16 Signs It’s Time to Upgrade Your Accounting Software

Talk to the leaders of just about any company — from a tiny startup to a global conglomerate — and they’ll tell you their accounting system is the engine that drives the business.

To evolve and grow, successful businesses need to have a firm grasp of their finances and manage their capital assets effectively, and to do that, their accounting systems also need to progress. However, rapid business growth can start to outpace an accounting system’s ability to keep up with an organization’s changing needs. The signs may be subtle at first — a delayed financial report or a couple of data inconsistencies — while the bigger issues that come with slow, outdated accounting software may lurk beneath the surface. Those problems can add up and ultimately threaten the future of the business by decreasing productivity, increasing data errors and creating stress among customers.

It’s important for companies to recognize the subtle but critical clues that their accounting systems need to be replaced. Ultimately, embracing modern accounting software can save companies time and money by reducing the need for data entry and other manual tasks related to invoices, payroll, expense management and bank reconciliation — allowing accounting teams to focus on more strategic work to help the business grow.

16 Signs It’s Time to Upgrade Your Accounting Software

As accounting systems age, they may not be able to keep up with the complex needs of a business, particularly as a company expands. It may be tough at first to determine whether an upgrade is necessary, but if companies pay close attention to the challenges their accounting teams face while using their current software, the need to implement a new system will likely become apparent.

Here are 16 warning signs that an accounting system has outlived its usefulness, plus a look at how the newest, most advanced systems can meet today’s business challenges.

1. No Cloud Access

On-premises accounting systems can be effective — to a point. But without access to the cloud, a company’s accounting functions are likely to be much slower, less secure and less accurate, which can put organizational growth at risk. In fact, after witnessing accounting teams struggle with on-premises accounting systems, Evan Goldberg and his partners launched NetLedger, the first cloud-based accounting systems provider that is now NetSuite, in 1998, heralding the cloud computing revolution. Cloud-based accounting software continues to drive cloud usage today. According to Verified Market Research, the cloud accounting technology market is projected to nearly double from $15.25 billion in 2022 to $29.94 billion by 2030.

Companies that continue to rely on accounting software without cloud access are likely to encounter multiple challenges. For example, as companies grow, they often need to add new systems, such as invoicing or payroll, to extend the functionality of their on-premises accounting software. This may involve creating separate databases to store financial data, which can lead to redundant data entry in multiple systems, data errors, difficulty running reports and, perhaps most important, an inability to get a single view of real-time data. In addition, with team members often working in separate locations, on-premises accounting systems also struggle to maintain seamless financial workflows, leading to bottlenecks.

Companies may begin to recognize the limitations of their on-premises accounting systems in several respects. Employees may find it difficult to access financial data remotely or collaborate with colleagues in different locations, leading to delays, errors and inefficiencies in financial reporting. Companies may also notice they need to deploy separate accounting systems for different business units, leading to data silos and difficulties with consolidating financial information accurately. In addition, companies may find that their accounting teams are spending a significant amount of time on manual data entry and reconciliation tasks.

With the anytime, anywhere availability of cloud-based accounting systems, companies can access real-time financial data to drive strategic decision-making. Centralizing accounting functions in a single cloud database also unlocks real-time collaboration among team members because stakeholders can access the same financial data simultaneously, streamlining financial reporting. Cloud-based accounting systems also feature seamless, automated workflows that fuel efficiency and ensure data consistency, reducing the need for manual data entry, minimizing errors and saving valuable time that can be invested in strategic financial planning and analysis.

2. Can’t Report in Real Time

Businesses often thrive or die on the strength of their financial performance data. Yet older accounting systems may lack real-time reporting features, leaving accounting teams to feel like they are trying to navigate a large, modern city with an old, out-of-date map.

The disadvantages of using an accounting system with no real-time reporting capabilities are typically easy to spot. For example, accounting teams may find themselves spending more time preparing financial data than analyzing it and struggling to deliver up-to-date reports. In addition, companies using accounting systems that can’t provide access to real-time data face several potential risks. For example, making decisions based on outdated, inaccurate data can lead to financial losses, missed business opportunities and noncompliance issues.

