No, Your CRM System Is Not an Accounting System
Don’t even think about it
Written by Gene Marks
I know what you’re thinking. You’re working with a good Customer Relationship Management system. You’re using it to forecast sales and project opportunities. Maybe you’re doing quotes or generating invoices out of it. Or you’re tracking certain expenses, time and materials. I have clients that use products like GoldMine to do this all the time. It’s fine, as long as you understand one very important thing: your CRM system is not an accounting system.
CRMs are databases and they can be customized to hold information about pretty much anything you want – customers, prospects, suppliers, equipment, inventory or jobs. But there are no ledgers. There are no accounting internal controls. There are no surefire ways to stop someone from changing numbers or disrupting an audit trail. This is not the fault of CRMs. They’re not designed to do this. They’re designed to help you increase sales, improve customer service, build relationships, improve productivity and grow profits. But there’s a good reason why they won’t let you print checks or do payroll: the makers of these systems don’t want you to even think about using these systems for accounting transactions. It’s just a bad idea.
This is why many CRMs integrate with accounting applications. GoldMine, for example, can integrate with QuickBooks using qbGold, which is made by GoldMine partner The Trainers Advisory Network. Implementing this product the right way means you can have all the benefits of an accounting system within your CRM system without actually doing accounting in your CRM system. Does that make sense?
Here’s what makes sense: synchronizing customer and supplier info so that you only have to do data entry once. This cuts down on errors, improves accuracy and increases productivity.
Another thing that makes sense: viewing accounting data from within your CRM system so that your sales and service people can see orders, invoices, cash payments and – most importantly – open receivables. This way decisions can be made and actions taken – for example, denying a shipment if a receivable is overdue or suggesting an add-on product based on a prior order – knowing all the information rather than working in the dark.
Finally, you can use your accounting data in your CRM system to better target opportunities within your own customer base by recommending other products and services that you provided based on what’s been ordered in the past or identifying a customer whose sales have fallen and reaching out.
For years I’ve been asked by clients why there just isn’t a one-stop-shop system that does it all: CRM and accounting. I’ve often wondered that myself. But I think I now understand: CRM and accounting are simply two completely different things with very different requirements.
Building these systems takes a different kind of expertise. This is why baseball teams have relief pitchers and starters, why some TV networks only show movies while some show only news, why there are cardiologists, dermatologists and neurologists. These are all specialties. It’s no different for software. In the end, you want to work with a company that really knows CRM and someone else that really knows accounting. Today’s tools, like qbGold, make it easy to marry them both. You truly can have your cake and eat it too.
But hey, go ahead, ignore my advice. Do your accounting in your CRM system. Give your accountant a heart attack. Try to figure out what your profits were last month or where that cash you thought you had mysteriously disappeared. That’s what’s going to happen if you use a software designed to do something else to do your accounting.
Gene Marks is a certified public accountant and the owner of The Marks Group PC, a ten-person technology and financial management firm based near Philadelphia that specializes in CRM. Gene writes daily for The Washington Post and weekly for Forbes Magazine, Inc. Magazine and Entrepreneur Magazine. You can follow him on Twitter and Facebook.