It can be very tempting to scrimp on an accounting system when you first start up your new rental business, but this approach can be false economy and cause you significant problems down the road. Entry level accounting systems have their uses but rental companies would be better served by spending a bit of extra time and money to consider other options. Those television advertisements for simple-to-use accounting systems running off a smartphone will work for many very small businesses, often independent contractors, but not for a more complex business. Read on to discover three reasons why not to buy entry level accounting system for rental start up businesses.
Reason 1: Entry level systems deliberately restrict the functionality of the software.
If you think about any population group of companies, there are usually a few companies at the top (think Fortune 500), and millions of companies at the bottom. Entry level systems are after the business of the lowest common denominator, which are companies with requirements for basic financial reporting, the ability to pay suppliers, and invoice and collect from customers. They may add some basic capability for inventory and job cost but, again, restricted to make the system easy to use for non-accountants.
With a few exceptions, rental companies have a more complex business model than what will fit in the bottom tier of companies. Requirements may include more complex inventory systems, even manufacturing in some cases, service management, fixed assets, equipment reservations, and advanced analytic reporting to optimize fleet composition and management.
Your rental business NEEDS more capability – if not today, then certainly in the future.
Reason 2: Changing systems is always a hassle.
Think about the aspects noted in Reason 1. Any rental business of any size is going to need advanced functionality. How and when are you going to change systems? And will you be able to convince your bookkeeper, who is entrenched in that entry level system, to change systems? At Open Door, we have talked to companies who are waiting for their bookkeeper to retire before they change systems. Sometimes the positive change is delayed because the person is an older relative who has helped out for years. Other times the bookkeeper, or potentially other people in the small company, are adamant that they don’t want to give a new system a chance and no one in the company wants to fight that battle.
Pick a system that can grow now and find a bookkeeper that can grow with it.
Reason 3: The cloud gives you unlimited access to the systems and data you need to grow your business.
This doesn’t mean any cloud-based accounting system will be able to offer this. You need an integrated financial, rental, and service system with the ability to manage your rental business. Pick the right system first and you will have access to many options available to better cloud-based systems, including Power BI for the business intelligence you need to optimize your business, Microsoft Flow to automate important and tedious business processes, Microsoft Power Apps for programmers or non-programmers to quickly develop mobile solutions that work for your business, and Microsoft Dynamics 365 Business Central for your accounting needs. Download an app from the Microsoft AppSource to run your rental or service business and you will be off and running.
Implementation costs for cloud-based accounting systems can be a fraction of the cost of previous mid-market accounting and ERP systems, making it feasible to start with one of these systems now for even a single user.