Donald Sauder serves as a CPA and financial consultant for all sorts of small businesses. His clients work in manufacturing, steel fabrication, wholesale and retail distribution, construction, and more.
Most of these small businesses start with QuickBooks or another accounting software to manage their books and keep track of assets, liabilities, expenses, and revenue. But for many of Donald’s clients – especially those who have high inventory volume - there comes a point where they need to move to a system with more capability, typically an ERP.
When is it time for an ERP?
As your business gets more complex, it becomes much more difficult to understand the state of your company. What are your actual costs? What are your margins? What pricing decisions should you make in the current economic climate?
And if you have inventory, having a system to track and manage your goods becomes crucial to both current and future success.
“Businesses that don't have ERP don't know their cost of goods sold. They don't know where their margins are at. They really can't make decisions. They don't understand how much inventory shrinkage they have or when variances occur. They don't know because they don't have accurate inventory counts,” said Donald. “Chances are, if they're a business with more than a million or two in revenue, they will get substantial ROI implementing an ERP system where they can track their actual cost and their inventory.”
Another reason to move to an ERP is the need to integrate different aspects of your business into one system. Often, software like QuickBooks requires add-ons that don’t integrate well, or they don’t give you the options you need for the way you manage inventory.
“The main reasons why our customers want ERP are a combination of web modules and web ordering, because QuickBooks doesn't have an easy integration for an online store. And then the complication of inventory modules as they outgrow QuickBooks,” said Donald.
Don't trust the wrong ERP partner
Unfortunately, the ERP implementation process has a high rate of failure. According to research from Gartner, 25% of ERP implementations fail entirely, while even more fail to meet customer expectations.
Because of this, Donald and his team are hesitant to recommend systems or push customers toward ERP because they’ve seen the poor outcomes.
“There are multiple $100,000 software carcasses in our clients’ portfolios, simply because the consultants promise something they couldn't deliver,” said Donald.
He and his team are all too aware of the fact that businesses aren’t always prepared for the work that it takes to move to an ERP, and ERP consultants don’t always understand their customers’ businesses very well. However, they feel more confident when their customers choose to partner with Koble.
“Fewer than 5 of our clients have had a successful implementation with ERP in the last 5 years – all of them with Koble.”
Why Koble implementations succeed
Koble’s process involves a simple implementation that gives customers only what they need without a lot of extra modules to start. And because Koble has done so many implementations with their ERP—called EBMS—they have a clear process to follow.
“When you're a part of a proven process, it makes life so much easier. And I think that Koble has a proven process so that when a customer signs on, they don't even realize how well the process works.”
Navigating finances and pricing with ease
A key aspect that Donald and his team look for in an ERP is strong reporting. With Koble, he can help clients get a look into their finances and make adjustments as needed, so small financial issues never become big ones.
“We have a number of clients that will log on remotely each month or each quarter, and we'll just look at the EBMS reports together,” he said. “In 15 minutes, we can tell them whether they're on track or not. Maybe we’ve set benchmarks on consistency and gross profit from month-to-month or quarter-to-quarter. If they’re not hitting those benchmarks, then they know there's an issue, and we might spend some more time drilling down on why there was a deviation. That's very valuable to the client.”
Another way an ERP benefits clients is by keeping them on top of pricing changes and inventory, something that’s become more relevant again with the introduction of tariffs.
“In 2021 and 2022, when prices were adjusting rapidly, what we saw was businesses that had ERP systems and could track their cost accurately were like an airplane flying with all of the gauges functioning. They knew where they were at month-to-month. They navigated changes with ease. And they didn't get to the end of the year and get a surprise when they did their inventory count.”
Simplify year-end with a strong ERP
Year-end is a busy time for CPAs, as they close the books on the year, prepare tax filings, and run year-end reports for all their clients. Having an ERP in place is a big advantage for both business owners and accountants because they don’t have to spend time trying to track down the data they need.
“When December rolls around, having those inventory reports, the AR aging schedules, the accounts payable aging schedules, the customer down payment schedules, the accrued wage adjustments, the detail for fixed asset additions, the bank reconciliations, the equity adjustments, the distributions, what's been distributed from a tax perspective, all of that's pertinent year end information and ERP system makes that so much easier because the detail is right there.”
And EBMS is unique because, unlike most other ERPs, Koble provides an accountant’s copy of the software to CPAs.
“It makes tax preparation so much easier when we can run that data without taking up the client's time,” Donald said. “We can access the information and run the reports, so it makes the year-end process almost seamless.”
Make your business investment-worthy
One of Donald’s jobs as a CPA is to value a business and help investors or business owners figure out what the business is worth based on income and assets. His view is that if a business has an ERP and has put a system in place to manage inventory and financials, then it’s more appealing to investors and therefore would be valued higher.
“Businesses are worth more the closer they are to investment grade, and a business that hasn’t fully implemented an ERP system is probably not anywhere near investment grade,” Donald said. “A business that has the ERP system implemented has the tools, resources, and financial controls to bring in a CFO and a controller to make those decisions and delegate the accounting functions, without building something from the ground up.”
The financial information from the ERP is foundational in understanding the business’s health and gives Donald confidence that he is appropriately valuing the company.
“We use the inventory module to double-check inventory from prior years against tax returns,” he said. “The ERP also has details on outstanding accounts receivable beyond 30, 60, and 90 days to know what the collection process is like and how meticulously the business works on collections. And bank reconciliations. You'd be amazed at how many businesses don't have good bank reconciliations. If you can't confirm cash, what else could vary?”
The Bottom Line
An ERP is essential for high-inventory businesses that want to grow, scale, or attract investors, but failure in implementation is a concern (and can be a big waste of money). Therefore, it is essential to pick the right ERP partner, a company that understands the needs of small- and medium-sized businesses and has a proven implementation process in place.
Koble’s ERP, EBMS, is the system that Donald Sauder has seen his clients successfully implement most often. Koble works with both business owners and their CPAs to make sure both have what they need to understand the state of a company’s financials. The result: satisfied businesses and happy accountants.
As Donald says,
“Everyone who uses EBMS is delighted with it.”
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Could your business or a client’s business benefit from the insights and reliable data that an ERP provides? Contact us! Koble is ready to help business owners move from chaos to clarity with the help of our ERP and a proven process for successful implementation.
Melanie Hess is a content writer at Koble. She loves diving into relevant business topics and sharing what she learns through writing articles, blog posts, and more. When she's not learning about ERP implementation, business financials, or inventory management, she likes long walks, podcasts, and trivia competitions.
