. BREAKING NEWS - In this week’s episode of the ERPodcast, we examine a QuickBooks system that ultimately cost the State Department $657-thousand dollars. We’re reporting on a source document -  a May 1 Department Of Justice Press Release, and additional reporting -  links are attached below. Upfront Summary – many accounting teams choose QuickBooks, but lack of security features are an incredible risk, plus the unseen costs mean QuickBooks is ultimately more expensive than entry-level ERP software – examples to follow. So QuickBooks cost the US State Department $657-thousand dollars. And wait, you’re saying, QuickBooks software was available at Costco for like $300 just a year or two ago – QuickBooks is now mostly deployed Online, and the licensing price is around $120 a month, plus users. That’s the price. But Then there’s the Cost! Two different things. We talk about it today. I’m Gene Hammons, Founder and Managing Director of an ERP Consulting team called ProfitFromERP. Here’s the news We first started tracking this story after Fox News Evening Anchor Elizabeth MacDonald broke a Sunday a week ago about a US State Department Budget Analyst who embezzled over $657-thousand dollars in a two-year period. We confirmed the reporting through a half dozen sources, including the source document, a DOJ Press release - links below. According to all the reports, Senior Budget Analyst Levita Ferrer, pled guilty and admitted writing 63 checks to herself over a two year period March of 2022 to April of 2024.  The checks totaled  $657-thousand, three hundred fourty seven dollars and fifty cents. She did it with signature authority and standard access on the QuickBooks system used to issue State Department checks. Her particular M.O. was reported as her writing checks to herself, depositing them in her account, then going back into QuickBooks and changing the payee name on the check screen – deleting her name in this case – changing that to one of the State Departments’ regular vendors. And who would be the wiser. Hey – it’s another check paid to our regular vendors. It worked, for over 2 years. QuickBooks has long been known for allowing users to simply edit information. It’s built in as a feature, making it easy to use. No adjusting entries. Just highlight, delete, revise, change, - no audit trail, go wild. Apparently, Levita did. As we hear in the news these days, Government spending is wide open, oversight is lax, and everyone is playing very loose with government funds.  According to Capital Hill News, there’s over 2,000 QuickBooks instances in use across different departments of the federal government. 2,000 situations where users can simply delete information they don’t want anyone to see. 2,000 situations where you can’t segregate duties what financial analysts can access – everybody has access to everything. But why would anybody use a QuickBooks system where fraud and deleting evidence is so easy? The truth is, millions of US small to midsized companies use QuickBooks because of it’s low purchase price, but they don’t realize the true cost. This isn’t the first ERPodcast to highlight some of the risks of Quickbooks, we’ve been talking about it for years. See, it can be a rational decision to pick Quickbooks, easy, simple, dirt cheap. ERP software starts at 50K, then there are implementation services, consultants charging $250 an hour. And we’ve seen some really stellar CFO’s say all they need is QuickBooks and spreadsheets, or Power BI or other outside tools to run a $50m corporation. And they’re right. They can make it work But the reality is, while there’s prices you can see, there are hidden costs to QuickBooks. A lot of hidden costs. In this case, it cost $657k. But that’s only ONE of the costs. When your software can’t run a P&L (a profit and loss report)  on each of your customers, you know you make money at the end of the month, but some customers you make money, some customers you’re losing money – you don’t have the reporting granularity to be able to analyze the business – with customers, or inventory or operations or anything else. But back to the security losses, In real life, using any one of hundreds of ERP systems on the market, say using a simple Microsoft Dynamics system for $70 or $80k, this all could have been avoided. But $80k is more than QuickBooks $120 a month. Yes, the price is lower, the costs however, are much greater – even without embezzlement, theft and chicanery. Then there’s our client companies – the first one, a $30m company on QuickBooks, 13 people in the accounting office, to run the books and all the spreadsheets they needed for reporting -  and they had no idea where their million-dollar oilfield machines were that they leased out – they had no idea where any of it was. Millions of dollars’ worth of industrial equipment. Contrast this with our second $30m NetSuite-run company. They had the original 6 people in the accounting office that were there back when it was a $7m company. And they knew exactly where each and every server they had sold,  placed in thousands of customer companies all across the country – they could search by brand, configuration, warranty outdating, anything. Two $30 million dollar companies. Now do the math on 13 people in accounting versus 6. There’s your cost of QuickBooks right there – a cost that if you avoided it, it would pay for NetSuite year one alone – but instead, keep going on QuickBooks with 7 extra people year after year it starts to add up. And then there’s the market conditions – A recent CFO survey of mid-market financial staffing said most respondents say they need an about extra day and a half every week just to get their current job done.  First of all, no software can give you extra days – but it can decrease workload so you can get more done in the days you do have. Also, when we realize most companies are growing, the time crunch only going to get worse. One of the single biggest issues our new clients face is the massive amount of paperwork required to make up for lack of functionality in their current accounting systems. They’re also tired, burned out, maxed out and overworked. Turnover in accounting is also a big risk. Why anyone would leave a cush job where you just drudgeingly input data all day long, we don’t know. Sadly, they’re avoiding higher-priced ERP systems but ignoring the true and actual cost of QuickBooks. And it’s not just always QuickBooks – but outdated accounting systems in general. We were working with a client moving off of Microsoft Dynamics GP – a version of accounting software being discontinued by Microsoft.  As we toured the office the first day, we noticed one thing – paper everywhere. Filing cabinet walls lined the office. Filing cabinets were the cubicle walls. Filing cabinets in storage rooms. Historically, accounting WAS paper, a backward looking  historic look at what had already happened, financially, at a company. The firm gathered receipts, reports, bills, invoices, - all these paper records of transactions that had happened or needed to happen – and entered them by hand into accounting software. Then they worked to close the monthly books and give managers reports two weeks later to approve spending that happened up to 7 weeks prior to the approval. I’m not saying that happened to me, I’m just saying I have no idea what my staff in those days was doing the previous week, much less a month prior when I was asked to approve a client lunch expense. Worst of all, this reliance on paper turns the accounting team into a manual data entry staff. Huge waste of a talented team. Today, with ERP we’re so far ahead of that. Customers are entering their own orders online. Vendors are sending invoices to payment portals. Barcodes are scanning orders leaving the warehouse. All of these transactions occur in real-time, automatically updating the ERP system and tracking the transaction from its source. All without a single piece of paper. Now our accounting staff is using their brains instead of their fingers. Analyzing spend instead of spending all their time data-entering historic spend. And the key point is, we’re eliminating labor costs, error rates and automating the process with greater clarity, granularity, reportability and efficiency. When you actually analyze your business, your workflows, your processes and track the actual costs of how you’re doing business, you’ll see the three new hires you have budgeted for next year – hires that you’ll no longer need with a new ERP process, you’ll see immediate payback…. But more importantly, you’ll get the security and risk avoidance you need. So your software doesn’t end up accidentally costing you $657-thousand dollars. The State Department story was news breaking – but sadly, it’s not uncommon. Being in the business for 25+ years, I remember when QuickBooks first came into the market – it was advertised as Bookkeeping Software for people who don’t know Accounting. It was a great option for solo business startups, mom and pop businesses, as long as mom could trust pop. And segregation of roles, so mom has to create the vendor and pop has to write the check – that’s ERP functionality, not QuickBooks bookkeeping. I mean, if you don’t know accounting, not being able to change something in the books is a real pain. If you’re an accountant, you know you don’t go in to the books willy nilly and just erase things, if a transaction needs to be changed, you enter a reversing entry, a credit memo, and now you have a record of the original transaction, the correcting transaction, who did it, when and for how much. You can track it, audit it, and everyone has transparency as to what went on. If some of this sounds familiar,