These days, many small and medium sized businesses use accounting software systems, such as Sage, Xero or Quickbooks. These applications are often used alongside spreadsheets which are used to manage processes outside of the finance department.
When a business is small and the number of transactions that need to be managed is relatively low, there’s no doubt that the use of both accounting systems and spreadsheets is key to effective management. It’s when a business grows, however, that using multiple systems can cause major problems and affect the flow of information around a business.
If each department in a business uses their own software application and these programs have not been configured to talk to each other, there is a high risk of ‘data silos’ emerging and these can wreak havoc.
Data silos are essentially different versions of data held by different people within an organisation. Information may differ widely in terms of its accuracy and this can disrupt operations and hinder supply chain management, potentially undermining customer relations as a result.
The next step up from basic accounting systems is Enterprise Resource Planning (ERP) software, which centralises all aspects of business operations within a single system. ERP software includes functionality designed to automate different business areas and improve the flow of information between everyone within a company.
By enabling personnel with different job roles to access and share accurate, up to date information, the likelihood of effective collaboration is increased significantly.
To help businesses owners identify if they have outgrown their existing software, we’ve written an article called ‘The top six signs that your business needs ERP software.’ Published in Business Computing World, the article is available by clicking on this link.