If your bookkeeper spends Saturdays in the office trying to keep up with paychecks and taxes and tax code updates and outstanding invoices, specialized software can come to the rescue.
Do you track purchase orders and client lists using Excel spreadsheets and Word documents? Produce invoices using a calculator, label printer, paper check- book and envelopes? Use sticky notes on your monitor to remind you that, say, an employee needs to change her income tax withholding?
If so, you’re not alone. Many small businesses begin this way and, before they know it, realize that the sticky notes and spreadsheets just aren’t cutting it anymore. Setting up and using small-business accounting software may be just what you need, and believe it or not, it’s much easier than it seems.
A Place for Everything
There are three major areas of benefit in using accounting software if you have a small business, and lots of little ones. Taken together, they mean you’re sure to save time and even money—and gain time to concentrate on growing your business.
Customers. That list of customers you’re trying to maintain as a Word document or in Outlook or a Rolodex or—say it ain’t so—on paper? That list needs to be in a database designed for finances. Accounting software contains record formats that let you type in—or sometimes import— relevant details, things like contact information, credit terms and limits, credit card numbers, and price levels. You can usually set up custom fields to track any additional information you’d like to. And sometimes customer records can also contain descriptions of jobs you’re working on for that company; they may even display a history of your transactions with them.
Try doing that on an index card. Now try keeping it updated. And add all your vendor records to that to-do list. Accounting software keeps you in the know about whom you’re buying from, and to whom you owe money.
Employees. Does your bookkeeper spend his or her Saturdays in the office, trying to keep up with tax tables, paychecks, and taxes? Take the time to enter information about your employees and assorted taxes and deductions (and it will take some time up front, like any other setup task). Then payroll processing will involve little more than entering the hours everyone worked and printing paychecks (or authorizing direct deposit). When it’s time to make good on your government payroll tax obligations, the software will make those calculations, too.
Inventory. What do you do when a customer orders something? Does someone have to go into the back room to see if you have any to sell? By keeping inventory records, you’ll have detailed descriptions of everything you sell. When you sell something, your software will decrease the level you have on hand. Sell enough and it will remind you that you’re running low, so you won’t be caught short.
Financial transactions are the lifeblood of a business—they help you pay the people you owe and get paid yourself. Accounting software uses all of those nicely organized records you’ve created and makes transaction processing a snap. Built-in integration means that, unless you need to enter a new vendor or item, or update other information (and you can do this easily, on the fly, anytime), all the data you need is right there in one program.
How are you creating invoices now? Typing them up in Word, or, worse, using a typewriter on preprinted stock? That probably means you have to look up things like addresses, item numbers, and so on—a major time waster.
Accounting software contains prebuilt forms for documents like invoices, purchase orders, and sales receipts. The forms can usually be customized—you can add your logo or other graphics and add or delete fields. When you need to fill one out, drop-down lists let you select data for fields such as Customer and Item, data from the records you’ve already created. The software is designed so that everything works together.
When you’ve completed invoices or purchase orders, you don’t need to waste time printing, labeling, stamping, and mailing; you can simply e-mail the document. Saves time, and it may help you get paid faster. Some software will let you accept credit card payments or electronic checks, a function that may also improve your bottom line.
This integration saves not only time but also embarrassment when a customer or vendor calls to check on something. Instead of rifling through paper files or promising to call back after you check with someone else, you can use your software’s search capabilities to pull up the appropriate documents or transaction.
All of the work you do in your accounting software culminates in a benefit that you would have to struggle to replicate in any other way, if you could manage it at all: reports. Yes, an Excel spreadsheet can track your income and expenses. But Excel doesn’t provide a view from which you can select from among dozens of customizable reports that can tell you, for example:
- Your gross profit from each customer
- How your net worth has changed over a specific period of time
- Your company’s value, with the total balance for each type of account
- Your company’s total expenses, per transaction, for each vendor
- What wage and withholding information you need for state taxes
- Which transactions have affected the value of your inventory
Of course, you can set up Excel spreadsheets to tell you just about anything, but that’s the point: You have to set them up— and update them constantly. Accounting software simply builds on the work you’ve already done, the transactions you’ve already entered, to give you a real- time, bird’s-eye view of your company’s finances.
That’s a time-saver, but it can be more: a business-saver, if you stay on top of your reports and catch problems early. Auditing, Banking Benefits There are still other reasons why most businesses need accounting software:
- Audit trail. If you have multiple employees working on a paper system, you may have a hard time knowing who’s done what to your records, and when. Most accounting software offers an audit trail, a lengthy list chronicling any additions and changes made to the system, and who made them. This is a critical security feature.
- Multiuser access. Most accounting software can be set up on a network, which means you’re not constantly running back and forth to other offices to get the information you should all have.
- Roles and permissions. If you’re on a network, you probably don’t want every- one to have access to everything. Accounting software lets you assign roles to users and define exactly where they can go and what they can do on the system.
- Online banking. Most accounting software gives you easy access to your bank accounts online (if your financial institution allows it). This capability can save a lot of time, provide real-time banking information, and eliminate some duplicate data entry.
- Dashboards. With so much going on in your financial system, how do you get a handle on what needs to be done each day? Accounting software can remind you when, for example, invoices are due or past due, payroll or other taxes must be paid, inventory is running low, and more
- Accountant access. If you’re working with an accountant who blesses your books periodically, you can give him or her access to your system—and keep working ahead while your past work is being checked.
Yes, you Can
There are probably as many objections to accounting software as there are reasons to use it. It’s expensive (it’s not). I’ll need to have an accounting professional on my staff (nope; these programs are built for non- pros). I can track my finances just as well on my own (you can’t). I’ll lose all of my data (and there are many reliable backup options). My business is too small (do you spend money? make money?).
If you need to know how much money you’re spending and taking in, where it’s going and coming from, what’s in stock and on time and what’s not, and you want to treat your employees, customers, and vendors as professionally as possible, you need accounting software.
Source: Kathy Yakal- PC Magazine