We're talking today about something you've probably asked yourself once or twice: "When should I say goodbye to Xero or QuickBooks and hello to an ERP system?"

What's an ERP Anyway?

First off, what on earth is an ERP system? Great question!

ERP stands for Enterprise Resource Planning. But think of it like a multi-tool Swiss Army knife for your business. It's a software that takes all the different parts of your business – finance, supply chain, operations, reporting, manufacturing, and human resources – and ties them all together in one neat bow.

Sounds almost too good to be true and sometimes it is, as it takes a long time to implement (6-12 months) AND ERP systems are very expensive.

So before embarking on this big project, make sure that your business is ready for the upgrade.

How to Tell if You've Outgrown Your Accounting Software

So how do you know when it's time to level up from your accounting software to a full-blown ERP system?

Here are some tell-tale signs:

Not-So-Great Reporting: If your current software starts sweating when you ask it for in-depth financial reports, or custom reports are a pain to create, it might be time to invite ERP to the party.

There may also be issues with data reporting and analysis which you may find just isn’t fast enough to keep up with the pace of the business today.

Siloed Data: Are customer details in one system and financial data in another? You've got yourself data silos. ERPs are like the superheroes of data organisation – they bring everything together in one centralised hub.

This can also be further complicated post a Merger or Acquisition event or if you have legacy history with really bespoke reporting that is no longer relevant or capable with the business today.  Sometimes pulling everything together into one system rather than having loads of add-ons and links is necessary.

Too Many Errors and Inefficiencies: Tired of manual data entry mistakes? ERPs can take a load off by automating many of these tasks, making life simpler and reducing the chance for slip-ups.

Inventory Management Woes: If keeping track of inventory across multiple locations is giving you headaches, an ERP could be the aspirin you need. Real-time tracking makes managing your inventory a breeze.  This is one area that ERP systems have really come into their own.  I have personally worked with ERPs that has a lovely WMS and it can be a total time saver.

Challenges in Scaling: If your accounting software is wheezing trying to keep up with your business growth, it's probably time for a change. ERPs are all about scalability and are designed to grow with your business.

You may also find that scaling internationally, new regulation, introducing new products & services or even a new business line will cause issues with your current accounting software.  Not only from volume and complexity but also the ability to segment the market and do matrix reporting.

Spotting these signs early is key to preventing any stumbling blocks on your path to growth. ERPs might seem daunting, what with their wide range of functions and potentially tricky setup. However, the benefits you'll get in the long run – better decision-making, streamlined operations, and improved scalability – are worth it, if it suits your businesses budget and available resources for implementation.

As a seasoned CFO, I've been there, done that, and the world of startups can be a rollercoaster ride.  I've learned a ton on the journey. Want to delve deeper? Check out my online courses for a treasure trove of insights and strategies on handling growth effectively.

Remember, moving from smaller accounting software to a robust ERP system isn't just a sign of growth—it can be a savvy move that can help your business scale to new heights.