As a small business owner, you probably love to save money by doing everything you can by yourself. In the early stages of your start-up, managing accounting using spreadsheets may be enough. But as it grows, you find yourself spending more time sorting your company’s finances and accounts. You could use this time doing other things more important for your business, like developing new products or improving customer service. Still, you’re trapped in your efforts of figuring out how to do bookkeeping.
Maybe it’s the moment to change your current practises and seek out a new way to manage your finances. Managing your finances manually doesn’t provide the expected results, but financial management is crucial for your small business’ success. So, what other option do you have? You can automate your financial operations with the help of accounting software. However, before implementing one, you need to learn a couple of things.
It’s essential to understand what accounting management implies before documenting the importance of using accounting software for small businesses. Accounting management refers to a strategic organisation, planning, direction, and control of financial evolution within your business. It’s essential for all companies because it secures a stable cash flow. If you assume the role of the accounting manager, you need to estimate your company’s capital needs, create investment opportunities, make financial decisions, and establish financial policies.
Financial management goals are to maintain a stable cash flow, optimise profits, maximise market share, lower capital expenditures, and ensure business longevity. If your start-up lacks proper accounting management, it’s challenging to reach its goals, and it can even risk bankruptcy.
Accounting software (or accounting apps) is developed to assist entrepreneurs and accounting experts in simplifying financial processes and managing companies’ accounts. Accounting apps range from easy-to-use single-entry systems to advanced accounting software that manages invoices, salaries, accounts receivable, accounts payable, and business assets.
More and more small companies have started to use accounting software because it facilitates financial transactions and generates several financial reports. Now you probably perform all financial tasks manually using spreadsheets and transaction journals. But this method is impractical because it’s prone to errors. Accounting systems can automate tasks, enable better financial decision-making, and even reduce accounting expenses.
Your business is growing
Spreadsheets might have been helpful for the initial stages of your business because they helped you budget and plan your finances. But as the operations evolve, the situation can become difficult to control. Even simple tasks such as making cash flow projections and tracking invoices can become tedious and overwhelming when you handle an increased workflow.
The moment to use accounting software or hire an accountant has come, and it’ll actually save you money.
You need faster access to data
As the business grows, you handle a higher volume of business information, and if you rely solely on paperwork and spreadsheets to manage it, it can be challenging to analyse it effectively. When using spreadsheets, you cannot access data immediately because you need to use specific formulas and commands to extract the necessary information. Also, if you neglect to update the spreadsheets with new data, you may not be able to get an accurate financial snapshot of your start-up’s progress.
When the present accounting method delays business decisions, you need to consider using an accounting system.
You waste time on repetitive tasks
Small business owners wear all the hats, juggle several tasks, and have conflicting priorities. Inventory tracking, administrative tasks, and invoicing customers are necessary, but repetitive operations waste valuable time.
The specialists from Quickbooks state that accounting software automates most financial operations and leaves you with free time to grow your start-up.
You experience several bookkeeping errors
Did you know that 9 out of 10 spreadsheets contain errors? The chances of your paperwork featuring errors are quite high, and you don’t want to take them. When you store all invoice details into a spreadsheet, you need to write down the customer name, invoice number, register the date, and update the spreadsheet when the client pays the invoice. You handle a lot of data, which leaves plenty of room for mistakes.
Reasons small businesses should use accounting software
Save time and money
Using an automated program to handle financial tasks saves time as you won’t have to complete several repetitive tasks. You don’t need to spend your time enrolling in costly training courses to learn how to keep food records. Accounting software is usually easy to use and provides you with an extra hand as you grow your business.
Control cash flow
All businesses have money coming into their accounts and bills to pay. A simple-to-use program can help you generate invoices, keep track of the customers who didn’t pay them and help you manage payments.
It’s daunting only to think how much time you must waste to compile all receipts and documents your accountant needs to complete your company’s taxes. An accounting app is perfect if you want to avoid this stress because it enables you to record the cash flow and export the data to your accountant with the click of the mouse. Also, when you use the software you understand, the quality of records makes your and your accountant’s jobs easier.
You no longer have to worry about adding
Maybe you’re a pro at mathematics and calculations, but most entrepreneurs aren’t, so they use accounting programs to calculate everything for them. This lowers the possibility of errors in business finances and saves time wasted on calculating and double-checking results. An accounting app records receipts and payments in the proper columns and adds up each column. Depending on the app you use, it can even record the balance in your bank account.
If the ideas we highlighted above apply to your situation, this may be the right time to make the switch to an accounting app.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.