Choose your bookkeeping software wisely. In the early stages of owning a small business, many people find they also have to be the bookkeeper. This can mean less time spent doing what you love. Even if you have a dedicated bookkeeper, finding a way to stay on top of the latest numbers can be tricky. Your bookkeeping software plays a huge role in determining whether the process is quick and fun, or tedious and time consuming.
BOOKKEEPING – THE PROBLEM EXPLAINED
At first, you may be frustrated by handling finances, or worse, second-guess your decision to open your own business. You may be overwhelmed by monotonous jobs and hidden responsibilities. Most people using traditional bookkeeping software such as Sage have the same complaints. They say the process of entering data and then sorting it is a pain. Not to mention all the headaches involved in getting it prepared for their accountant.
In a world where computers are connected online, these problems needn’t exist anymore. The accounting landscape has shifted dramatically. Online bookkeeping software connects to the internet to automatically collect your data, and then sort it for you.
Bookkeeping is much less painful when your bookkeeper and accountant can login and view up-to-date accounts online – anytime, from anywhere. That’s why we choose Xero online accounting software.
CASHFLOW IS KEY TO BUSINESS SUCCESS
So why does bookkeeping matter when it comes to cashflow? Well, if your books aren’t in order, then it’s hard to get an accurate picture of your financial position. As every small business owner knows, cashflow is the ultimate key to success or failure.
People fall into the trap of looking at their bank balance and thinking it represents the money available to pay their bills. But the bank balance is an illusion. You can’t see the liabilities that are looming, such as taxes or bills. When you can’t see up-to-date cashflow, you’re like a pilot in fog. Without any instruments to see altitude, speed, or direction, you’re flying blind.
The key to staying on top of cashflow is to reconcile as often as possible – ideally every day. A bank reconciliation is when you organise all the payments that have gone through your bank account. You should know exactly what money has or hasn’t been paid or received. When you know what’s coming, you can take action before things get messy.
THE FUN WAY TO DO BANK RECONCILIATION
The best bookkeeping software (like Xero) automatically imports all your bank statement lines, and matches them with your sales invoice or bill. Then you truly know if your business is profitable, and where you can be smarter with your money.
Suddenly bookkeeping isn’t so hard. In fact, it’s so easy many people say it’s fun and even addictive!
Five easy ways to make your business run smoother and smarter
1. Use bookkeeping software that connects to your bank account and automatically organises your transactions.
2. Do a bank reconciliation as often as possible, to see your cashflow in real-time.
3. Give your bookkeeper and accountant a login, so they can give professional advice sooner rather later.
4. Use online invoicing for quicker and easier payments.
5. Connect your business systems to your bookkeeping software so all your data is accurate and up-to-date.
WHEN DATA FLOWS, IT’S BETTER FOR BUSINESS
Data should flow from other sources, not just your bank account. Depending on what type of business you run, you probably have other financial systems like a POS cash register or job management software. When data from those systems integrates with your bookkeeping software, everything is faster, easier and more accurate.
INVOICING IS A GOOD EXAMPLE OF THIS
If you invoice customers, it’s best and more efficient to do it online. With online invoicing, your customers tap “Pay Now” and their payment is immediately processed. There’s also nothing to get lost in the mail – you know exactly when your customers have opened an invoice.
With the right software, bookkeeping can go from tedious to simple; from confusing to clear; and from boring to fun. When it’s simple and fun to do the bookkeeping, your business is in a position to be much more successful.