Risk Management and Controls – ERPs are Still Your Best Choice
In today’s automation landscape, there are many compelling reasons why small and medium businesses are happy with their QuickBooks Online (“QBO”) or Xero and “Tech Stacks” (suite of technology applications or “apps” and software as a service or “SAAS”). Genuine plug-and-play opportunities and excellent user interface and experience provide simplicity and confidence to businesses.
Companies can question the need to evolve to an ERP. We addressed many of the reasons in our blog: Looking for an ERP? Here’s what you should be thinking about first.
As businesses grow, even in today’s technology landscape, they will almost certainly outgrow the simplicity of general ledger accounting systems like QBO and Xero and need to upgrade to an ERP. Several limitations exist when comparing QBO and Xero to more robust ERP systems like NetSuite and Acumatica. One area this is especially true is in the context of controls, Sarbanes-Oxley Act (SOX) compliance, and risk management:
– Internal Controls: QBO and Xero do not offer the same level of internal controls as NetSuite or Acumatica. This can be a limitation for companies that must adhere to strict internal control requirements under SOX. It also becomes an increasing risk for growing businesses that need the segregation of duties, clear roles and responsibilities, and limitations to access. Internal controls save money in today’s cyber world, where our security and access are constantly threatened. The risk of vulnerability to your systems and cash is high when you do not have the systems and processes to mitigate risk.
– Audit Trails: Robust ERPs like NetSuite and Acumatica provide comprehensive audit trails essential for SOX compliance and assurance. QBO and Xero may offer audit trails but are not as detailed or customizable as those in full-fledged ERPs. When a business requires an audit or other assurance, it may incur significant costs or struggles if they are not set up with the systems that support it. Growing businesses will eventually need assurance engagements to meet the needs of lenders, investors, or other stakeholders. If a company wants to keep the time and cost of its audit or assurance engagement as low as possible, it needs to have the processes, controls, and technology that make for a seamless engagement.
– Risk Management: Companies need to assess financial reporting risks and develop strong internal controls to manage them. QBO and Xero have few risk management features. The features are not as extensive or integrated as those in NetSuite or Acumatica, which offer more sophisticated risk assessment tools. Risk management becomes more complex as businesses grow, becoming a compliance requirement when entities go public or have other stakeholder requirements.
– Compliance Features: NetSuite and Acumatica are designed to support compliance with international taxes and regulations, including but not limited to SOX compliance. They offer more advanced features for multi-subsidiary consolidation, multi-currency support, and compliance with international standards, which are essential for larger global organizations. QBO and Xero have little functionality to support global or compliance requirements.
– Customization and Scalability: Larger businesses often require ERP systems that can be customized to their specific processes and scale with their growth. NetSuite and Acumatica provide extensive customization options and scalability not matched by QBO and Xero, which are generally more suited to smaller businesses.
– Security: For businesses with specific security or compliance requirements, such as those under SOX, the security features of an ERP system are critical. NetSuite and Acumatica may offer more robust security features than QBO and Xero, which are essential for protecting financial data and ensuring compliance.
QBO and Xero are effective for small to medium-sized businesses; larger organizations with complex compliance and risk management needs will find the controls and features of ERP systems like NetSuite and Acumatica more suitable to meet their requirements and manage risks effectively.
NetSuite and Acumatica address risk and compliance through various features and capabilities designed to meet stringent requirements that come with growth.
Below is a summary of each system’s strengths. The list is not inclusive but illustrates some of the advantages of each option.
Both NetSuite and Acumatica have built-in processes and features that help businesses comply with risk management requirements, from establishing and monitoring internal controls to ensuring the integrity and security of financial data. These ERP systems provide a robust foundation for companies to manage their compliance and risk effectively.
Here are our discussions:
- Dinosaurs of Tech – Is That Where ERPs Are Heading?
https://amplifytech.ca/dinosaurs-of-tech-is-that-where-erps-are-heading/ - Xero and QBO Users Shocked: The ERP Features They’re Missing Out On!
https://amplifytech.ca/are-erps-keeping-up-with-qbo-xero-and-tech-stacks/ - Compliance Chaos: Do Xero and QBO Stand Up to ERPs?
- ERPs in Crisis? Shocking Revelations About AI Takeover!
https://amplifytech.ca/erps-in-crisis-shocking-revelations-about-ai-takeover/ - Data Disasters: How Poor Management Can Derail AI Dreams!
https://amplifytech.ca/data-disasters-how-poor-management-can-derail-ai-dreams/ - From Cloud to AI: How NetSuite and Acumatica Are Pioneering the Next Tech Wave!
https://amplifytech.ca/from-cloud-to-ai-how-netsuite-and-acumatica-are-pioneering-the-next-tech-wave/ - Salesforce and “Best-in-Class”: Are They Killing the All-in-One Enterprise Dream?
https://amplifytech.ca/salesforce-and-best-in-class-are-they-killing-the-all-in-one-enterprise-dream/
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