Transitioning to an ERP System May Be the Key to Growing Your Profitability
Most construction businesses select a basic accounting software program when they first launch operations. At that point, it is a good choice – affordable, and easy to set up and use. And the software may even have limited functionality specifically designed for the industry. But there comes a time in the lifecycle of every growing contractor and developer when that “standard” accounting product is simply not enough – a time when a full Enterprise Resource Planning platform (ERP) makes sense.
Here are 10 common signs that your business is ready for a full ERP system.
1. Your company has become multiple entities.
There are many reasons why your corporate structure may need to become more complex. For example, a developer that manages its own properties may want to track projects as separate entities during construction and after build-out. Your business software should accommodate multiple entities while still providing an overall view of your business finances.
2. You need to manage customer relationships more closely.
A robust ERP system with a fully integrated customer resource management (CRM) platform should function as the single storehouse for all documents and agreements. This includes information about billing milestones, work order submittals, change orders and other compliance records that impact a project. Additionally, ERP integrates with email, so all related conversations and transmissions are in one shared repository.
3. You need greater control over production and inventory.
The capability to track your inventory across all locations is essential to timely delivery and efficient operations. Your software should give you the flexibility to choose your method – whether average cost, first in first out or last in first out – and to change over time. Your system should be intuitive as well, making proactive inventory replenishment suggestions.
4. You’re wasting time on duplicate data entry.
As companies mature, they often need to add more powerful payments processing, CRM, marketing automation and business analysis tools. A robust ERP system built on open application programming interface (API) standards enables dissimilar software applications to communicate with each other and dynamically share data (i.e. “talk” to each other), eliminating the need for duplicate entry.
5. You need greater insight into your business.
Your accounting system should help you manage the business and improve performance. Look for ERP software that lets you set up visual, intuitive dashboards containing widgets that track key performance indicators and applications from inside and outside your organization. Users should be able to drill down to quickly access and track critical project data, material arrival timelines, invoice approvals and expenses.
6. You’re not getting enough customization or innovation.
Your business software should adapt to your business, not the other way around. If you want to take advantage of business functionality that enhances profitability, you’ll need to make the move to an ERP platform that offers customization, and delivers new proptech features and innovations that can radically enhance the way you run your whole business – not just your accounting.
7. You’re not receiving the benefits of a true SaaS system.
True SaaS provides access anywhere, anytime on any device. A modern cloud ERP platform allows you to access your business applications from any web-enabled device without installing software. There won’t be additional services to buy, applications to install or special configurations to endure.
8. You’re running out of user licenses.
When you first signed up, your software’s user capacity probably seemed like more than enough. But as your business grows and adds locations and headcount, you may find that you’re running through those licenses quickly – and can’t even consider providing limited secure access to users such as investors, project managers or outside accountants. An ERP platform will grow with you.
9. You can’t get straight answers in the support documentation.
Industry expertise is a key driver to success and not likely to be achieved with a generic FAQ. When you subscribe to a robust cloud-based ERP, you will likely work with a highly trained and experienced value-added reseller (VAR) that knows how you need to use the system and what outcomes you expect. Further, your VAR can provide training for your employees and quickly get them up to speed.
10. Potential investors might not take you seriously.
Looking for investors and limited partners for your business? Congratulations! But you should know about a potential pitfall with a basic accounting system: there’s a very limited audit trail behind your accounting data. Many experienced investors will tell a smaller business to migrate to a “real” system before coming back to reapply for funding. This ties back to this article’s original point: when you’re ready to take that next step in terms of capital, multiple properties and multiple revenue streams, you will be expected to show that you’re keeping professional financial records, too.
Your business is growing. Don’t let your accounting software slow you down. Upgrading your operations to a true cloud ERP system will allow your company to establish a firm foundation for long-term, profitable growth.