Upgrading to a system with real-time financial reporting capabilities frees teams up from constant data preparation, provides leadership with an up-to-date snapshot of the organization’s financial health and allows companies to focus on more strategic analysis and business forecasting with the assistance of AI-powered systems.

3. Can’t Glean Useful Insights

In many ways, some older accounting systems are merely repositories for recording and storing financial data, providing little in terms of analyzing the numbers to cull meaningful insights. In addition to a lack of analytics capabilities, it can be challenging to draw significant insights from older systems that don’t integrate well with other enterprise systems, such as customer relationship management (CRM) software and tools used for payroll. This creates data silos that make it difficult for accounting teams to get a comprehensive view of financial data. Older accounting systems also require external tools for reporting and analytics and have a limited ability to customize data, making the process of gathering insights more time-consuming and error-prone.

Modern accounting software goes much further, helping companies look beyond a single set of numbers and transactions to discover patterns and themes in the data, which lead to useful insights that drive better decisions. Upgrading to a new accounting system opens the door to a faster, easier, more accurate understanding of data to spot spending patterns, identify cost-saving opportunities and predict cash flow trends.

4. Only Manages Accounting Basics

Outdated accounting software may handle only basic accounting functions, such as recording transactions, tracking accounts payables and accounts receivables and producing simple financial reports. Telltale signs of limited accounting software functionality include the need to rely on spreadsheets for data analysis or having to house critical data in separate software, such as sales and inventory systems, because of a lack of integration.

Such limited functionality may be good enough for some small companies, but growing companies need more robust capabilities, such as real-time reporting, integration with other business systems and advanced data analysis, to inform decision-making and maintain a competitive advantage. An advanced accounting system can also reduce the need for manual data analysis and allow for greater tracking of accounts payables and receivables, cash flows and a company’s overall financial health.

5. No New Integrations

In today’s fast-paced business climate, an accounting system should be one piece of a larger enterprise software ecosystem that comprises multiple parts that talk to each other and quickly balance the tasks that need to be completed. The result? The whole software environment is greater than the sum of its parts.

However, many outdated accounting systems aren’t built on architectures that feature application programming interfaces (APIs), which allow accounting systems to work seamlessly with other critical systems, such as CRM software, inventory management systems, payroll services and ecommerce platforms. Without integration, companies must use time-consuming and error-prone manual processes to record transactions separately within each system, making data analysis difficult and slowing financial decision-making to a crawl.

Integrating accounting software with other critical applications, on the other hand, allows data to flow freely among systems. For example, when a company records a sale in an accounting system, an integrated inventory management system can automatically adjust inventory levels. At the same time, with an integrated CRM, customer profiles are automatically updated with new data. As a result, the company can remain more nimble, quickly responding to changes in the business environment based on comprehensive, up-to-date data.

6. No Mobile App

With so many companies deploying remote workforces, mobile capabilities have rapidly become a necessity for any growing company looking to analyze data and make decisions quickly. The inability to access financial data from any location slows decision-making and limits overall efficiency and agility. This can lead to delays in invoicing and approval processes, decreased visibility into financial health and slower customer service — all of which have serious long-term implications for business efficiency and profitability.

If an accounting system lacks mobile applications for iOS and Android or has limited functionality on mobile devices, it’s time to upgrade. Accounting systems with mobile apps allow companies to send invoices or check cash flow from a coffee shop, for example, or approve expenses while commuting by train. Cloud-based accounting systems offer the highest level of mobile access, with users needing nothing more than an internet connection to access the system.

