’ll make less informed decisions. You can lose your competitive position and end up with dissatisfied customers. Your colleagues will lose their confidence in senior leadership. Poor decisions can mean the difference between business growth or failure. Is it worth it?

A better reporting solution gives you more insight and visibility into your data and gives you the tools to make better decisions with improved strategic planning.  You’ll have what you need to optimize margins and pricing and to increase time-to-market with better market fit. The right information at the right time can help you increase both shareholder value and market share.

Growing companies are hyper-focused on metrics.   For example, one strategy is a 5-5-5 metrics approach. First, determine the top five metrics that matter most to your organization, then for each of those create five metrics that roll up, and then track five additional metrics for each of those. That gives you five tier-one metrics, 25 tier-two metrics, and 125 tier-three metrics.

For example, a family-owned real-estate investment firm might monitor assets under management, internal rate of return, cash-on-cash, notes payable, and net income period-to-date, with tier two and tier three metrics for each.

Your key metrics might include these and others, both financial and operational, that help business leaders track the health of your organization. Other metrics might include:

  • Budget verses plan
  • Current consolidated cash
  • Days sales outstanding
  • Generally accepted accounting principles adjustments
  • Notes payable
  • Revenue per employee
  • Employee turnover

If you’re a QuickBooks user, you are likely thinking “there’s no way I can do that; that’s a lot of spreadsheets,” and you’re right.   But here’s the thing; best-in-class finance leaders are data driven, so they can help map out the direction of their organizations based on the opportunities or issues that the data uncovers.

QuickBooks Reporting Checklist

Use this checklist to evaluate your reporting capabilities and see if it is time to consider a new financial management solution.

Are you building 60% or more of your reports using spreadsheets?

Spreadsheets can be powerful, flexible tools for ad-hoc reporting. However, producing routine reports means you’re stuck in manual processes and wasting time in spreadsheets. This becomes a problem when a single report can take hours or days to create.

As a QuickBooks user, chances are you provide information to the rest of the management team as requested or on an ad-hoc basis. What happens is that you and your team get inundated with requests, especially if the company is growing or is looking at new strategies for growth.

Today, your QuickBooks reporting requires a lot of manual processes and that means your reporting takes days or sometimes weeks to complete.

Your filtering in QuickBooks reporting is limited to the chart of accounts and class, so you’re exporting a lot of data to spreadsheets so you can analyze the information.

These spreadsheets are error-prone, especially when doing consolidations and eliminations. And you have no visibility into the company’s future cash position.

Do you have trouble accessing your financial information in real time?

Any time you’re exporting your financial information from QuickBooks, it’s static and out of date.

If you’re using third-party systems to build reports, it also increases the chance that multiple people create individual instances of similar reports. Not only are people spending duplicate time tweaking the same reports, but someone may accidentally use an out-of-date report. Time spent on version control is time away from financial management.

Further, the more hands that exchange and tweak the information, the higher the likelihood that formulas will break, or information will become distorted. You could be basing important business decisions on stale or incorrect data.

This lack of real-time data can also be troublesome at board meetings. People may present conflicting numbers, resulting in confusion or even embarrassment.

Are you unable to report on more than one dimension or category?

QuickBooks reporting can only build reports on a single dimension like location, department, customer or project, so you’re stuck with two choices: deal with limited dimensional insights or use a workaround by creating segmented accounts for every variable and combination. Neither of these options give you a multidimensional view of the metrics that matter.

These options can also leave you poring through a lengthy spreadsheet that requires you to endlessly scroll through your account codes and numerous tabs that you need to manually comb through to find the right data. This makes it unwieldy to join tables, create custom calculated fields or use pivot tables to get insight into your data. If anything goes wrong in building your spreadsheet, it can take hours or days to fix or run the report.

The limited reporting insight means that you could be missing out on critical information to make important strategic decisions.

For data-hungry organizations, it’s obvious that QuickBooks reporting can’t give you the up-to-date information you need across an array of metrics and dimensions to make data-driven decisions. With QuickBooks, you lack the real-time visibility you need, and other business leaders want, to drive business strategy.   And in some cases, limited visibility translates to poor cash flow.

Data You Can Use

As a finance leader, it’s your responsibility to use data to make informed and strategic decisions for your company. Having a comprehensive understanding of your operational costs and profit margins are just the tip of the iceberg for what you need to manage effectively.

A modern cloud-native financial management solution provides easy-to-use and intuitive financial reports and dashboards from almost any perspective, such as by entity, currency, or location. These provide real-time insight into financial and operational data, empowering you with the information you need to make decisions quickly without spending weeks creating and working with time-consuming and error-prone spreadsheet reports.

For example, consider the power of a multidimensional general ledger (without the multidimensional madness that confronted Dr. Strange). You can use this to report on projects, customers, locations, departments, items, vendors, employees and other categories for in-depth visibility into profit and loss. Your financial management solution should have both prebuilt dimensional reporting and support user-defined dimensions to capture and store additional business context for each transaction, budget and customer.

Required dimension values ensure data quality by making dimension values mandatory for transactions that post to specified accounts. Autopopulated dimension values simplify data entry and improve accuracy by autopopulating values for specified dimensions based on values of other dimensions.

Multiple-entity multibook general ledgers are impossible to create in QuickBooks. These should give books for cash, accrual, or both automatically post to the correct book enabling accrual-based firms to see the impact of cash transactions more clearly. As well, you should have the ability to create books for reporting by different standards, including International Financial Reporting Standards and generally accepted accounting principles. Side-by-side multibook reporting will show comparative performance by different bases.

Financial reports and dashboards should give management a snapshot of your current financial health across the key performance indicators you’ve set, enabling you to take action when it matters most – whether the information is showing a shortcoming or low performance relative to the desired goal. What sets these apart from spreadsheets and static printed reports is the ability to interact with the data by drilling into multiple metrics, so you have a better understanding of whether you are on target, behind schedule, or performing above expectations – all in real time.

It’s not an exaggeration to say that QuickBooks can kill your business. A lack of sophisticated yet easy-to-use reporting can mortally wound your business. If you answered “yes” to any of all the checklist questions, it’s time to look at a QuickBooks alternative.