When is it time to retire your accounting system?
In some ways the signs are similar to if you tried to wear the same coat for several years as a growing child. The coat might get uncomfortable, some of the seams would tear, and you might soon resent the coat due to the little use you can get out of it.
We’ve noticed the average time for an organisation to keep accounting software is around five to seven years. And perhaps you’ve only reached year four and your software still has some life left in it.
But we also know of organisations that stayed loyal to their finance system for 20 years, only abandoning it when the provider said they were pulling the plug on support or it can no longer serve their needs.
Why do people wait that long? Well, if you’ve been on-premise until now, you might still be wary of the cloud (although it’s much more secure than ever), or you might be concerned about the time it takes to implement or losing historical records for audit purposes.
And you might simply believe it’s better for the books to put off the purchase of a new system for another year or two.
That might be a mistake. Here are some signs that you might need to consider migrating sooner rather than later.
Your finance team are doing too much busywork
According to a new study by Modulr, accountants in the UK are still stuck doing tasks that probably should have been automated long ago.
46% of finance workers say they spend more than three hours each week on tasks like reconciling accounts and tracking company compliance with regulations. Meanwhile, almost half are still stuck on manual data entry (45%).
Not always, but often, this is because accountants are working with disparate systems that weren’t designed to get this spread out. And limited integration means that you’re still rekeying financial data from one application to another – with more than one source of truth. And a lack of Open Banking compatibility might mean the bank statement says one thing, and the accounting system another.
This may all come to a head when the Year End approaches. Before switching to Xledger, the FD of Southampton University Science Park says at Year End, “We would’ve had to recruit extra people to do manual tasks, while simultaneously getting less work done, due to volume of invoices.”
This kind of busywork can be eliminated with better integration, allowing for the automatic updating of data from one application to another. This goes beyond finance: CRM systems, Housing Management systems, and any key source of data in your company should probably link to your finance systems via API.
With the right umbrella cloud system tying applications together, you’ll also gain the ability to scale more easily – adding new entities to the ecosystem without causing it to creak.
All this will allow for more advanced automation, cutting out the busywork, and giving your people space to get more important work done.
You don’t have the insight you need
How quickly can you have the answer to a vital question? How easily can you get the data you need on department financial performance or sales revenue? If you need to respond fast to rising costs or a sudden loss of cash flow, do you have all you need to be agile?
CFOs depend on knowing the broad picture and having granularity of insight – and that insight can’t afford to be out of date. You want everything from P&L and liquidity forecasts to KPIs to be at your fingertips, but so many organisations don’t have this.
That was the case for the outdated systems at the Warwickshire Wildlife Trust, where the information distributed within the organisation was often outdated. Philip, the financial controller, said that “There was a severe lack of relevant information in a timely fashion with the old system, and management accounts were always two to three months out of date.”
The Wildlife Trust needed to have all their data in one hub designed for an organisation of its size and complexity – one that would also give real time insight to people beyond finance.
“To extend the use of a finance system across an organisation, you need to move to something cloud-based and more distributed,” said Philip. “The old system was very much owned by the finance department and they controlled what information people were given. Whereas with Xledger, you can see the numbers in real time. If you’re a project manager, you can see exactly what’s happening on your project.”
You’re not attracting the best finance professionals
Finally, if your accounting system is showing its age, you might not find it easy to keep many accountants on team.
There is a crisis of talent at the moment in the accounting profession, one that EY was happy to throw $1billion at trying to solve.
According to research by Center for Accounting, the top reasons for staffing success among accountants include:
- Leveraging technology
- Having a distinct culture
- Continuous employee development
And while numbers two and three in the list might not depend on whether or not your financial management software is stumbling or making strides for your company, the first absolutely does. Leveraging modern financial technology is crucial for attracting and keeping the best financial professionals.
After all, do your people want to spend their time on data entry, or more meaningful problem solving? Do they want to review old reports or to be able to identify what’s happening as it happens, so they can make powerful decisions in the moment?
Lorraine Twist, a director at recruiter Hays specialising in accountancy and finance, spoke on this issue to Raconteur, “Firms that are able to prove they are digitally savvy are typically more successful in attracting and retaining talent… Ultimately, firms need to show candidates that the job entails more than numbers and spreadsheets.”
As part of the same article, Liz Parry, a telecoms CEO and former accountant, said, “Some organisations encourage you to step out of your lane and look beyond the pure financial responsibilities, but not many do and you can end up stuck in a very stereotypical finance department where it’s tough to gain exposure to other disciplines.”
New financial systems don’t just create new possibilities for your organisation, it also creates new possibilities for your people – who may have more skills than your current system allows them to display.
Once they have new tools at their disposal, they’ll suddenly discover they have time. Time to go beyond financial maintenance, to intersect with other disciplines, and rise to fulfil a role that’s more satisfying to them and more valuable to your organisation.
To learn more about our software solution, made by accountants for accountants, you can always book a demo or check out our article on three key trends in finance software you need to know about in 2025.
