Small businesses need accounting systems that save time, money and provide bottom-line clarity. As businesses grow, they become more complex entities, so it’s imperative to have prudent approach to accounting from the outset.
The Daily Business Post asked Denis Breen, managing director of ProfitPal Accountants, how small and medium businesses can ensure the most efficiency with their accounting system.
1. Consider online accounting software
Over the past four years online accounting has eclipsed more traditional desk-top systems as it continues to dominate the accounting software market for new business owners or for those looking to upgrade their accounting system.
The reasons are many but they include, access from any location, flexibility in billing their customers, integration to multiple applications, integration with accounting firms who can assist their clients in real time, software that is always up to-date and costs a fraction of desktop software prices when you consider the yearly upgrades and maintenance contracts of desktop software.
If you want an efficient accounting system, go online. With systems like Xero, Kashflow, Free Agent, Freshbooks, Wave, Clear Books, Big Red Cloud, Sage One, Twinfield, Net Suite and a few more, there are numerous choices.
2. Automate your bank feeds, then never open a bank statement again
One of the key benefits to come from online accounting systems has been the ability to automate accounting processes. Online systems enable direct bank feeds compliments of Yodlee ( a data scraper or aggregator )
Basically Yodlee takes a copy of your bank transactions from your bank account and inputs it into your accounting software. Once the data has arrived in your accounting system you can set up bank rules that will automatically code and post the information.
This one feature alone will save you hours of data entry and greatly increase the accuracy of your financials, so waiting for the month end statements or logging onto online banking each day in order to look at your transactions and balances has become a thing of the past.
3. Photograph your invoices then dump them
Some of the best accounting feeder apps are OCR invoice and receipt capture apps. Basically an app on your phone that allows you to take a photograph of a receipt or an invoice where ever you are. The app then reads the information on the document creates a file and sends it to your accounting system as either a paid transaction in the case of credit card transactions or unpaid one in the case regular purchase invoices.
Your purchases ledger is automatically created. You will need to review the data and in some cases electronically push it into your accounting system but this is a great way of efficiently tracking expenses and invoices, retaining the photographed document and eliminating a whole lot of paper. The best purchase invoice apps in the market place are Receiptbank, Invitbox and Expensify. All three add substantial efficiency to your accounting systems.
Cash is king when it comes to business so make sure your invoices are going to your customers immediately, while you’re travelling, while you’re in front of them but don’t wait until you are back in the office if the bill can go out sooner.
Using systems like Xero or Freshbooks will enable you to create invoices from any device including your phone, email them immediately, track if they have been opened and encourage your customers to pay you immediately via electronic payment providers such as Paypal and Stripe.
5. Establish a performance output
If you’re going to have an efficient input accounting system make sure you have an efficient output accounting system also. Establish simple and clear monthly metrics for your business, track them, benchmark them to your peers, compare them to your budget and forecast.
If your accounting process can’t produce a performance output with ease then something is going wrong below you in your organisation that requires your attention, either fix it or consider outsourcing your accounting function, but one thing is for certain, having a performance output will push you to continually increase your bottom line.
We use a variety of performance apps for our outsourced clients to communicate progress, including specialised systems such as Spotlight Reporting and Fathom. As long as the base data is accurate and we make sure it is, then these systems automatically produce incredible user friendly performance reports. Clients love them.