Ralph Hearn explains the indicators that a growing business may benefit from new accounting software.
Outgrowing your current online accounting software or even spreadsheets can often cause unwanted time pressures for business owners. If you feel like there are not enough hours in a day to run your organisation and manage your accounts, then new online accounting software may be the answer you’re looking for to liberate those extra hours you’re seeking.
There are no clean cut rules to consider whether you need new software – there are however, tell-tale signs which can indicate the need for a new package. Your existing accounting solution has most likely served you well, but perhaps as your business has grown; it’s been unable to keep up.
Time is often one of the biggest pressures faced by owner managers, thus the challenge is often finding the right opportunity to make the switch. When you’re immersed in the day to day running of your business, it’s easy to simply ignore the red flags of trouble ahead. But, unnecessary pressure from under performing software can lead to inadequate accounting records that are likely to cause greater difficulties in the future.
When starting out it’s understandable to choose a simple software solution that suits your needs, especially when the cost of implementing a fully functioning accounting software outweighs the benefits derived from doing so. However, as you grow and the volume of transactions and invoices increases.
You may find your current software solution doesn’t satisfy your growing list of needs. When this occurs it’s probably time to consider a more sophisticated system that can help save you the time you need to concentrate on running your business.
Identifying the tell-tale signs of outgrowing software
If you often find yourself spending hours on end creating reports or staring at spreadsheets because your current system can’t keep up, or if you find yourself tied up with the tedious task of manually entering data, which could be easily automated – then more often than not your valuable time is being wasted.
You'd be better off focusing on what you’re good at and what will be of most strategic benefit to the development and growth of your business.
2. Understanding the real-time financial position of your business
Making informed business decisions tends to start with an access to and understanding of your current financial position. Growing without a clear insight of your current cash position is akin to driving a car with your eyes shut. It’s not impossible, but it will be far more challenging and risk fueled than it needs to be. The end goal will be far harder to come by.
Growth tends to be better achieved and maintained when key decision makers are fully aware of their current affairs. How do you know what’s coming in and what’s going out if your data is kept on an outdated spreadsheet?
If it’s a struggle to work out your cash position because the numbers in your spreadsheet won’t match up to your bank statement, it may be worth investing in a cloud accounting software which allows data to flow automatically into your software from the bank accounts and other financial sources.
Managing your cashflow can be made easier with software features that not only help you collect money owed but also improve the performance of your organisation’s credit control function. With many online software programmes you’re able to generate real time, updated reports wherever you are, as well as creating and sending invoices to keep on top of money owed.
3. Difficulty sharing information
Are you able to share real time information with your accountant with ease or is it becoming mind numbing to send a USB drive or equivalent every week? Not only is it a pain, it’s inconvenient, unreliable and could potentially jeopardise the security of your data.
If this applies to you, it could mean that your needs have outgrown your software. It’s probably time to consider a new package that allows your accountant, and those authorised, with access at any time anywhere – as long as there’s an internet connection.
4. Data security
Perhaps you’re all too familiar with the old feeling of your document shutting down before you’ve had a chance to click save, but with online accounting your data is backed up in real time – meaning if anything was to happen to your device, you’d be able to access it on a different phone, tablet or laptop and continue from where you last left off.
A natural concern for any businesses is data security, but cloud accounting is one of the most secure ways to store data. Businesses move fast these days and cloud is a good way to keep up, and work in unison with your advisor.
5. Record keeping
Record keeping can be a challenge in itself without having to enter information manually on outdated software. To comply with HMRC regulations, you’re required to keep VAT invoices for 6 years – if you have a large number of invoices this could amount to significant storage requirements within your office or worse still a significant storage invoice each month!
With most cloud accounting packages, you’re able to store your VAT invoices online saving yourself storage space and money whilst still complying with the law. Plus, it’ll be easier to find the records, if required rather than rifling through 6 years worth of them.
The content of this post is up to date and relevant as at 24/03/2017.
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