7. Limited Automation

Older accounting systems are less likely to include automation features to speed workflows by managing everything from finance and human resources (HR) to CRM and supply chain management (SCM). For instance, an older system might provide automatic data entry, but not automated report generation or invoice processing. AI-driven software can use optical character recognition (OCR) to pull relevant information from documents, as well as automatically match payments to invoices and transactions in the reconciliation process. The more an accounting system requires manual tasks, the less efficient — and more costly — the system becomes. Not only are manual tasks time-consuming, but they can lead to accounting errors, which can result in mistakes with serious financial and legal consequences.

If companies find their teams spending too much time on manual data entry, reconciliation and report generation, an upgrade to a new accounting system could pay huge dividends. New accounting systems can automate everything from data entry and invoice processing to tax calculations and regulatory compliance. For example, an accounting system can automatically generate and send invoices to clients, track and categorize expenses and automatically update financial records in real time. In addition to improving efficiency and reducing errors, automated accounting systems provide faster real-time insights into financial data to drive more agile decision-making.

8. Limited Currency Options

Businesses may have trouble expanding globally if they rely on outdated accounting systems that can’t handle multiple currencies. In addition to spending considerable time on currency conversions, companies may struggle to meet international tax obligations and suffer potential losses from unfavorable exchange rates. Some companies may opt out of an international expansion just to avoid managing different currencies, missing out on a potentially lucrative opportunity for growth.

If company leaders find themselves turning down international opportunities because of accounting system limitations or if managing international clients and suppliers results in painstaking manual currency conversions, upgrading to a new accounting system can unlock huge growth opportunities.

Modern accounting systems can manage transactions, balance sheets and income statements in multiple currencies, automatically applying current exchange rates. These newer systems simplify international transactions to ensure accuracy in financial reporting and compliance with international tax laws. With an upgraded multicurrency accounting system, businesses can send invoices in the client’s local currency, then automatically convert and record the transaction in the business’s main currency, keeping track of exchange rate fluctuations in the process. These capabilities are key to maintaining accurate financial records and promoting seamless global transactions.

9. No Payment Gateways

Payment gateways allow companies to accept debit or credit card payments from customers online; they’re basically the online equivalent of the point of sale (POS) system we use when paying with a credit card in a store. With the recent explosion of online sales, most companies need a payment gateway to process online transactions by transferring payment details from the customer to a supporting bank.

Outdated accounting systems often lack the ability to integrate with payment gateways. While it’s possible to handle online payments without a payment gateway, the process is much more complex and risks alienating customers. Sure, companies can create their own merchant accounts to accept payments or use payment service providers, such as Venmo, or mobile payment apps, such as Apple Pay, but these alternatives also have their limitations, which can lead to slower payments, frustrated customers and potential lost sales.

If companies receive complaints about limited payment options, it’s time to consider new accounting software that can integrate with multiple payment methods, allowing businesses to accept payments through credit cards, bank transfers and even digital wallets. An integrated payment gateway speeds up order-to-cash payment processes and enhances cash flow while improving customer satisfaction by providing multiple payment options.

10. Software Updates Cause Errors

Software updates are a critical part of the software lifecycle, giving customers access to innovative new features that help fuel productivity, cost savings and growth. When companies host software on their on-premises servers, IT teams typically install and manage software updates. In the case of cloud-based software-as-a-service (SaaS) offerings, where companies use web browsers to access software hosted on outside servers, updates are done automatically over the internet without the need for IT support.

Updates are meant to improve software functionality, but as systems age, updates can sometimes do more harm than good, causing simple issues, like preventing certain features from working properly, or more significant problems, such as data corruption or complete system crashes. As accounting systems get even older, vendors may stop providing updates or support for products. At that point, they are considered at the “end of life.”

Update errors can have serious consequences, from delays in reporting to unprocessed transactions, which can have a ripple effect on the business, impacting everything from decision-making to tax-reporting penalties.

If companies see an increase in glitches as a result of updates, an upgrade to a newer accounting system can dramatically improve system reliability and security, plus improve job satisfaction and productivity for staff. When choosing new accounting software, companies should carefully review each vendor’s track record for successfully completing updates and providing customer support.

