Investing in an ERP like NetSuite can take your tech start-up to the next level, but what stage is the right stage?
This really depends upon where you are on your growth curve, but in our experience most start-ups outgrow their initial systems like QuickBooks or Xero and find they need to move to NetSuite when they meet some of the following criteria:
You have completed Series B funding round
This, of course is great news so well done if you have. Series B funding is usually around the £10m mark; a significant level of investment. Investors will be expecting to see rapid growth, so it’s important you have the right systems in place to facilitate expansion and meet expectations. An entry level ERP system will restrict growth whilst a decent upgrade to something like scalable NetSuite will give you the freedom to run and grow your business.
Approaching circa £10m / $10m in annual turnover
When your business is starting out QuickBooks or Xero will be perfectly adequate but if you are turning over closer to £10m then it’s likely that your business is more complex. For instance, you might find that you are providing project management and require software that can assist you with things such as job costing, estimating labour and revenue, timesheets, project billing and so on.
Another issue that many companies (particularly software companies) face is billing complexity. Entry-level accounting software will increasingly dictate the overuse of manual processes which will inevitably result in revenue leakage and customer churn. With more robust software like NetSuite, you can automate renewals and prevent your company leaving money on the table.
As your business really starts to take-off you might have plans to expand internationally and going global brings a whole new set of challenges. NetSuite OneWorld Financials gives you real-time visibility at a local, regional and headquarter level whilst standardising your business processes worldwide and ensuring seamless compliance with financial requirements such as IFRS, SOX and GAAP.
OneWorld supports over 190 currencies and exchange rates via real-time feeds, and you’re able to interact with global customers and vendors easily and efficiently. Compliance is one less thing to worry about with localised tax calculation and reporting for over 100 countries, and with the new SuiteTax engine it can support increasingly complex use-cases.
No entry level accounting platform can do all that.
Rapid growth is especially common in high-volume transactional sectors like Fintech, Software or eCommerce. The problem here is basic accounting systems can’t scale to support high volumes of complex transactions. The initial move to a platform like Xero to move you away from Spreadsheets was probably a good decision at the time but as your business gets more complex and you require different functionality, you’ve probably added other bespoke software and integrated that too. Over time the spaghetti nature of integrations will require many patches and workarounds just to keep it all up and running.