Business management systems usually don’t come cheap – whether it is a POS, ERP, Accounting, Inventory, or any system that helps to run your business. But did you know they can continue costing money even after the system is paid off?
One major way systems continue to cost money is through support. Some systems have a lower cost for the software, and a high monthly support cost. This seems like a great deal at the time – you’re saving thousands up front! But are you really saving that money in the long term? The lower up front cost with a higher monthly support cost is actually a better deal for the provider, not for you. If the system you purchased was $10,000 less than another system, but the monthly support cost was $200 more per month, then it will only take 4 years and 2 months to equal out. After that time period, the system you purchased is actually more expensive than the one with a $10,000 higher initial price. To combat this, try finding a system with multiple support options, and do the math to see what it will really cost you.
Another way your system could be costing you money is through manual processes. Let’s say you have a separate accounting system from your business management system. Your finance team spends about 4 hours per week manually generating invoices, entering and ensuring accurate data, double checking that the charges in your accounting system match to the transactions in your business management system, etc. That seemingly insignificant 4 hours per week is actually pretty costly, costing your company over $7,000 per year if paying the finance employees an average $35 per hour. That $7,000 could be saved by using a system that can automatically generate statements, journals, receipts, and other financial information. Manual ordering has the same consequence – if your business submits inventory orders manually and not through an automated or streamlined process, then you will be costing your business thousands per year. Using a system that makes ordering fast and easy, or connects directly to vendors, saves not only time, but also money.
Lastly, while you may be missing out on sales with an outdated system, you may also be missing opportunities for sales if your system does not have reporting capabilities. Yes, everything will run smoothly and work properly – but do you know if you are maximizing profits? With reporting capabilities, some systems are able to tell you your best selling items for any timeframe, margin reports to show your most profitable items, inventory forecasting to make sure you do not experience shortages or over-buying, and even customer data to show which customers spend the most money, what time of year they spend it, and what they spend it on. While not having these insights does not directly take money from your account, it does come at a price. What opportunities are you missing out on? How many times have customers come in looking for an item that you are out of stock of? How many customers love your business, but you just don’t have what they’re looking for when they need it? All of these questions lead to this: How much money are you letting walk out of your door, and how much money did you not invite in in the first place?
If you are interested in learning more about a new system, System Solutions LLC can help you get your money’s worth. Please email us or give us a call at 860-781-6470 for more information.