11. Requires Too Much Manual Work

When businesses rely on accounting systems that lack automation, accounting teams need to do too much manual work, including entering data, generating reports, reconciling accounts and calculating taxes. And when teams spend more time managing spreadsheets than working on strategic planning, the result is time-consuming, inefficient processes that lower productivity, put the company at greater risk of errors and reduce job satisfaction for frustrated employees.

In an age of rapid technology innovation, including AI and machine learning, many of these accounting tasks are ripe for automation. If companies sense rising frustration from accounting teams juggling too much manual work and see increasing delays in reconciliation and report generation, they should seek automated solutions that can reverse those trends. In addition to automating tasks, such as data entry, invoicing, payroll, reconciliation and report generation, automation capabilities can dramatically improve fraud detection, compliance and budget forecasting.

By automating as many tasks as possible, the software can free up accounting teams to focus more energy on strategic efforts, propelling growth.

12. Can’t Handle Growth

Most companies want to grow, but not every company is fully prepared to expand. Not only do companies need adequate resources to fuel growth, but also their systems need the flexibility and scalability to handle new customers, employees and business units. Outdated accounting software has difficulty scaling to handle larger volumes of transactions in a growing company, and, as a result, accounting teams often feel the strain when additional users, departments and offices pop up both domestically and abroad.

Some accounting systems can’t scale because they were specifically built with small businesses in mind and aren’t able to handle larger volumes or more complex transactions. Older software can also feature a more rigid software architecture, which makes it resistant to scale. This can create a wide range of negative consequences for growing companies, including delays in transaction processing, data inconsistencies, inaccurate reports and system crashes. These limitations can quickly lead to reduced productivity, longer response times, potential regulatory issues and slow decision-making processes.

Companies should keep an eye out for increasing accounting system crashes as one key sign that their accounting software has reached its limits. Increasing data inconsistencies and delayed financial reports are other red flags.

When upgrading to a new accounting system to support growth, look for customizable solutions that offer flexible architectures capable of tailoring functionality to a company’s specific needs, including handling a large volume of transactions, additional users and more complex business processes. Scalable accounting systems often include features like multiuser access, real-time data updates, sophisticated reporting and analysis tools and customizable workflows. In particular, cloud-based accounting solutions are ideal for handling growth because they allow companies to add computing resources to manage more complex transactions with just a few clicks.

13. Data Is Segregated

An unfortunate limitation of older accounting systems is an inability to integrate with other important enterprise systems, such as CRM software, to access data. After all, data is the lifeblood of successful businesses, allowing companies to get real-time insights into operations to improve everything from strategic decision-making to customer service.

Because older accounting software is often built on inflexible architectures that lack the necessary APIs to connect seamlessly with data in other systems, financial data tends to live in a silo. This puts companies at a disadvantage, with sales records stored in a CRM, for example, while financial data sits in an accounting system. As a result, pulling a report on sales performance and revenue requires a lot of manual effort, slowing down response times as teams consolidate data to build comprehensive reports. Not only does the manual process frequently create data inconsistencies, duplicate entries and errors, but it also means by the time reports are generated, the information is already old — a big no-no in today’s fast-paced business world.

A surefire sign of segregated data issues is a gradual but steady lengthening of the time necessary to build comprehensive reports. Newer accounting systems have several features that can help by consolidating companywide data into a single database, where it can be viewed and analyzed in real time. For example, enterprise resource planning (ERP) software can combine a wide range of data and functionality — from financial management and CRM to HR, SCM and more — into a seamlessly integrated hub that companies can use to virtually manage their entire businesses.

If companies opt not to use an ERP system, it’s important to find robust accounting systems that feature flexible architectures and APIs that make it easier for separate systems to share data. This will result in more comprehensive, real-time reports while reducing manual effort.

14. Lagging Customer Service

At a time when customers can share their good and bad experiences with brands widely on social media in an instant, customer service has become the ultimate competitive differentiator.

