Accounting Software - Another Brick In Your Business Wall

Are you working harder than ever in your business? Are your bottom line profits flatlining or in decline? In business, if you keep doing things the same way and expect better financial results then you are hallucinating!

We often talk about the need to build your business on solid foundations including the right business structure, appropriate and adequate insurances, the most suitable accounting software and the right professional advice. Your business could be at risk if you operate using the wrong business structure, have inadequate insurances or your contracts have ambiguous or unclear wording. The consequences can be financially catastrophic and in this article we are going to address an important brick in your business wall, choosing the right accounting software program.

When it comes to accounting software, you might think like Pink Floyd, “All in all it's just another brick in the wall”. However, your choice of accounting software is a key part of your business foundations. Poor record keeping is one of the most common reasons why businesses fail. One of the biggest mistakes small business owners make is they buy software beyond their business needs and level of accounting skill. This usually produces ‘computerised shoebox’ records that cause frustration and extra compliance costs. Before you rush out and buy a software program off the shelf you need to consider:

1. Your Business Needs – do you simply need the basic bookkeeping function, or do you also need invoicing, debtors control, creditors, inventory management and a full general ledger?
2. Your Level of Accounting Skill - Do you understand double entry accounting (debits and credits) or do you just have basic bookkeeping skills?
3. Do you want to use a cloud based accounting solution where you access the program and all your data online or do you prefer a desktop solution where the program and your data is all stored on your local computer? (There are pro’s and con’s that we will address in a future newsletter).

It makes good business sense to match your business needs with your level of accounting skill and we support a range of software programs including MYOB, Cashflow Manager and Reckon plus we also support cloud based solutions like Xero and Saasu that allow us to view your accounts in real time.

As an entrepreneur you probably work long hours and let’s face it, the bookkeeping aspect of running a business isn’t glamorous. It probably explains why bookkeeping and administration often don’t get the attention they deserve but without a system in place you can’t measure and monitor your business’ performance. If your record keeping is a mess you’ll end up with paperwork everywhere and risk missing paying invoices that could impact on your credit rating. You’ll probably delay invoicing clients and be slow sending out monthly statements that will slow your cash flow. Remember, your debtors could also be facing similar cash flow issues and in business you need to be paid first, not last.

Not only that, you could fall behind with your Business Activity Statements, tax returns, superannuation obligations and tax payments which are an obvious sign of a business in distress.

If you are a retailer, stock control is vital and your accounting software plays a key role in inventory management. Too many business owners guess when it comes to stock management and they run the risk of stock shortages or under-supplying orders. This could mean your customers go elsewhere. On the other side of the coin, an over-supply of stock means your money is tied up and piles of slow moving stock also consume valuable space in your warehouse or shelves. Ageing stock can devalue due to obsolescence or use-by dates expiring.

Failing to Plan is Planning to Fail

The old expression, 'people don't plan to fail, they just fail to plan' serves as both valuable advice and a warning for people in business. According to ASIC, 41% of companies that failed in 2012/13 failed because of inadequate cash flow or high use of cash. We urge you to prepare cash flow budgets and forecasts and the right accounting software lets you monitor your costs and produce projections with a few mouse clicks. Software and some apps can help you get your financial house in order and if you are using cloud-based software solutions you can access your files from anywhere using a range of devices including your smart phone or tablet.

Running a business is a bit like building a house. You need solid foundations and your choice of accounting software is one of the corner stones of your business. Talk to us today about which accounting software program best matches your needs and skills.

Other articles in this edition: 

• The 7 Website Essentials
• How Does Your Website Rank?
• Business Start Up Corner - What Is Your Cash Clock?
• Book Corner - Good To Great
• Marketing Corner - Email Marketing That Works
• Tech Corner - Voicemail For Your Website & Customised Email Signatures
• Self Managed Super Funds - Property Investments Yes or No?
• Life Insurance Within Your Supperannuation Fund