According to some studies, about one-fifth of small businesses still don’t use an Accounting Software Program. They are relying on spreadsheets or paper and pencil to track income and expenses the “old fashioned way.” While this can certainly work - it did for centuries - it’s not the best use of anyone’s resources. Just because you can do something doesn’t mean you should.
To the other approximately 80% who do use accounting software - congratulations! You’ve recognized that you can be more efficient and probably more accurate by using software written specifically to take care of bookkeeping and accounting chores. This is especially helpful for those business owners who did not study accounting in school. Do that thing that you do best. Let the accounting software take care of accounting.
That doesn’t mean, however, that you can buy the accounting software and forget it. You need to understand it, even if you aren’t the main one doing the accounting work. Here are three tips to help you maximize your accounting software.
Understand what it can do - Many small business owners use Quickbooks or other accounting software as a very expensive checkbook. They record their payments and deposits, and that’s about it. When asked about reports, many of them are not even sure how to produce a Profit and Loss statement.
However, even when you do know how to pull the P&L if income and expenses are not recorded correctly, that report won’t give you an accurate picture of your profit. Or possibly loss.
Invest in a training session with an expert who can show you the best (and correct) way to use your accounting software. If you’re not using it properly, your reports could give you false information. Make sure you understand it enough to handle the basics.
Understand what it cannot do - Accounting software is not the answer to every system you need in your small business. Don’t ask your accounting software to handle other chores such as Inventory, Point of Sale, or Customer Relationship Management.
While many of them do have an inventory component, it may not be sophisticated enough to handle complex manufacturing. It’s also not a POS system. Sure, you can record sales as they happen, but if you have a retail location with dozens of people in the store at any given moment all day long, your accounting software may be overwhelmed. Also, a CRM system can integrate with your accounting software to better track your customer information, preferences and communications.
What else might you need? Cash Flow projections. A/R management. Sales Tax tracking. Online shopping carts. Electronic bill payment. Many other specialty products can integrate with your accounting software and enhance it. You wouldn’t ask your CFO to run the forklift in your warehouse, so why would you ask your accounting software to perform other chores it was not designed to do? Realize that you may need something else and investigate your options.
Automate it - We are on the cusp of a brand new decade, characterized by artificial intelligence and machine learning. Your accounting software was probably among the pioneers in this brave new world. Utilize all of the integrations available to make your software more efficient.
Are you still typing in your transactions manually? Why? The accounting world is no longer dominated by data entry. The key now is data management. Connect your bank and credit card accounts electronically. Then you have the power to review and accept the data into your financial software.
One of the most beneficial automations you can utilize is an Accounts Receivable management system. InvoiceSherpa is the perfect app to make sure your customers have a quick and easy way to pay you. Some people just need reminders. InvoiceSherpa can do that for you.
With easily customizable email templates, you can say as much or as little as you need to give your customers that extra nudge to send payment. Don’t forget to say thank you. You can set InvoiceSherpa to send out email receipts, which let you know you received their payments and that you appreciate their business.
No matter what the task is, there is probably an App to automate it. Understand the way your accounting software works, and you’ll understand your numbers in a more meaningful way. Let’s make 2020 the Informed Year, and that will lead to the best decade yet!