Successful customer management doesn’t rely solely on effective CRM software, however. The limitations of an outdated accounting system can directly impact a company’s ability to provide the kind of high-quality service customers have come to expect. Consider the following scenario: A customer calls a customer service rep about a billing problem. The service rep accesses an outdated and slow accounting system to obtain details about the bill but has trouble deciphering the data and puts the customer on hold to contact the accounting department to ask questions. Meanwhile, the already angry customer waits more than 20 minutes to resolve a billing discrepancy. Not an ideal customer experience, to say the least.

Older accounting systems weren’t always designed to be user-friendly, which means customer service reps often struggle to access and share important data. The problem is exacerbated when accounting systems are disconnected from CRM or sales systems. This can result in poor customer service and lost customers (and revenue), not to mention harm to the brand’s reputation.

If companies see a steady increase in customer complaints about slow resolution times or if customer service reps experience greater difficulties accessing critical information from accounting systems, upgrading to a more advanced system can bring a host of helpful features, such as real-time data access, user-friendly interfaces, customizable dashboards and integration with CRM and sales systems. The resulting boost in efficiency should reduce resolution times and improve customer satisfaction rates.

15. Outdated Security

The prospect of a security breach must send shivers down the spine of every business leader. And while any breach could be a serious threat, perhaps none has the potential for disaster more than a security breach of an accounting system, the hub of an organization’s most sensitive financial data.

Outdated accounting systems carry a much greater risk of a security breach from both external and internal threats. Older software often uses weaker encryption protocols that don’t keep up with the pace of more sophisticated security threats. In the worst cases, old accounting systems may have no encryption at all. And as software ages, it may reach an end-of-life phase in which the provider no longer patches, updates or supports the system, leaving it vulnerable to more threats.

Security breaches can have dire consequences, including financial losses, damage to brand reputation, lost customers and legal and compliance issues, so it’s important for companies to look for signs that their accounting systems may not have adequate security features. Companies should pay close attention to whether the pace of security updates from their accounting system providers has slowed or employees report unusual activity.

An accounting system upgrade can provide greater peace of mind that a system is more secure. The latest accounting systems include a number of important security features, including strong encryption for data at rest and in transit, multifactor authentication to verify user identities, detailed audit logs to monitor activity and regular automatic updates to combat new threats.

16. Changing Compliance Laws

Companies in almost every industry face business regulations with ever-shifting rules and standards that they must regularly address. Finance, health care and technology companies, in particular, face constantly changing regulatory environments. And according to a recent survey from The National Association of Manufacturers, 63% of manufacturers report spending more than 2,000 hours per year complying with federal regulations, with 17.1% spending more than 10,000 hours annually.

Accounting software that can’t keep pace with changing regulations could create serious problems for businesses. For example, a failure to abide by new tax laws could lead to errors in calculating tax obligations, which could result in penalties and legal action. Failure to meet privacy standards could also lead to stiff penalties and lawsuits. In addition, older accounting solutions are often limited in terms of features that allow companies to stay on top of the latest regulations. They may also lack the ability to adapt the software to comply with local standards and industry-specific regulations.

If companies find themselves struggling to keep up with changing laws, the latest accounting systems can offer regular updates and strong customization options to make the compliance process easier. Some accounting software also offers dashboards that allow companies to monitor their compliance status in real time, making it easier to identify issues quickly. Companies should look for features that offer the ability to automatically install compliance updates, as well as generate compliance reports, send automated alerts to identify potential compliance issues and update changing tax laws to maintain accurate calculations.

Upgrade to Accounting Software that Grows with Your Business

One of the most effective ways to ensure that your company uses the most up-to-date, robust accounting system is to move to cloud-based accounting software, where the system is regularly maintained and updated by your provider and hosted on third-party servers.

