A second or third entity
The single strongest signal. Consolidation in a spreadsheet is fine at two entities and stops being fine at four, and the workbook becomes infrastructure nobody else can run.
By size
Between $5M and $25M, QuickBooks or Xero with disciplined process is genuinely adequate for most companies, and a lot of what gets sold into this band is premature. There are specific conditions where it stops being adequate — but revenue is not one of them, and being sold on revenue alone is the most common mistake at this size.
What is your annual revenue?
The situation
Not revenue. Four specific conditions, and you need at least two of them before an ERP conversation is warranted.
The single strongest signal. Consolidation in a spreadsheet is fine at two entities and stops being fine at four, and the workbook becomes infrastructure nobody else can run.
Around this volume the manual work justifies a hire. That is the point at which automating it is cheaper than staffing it, and it is a workflow fix rather than an ERP.
Multi-element deals, ramps, or usage billing mean ASC 606 stops being a formality. For software companies this is usually the forcing event.
A first audit, a lender covenant, a growth round, or an acquisition approach. Internal adequacy and external scrutiny are different standards.
Not a size issue but a risk one. If nobody but your controller could produce the statements, the system is a person and that is worth fixing regardless of revenue.
Department or project P&L reconstructed in Excel every month means dimensions were never captured — fixable at entry, not in the report.
Most of what companies at this size want from an ERP is one of two things, and neither requires replacing the ledger.
Both are live in weeks, both are reversible, and together they cost a small fraction of an implementation. If they resolve the pain — and at this size they frequently do — the ledger conversation postpones for a year or two, which is a better outcome than an unnecessary project.
Roughly a third of assessments at this size conclude that the right answer is to change nothing structural. Usually the advice is unglamorous: tighten the AP cut-off, enforce dimensions at entry, document the close so it survives a holiday, and revisit in a year.
That advice costs us a sale and it is the correct one. A company that implements an ERP at $12M because a salesperson framed revenue as the trigger tends to spend the following year regretting it, and the implementation gets remembered as a failure despite being delivered as specified.
If you are growing quickly and expect to be $40M within two years, factor that in. Fixing the chart of accounts and the entity model at $15M is materially cheaper than at $40M, because there is less history to restate and fewer people whose habits have formed around the current arrangement.
That is not an argument for a full ERP now. It is an argument for getting the foundations — chart, dimensions, close discipline — right early, which we do as an engagement without selling you a platform.
Questions
Three questions, and about a third of answers at this size are that you should keep what you have.