Here's the situation: Your client needs to upgrade their accounting software from an out-of-the-box program to a more sophisticated, customized system. You know it and your client is avoiding it. What should you do?You might have to get a little creative.

"What CPAs have to do is paint the client a mental picture of the brick wall that they're driving their cars into," said Mike Braun, chief executive of Intacct, an online financial management system provider based in San Jose, Calif. "These entry-level systems have built-in brick walls, and before you hit them you don't know they're there. But once you hit them, all hell breaks loose. You have to offer them an easy way to make the transition."

Or perhaps you can point out that, in order to expand their businesses, growing pains - such as upgrading the software system - are just part of the process. "First of all, CPAs need to set the client's expectations that change is inevitable, change is a good thing and that the benefits that will flow out of that can be measured and identified," said Mark Semmelrock, a CPA and director of the Sage Software practice at Blum Shapiro Consulting in West Hartford, Conn. "Obviously, there has to be a positive return on investment, and the CPA should be able to help quantify that. The CPA, as a trusted advisor, should be an intimate part of that role."

Entry-level systems, such as Intuit's widely popular QuickBooks, will only take a company so far. If a business is pushing 20 users on the system, and earning upwards of $10 million in revenue, they're probably maxing out the program, and it's time to upgrade.

"If clients are finding they are spending more time running their software than their business, that's a definite sign," said Mini Peiris, vice president of product management for San Mateo, Calif.-based NetSuite, a Web-based software provider for small and midsized businesses. "[Signals to upgrade] could come from anything, like if you need to baby-sit the hardware, or you're finding that you are waiting for screens to load because you have so much data. Those certainly are aspects that would adversely affect the business."

Identifying these and other telltale signs can help get the conversation rolling. If the client is constantly rekeying data, spending a lot of time on Microsoft Excel, or struggling with file-size limitations imposed by their entry-level system, it's time to start the process of bringing the software to the next level, according to Semmelrock.

Intacct's Braun said that clients who use entry-level systems often experience similar hurdles, such as an application designed to be used on a PC by a single user for a single entity, or financials that can only be managed in U.S. currency.

He explained that some entry-level packages allow transactions to be deleted outright, as opposed to voiding or reversing them. That would preclude an accountant from issuing an audit opinion that's suitable for going public or even doing business with a public company. "Deleting is a nice ease-of-use feature, but if you don't know who deleted it, when it was deleted and why, you don't have an auditable business," he said.

Other limitations for starter systems include the number of possible users, its overall transaction volume and any additional business processing needs that aren't met - such as customer relationship management, electronic data interchange and human resources capabilities. Lack of those can all be further proof that it's time to take the company's software up to a new notch, according to David Cieslak, CPA, CITP and principal of Arxis Technology Inc. in Simi Valley, Calif.

Cost, not surprisingly, is a major concern for clients facing an upgrade. "For a lot of clients this is not new to them," Cieslak said. "They've been around computer systems enough to know they can be a tremendous tool, but they can be a significant expense. They want to make certain that they are not just signing a blank check and this becomes a big black hole."

Semmelrock said that many small businesses have to resist the sticker shock of what a new system will cost in comparison to what they may have paid in the past. "If they are running an application that still works, they're going to say, 'Why do I need to buy something new, [when] this isn't broken?'" he explained. "So when they learn it's going to cost $30,000 for a new system and then another $10,000 a year to keep it going, that's not what they're accustomed to. So they're much more likely to do nothing."


According to Peyton Burch, CPA and vice president of strategic marketing at MIS Group in Houston, the CPA can have a significant role in helping to solve a client's technology problems, which ultimately offers what he described as a higher quality of work for the CPA.

"If a CPA is not proactive, they run the risk of losing that client to another CPA firm who is proactive," Burch said. "They run the risk of having the client feel like th ey've outgrown the usefulness of the CPA. On the other hand, if the CPA is proactive and is participatory in the process and has a strong relationship with the business partner community that serves the client well, they've helped that client grow."

While some CPAs have dabbled in reselling different accounting product lines and subsequently withdrawn their interest after seeing the extent of work involved, others find being knowledgeable in various offerings adds a valuable dimension to the firm's practice.

For instance, Sage Software's Accountants Network is releasing a checklist this month to help CPAs start to engage their clients about software upgrades. NetSuite offers a solution partner program and a referral partner program for CPAs, and Intacct has an Alliance Program for Accounting Outsourcers, with approximately 100 partner firms.

"If an accountant is well-versed on the product, then I think it's a lot easier for the accountant to have that conversation to give solid reasons why the client should move to the next program," said Heather Scarpero, director of the Sage Software Accountants Network.

"Many of the entrepreneurs that are on entry-level solutions know their niche, know their widget extremely well," Burch said. "Their business savvy is primarily entrepreneurial in nature, but it's certainly not nearly as sophisticated as what a CPA, a trusted advisor with detailed business knowledge, brings to the table. The CPA needs to help his client target areas of concern, in presenting the information in a manner that the business owner or the CEO can understand."

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