NetSuite launched the first cloud-based accounting system in 1998 and now offers the most complete solution for small, midsize and large enterprises. NetSuite Cloud Accounting Software delivers real-time access to financial data, simplifying the process of recording transactions, managing payables, collecting taxes and closing the books. NetSuite’s Accounts Receivable solution offers comprehensive automation tools for posting transactions, tax calculations and billing. It also delivers real-time insights with configurable dashboards, reports and KPIs.

NetSuite’s advanced automation features also bolster efficiency and reduce errors by automatically creating journal entries and reconciling account statements, eliminating the need to collect and normalize data from other departments. Because the system is cloud-based, NetSuite Cloud Accounting Software is accessible anywhere, anytime via an internet connection.

NetSuite Cloud Accounting Software is one component of NetSuite’s ERP solution, which seamlessly integrates its accounting module with NetSuite’s other leading solutions for CRM, HR, SCM and manufacturing. As a result, data from each system is consolidated into a single database, providing the most comprehensive view of companywide data possible to drive greater insights and inform strategic decision-making.

Flexible, scalable and adaptable accounting systems play a vital role in the success of any organization. But many businesses make the mistake of continuing to use software that has reached a point where it no longer serves the needs of the business. Recognizing the signs that an upgrade is required is the first step toward making a change to a better system.

The most effective accounting software integrates with other business systems and eliminates the need to enter the same data manually multiple times. It also provides a real-time look at key information, such as accounts receivable, accounts payable, sales data and cash flow, allowing accounting teams to closely monitor the financial health of their organizations and prepare for future growth.

Accounting Software Upgrade FAQs

How do I switch from one accounting software to another?

Switching from one accounting system to another takes careful planning. Companies should begin by assessing their accounting needs and then researching accounting software suppliers that meet those needs. Once a solution is chosen, companies should make sure they have the resources to migrate existing financial data into the new system. They should then rigorously test the new system before going live and ensure that all users are properly trained on the new software.

How do you transition to a new accounting system?

Transitioning to a new accounting system involves several important steps, and the most important is data migration. Existing financial data must be extracted, deduped and mapped to the data structure of the new system. Experienced IT resources should always be involved in data migration. Training on the new system is equally important to ensure a smooth transition. It’s wise to involve existing teams as much as possible in the vendor selection and transition process to ensure that they’re prepared and will welcome the change rather than resist it.

How can an accounting system be improved?

One of the most important ways to improve an accounting system is through updates delivered by the system provider. In the case of on-premises systems, providers deliver the update, which is then installed by the customer. With cloud-based accounting systems, on the other hand, the system provider automatically updates the software via the internet. Updates often provide critical new features, functionality and enhanced security to allow customers to take advantage of new innovations. Accounting software can also be updated via integration with other tools to extend the functionality of the accounting system. Newer systems have application programming interfaces (APIs) to make integration easier, whereas older systems may be more difficult to integrate.

Which software is best for accounting?

Determining the accounting software that is best for any company comes down to identifying the individual financial management needs of each business. In general, companies should look for modern accounting software that includes the following features: scalable and customizable architectures to handle higher transaction volumes and changing needs; automation tools to improve productivity and efficiency while reducing errors; and APIs to allow for smooth integrations with other critical business software, such as customer relationship management (CRM) systems. For many companies, cloud-based accounting systems offer the best solution, providing automatic updates to new features and capabilities. Cloud-based systems also have the benefit of not imposing upfront costs for hardware and infrastructure because they’re hosted by cloud providers that include this cost as part of their monthly subscription pricing.

What is advanced accounting software?

Advanced accounting software is based on flexible architecture and includes several features that make an accounting system highly scalable and customizable to adapt to the individual needs of each customer and provide deeper insights into operations. Cloud-based accounting software often features tools that automatically update data entries and workflows, dramatically improving productivity and efficiency. These systems are also able to scale to meet the needs of higher transaction volumes and new users. Advanced accounting software also integrates easily with a company’s other systems, such as invoicing or CRM systems. This prevents duplicate data entries and errors, while allowing companies to obtain real-time views of data in multiple systems.