When Should We Migrate to NetSuite?

Most startups start out using Quickbooks, which is great for small companies getting their basic set of financials and reporting for business operations.  A lot of the companies I’ve worked with have used Quickbooks, and so I get this question a lot - “when should we migrate to NetSuite?”

Having been through a couple of migrations and consultations already, the story usually starts like this... Sometimes the founder or COO will ask or suggest that the Company begin using NetSuite because “it’s time” or because they just raised their next round and it’s the mark of a more mature company.

While that may be true, here are a few considerations to better evaluate that decision before spending all that time (2+ months) and money implementing the new system.  

Complexity in Business Structure & Operations

The power of NetSuite is in its ability to customize to your business’s needs.  Do you anticipate your business structure and operations changing in the foreseeable future?  Here are a few examples of changes that could require an upgrade to NetSuite.

• Revenue recognition - Do you foresee your rev rec becoming more complicated or voluminous? 

• Going international - Are you going to be operating considerably in multiple countries and will need to report different sets of books (foreign currencies)?

• Company expansion/maturity - Is your company expanding (multiple regions, offices, operating functions) and you anticipate a huge volume and increased complexity of transactions?

  • AR/invoicing - Do you have a wide array of products and services you need to invoice your customers for? Are you hoping to sync complex details from your current AR system?

  • P2P - Are you planning to have a more robust purchasing process with POs and approval levels?

  • Fixed assets - Do you have a fleet of high dollar items you need to track? (scooters, drones, etc.)

  • Sophisticated reporting needs - Do you need a higher level of detail than what QuickBooks provides? (More classes, departments, etc.) Do your investors and board members have different reporting needs?

Clarity on Business Structure & Operations

Additional questions include, do you already know how you want to view your business?  Have you thought about the new processes/tools you want to implement?  Implementation will go a lot smoother if the answer to this is “yes.”  NetSuite is there to support your finance operations and provide you reporting based on how you want to view your business.  

During implementation, sometimes, I’ve heard, “we can decide on that later.”  If you find yourself saying that more than once, it may be a sign to implement NetSuite later.  I’ve seen organizations purchase NetSuite, go through implementation with the bare minimum requirements, and use it the same way as they used Quickbooks.  The “pro” to this is that your implementation will be easier and faster.  I put “pro” in quotes because although you can implement faster, later when you actually want to add on the bells/whistles, your NetSuite implementation team and advisors won’t be there to assist you and you may need to spend more money on 3rd party consultants. (I italicized more because it’s common to have 3rd party consultants for implementations, just emphasizing that you’d be spending more than you would have initially.)  It’s always easier to get your implementation done completely at the beginning.  And in case you’re wondering - yes, it's possible and it happens all the time.

Also sometimes companies will ask, well how do other companies do this (structure NetSuite)?  The answer to this may or may not be helpful because other companies are optimizing for different things.  Do you have a Controller or Head of Finance at your organization?  Typically if you do, not only can they assist with carving out how the financials will be structured, but they can also design the finance operations to their liking.  Often when a senior finance person is hired they already know which tools/process flows work best, as with any other executive in their function.  There’s less friction in having to change those tools/processes later as it’s not necessarily easy to do that in NetSuite once it’s been set up.  

Having this role filled would be a helpful nice to have, but not crucial.  Although, it’s not a coincidence that the maturity of a company’s finance operations tend to coincide with hiring a controller and implementing NetSuite.

NetSuite’s Year End

Like I mentioned before, NetSuite is expensive software.  Their year end is 5/31 which means sales reps are eager to get that contract signed before then.  Let’s just say it’s a good time to negotiate and they offer some pretty good discounts. :)  

Recap

If your organization is expanding rapidly and you’ve answered “yes” to many of the considerations above - seems like it may be about time!

Feel free to reach out if you have any follow up questions.