3 Benefits to Setting Up Your Business Accounting Systems for Success

When I created the accounting firm Inspire CA, I wanted to make sure that the businesses we worked with really understood their numbers.

Why?

Because I believe the numbers are often an area of denial, or thrown in the "too-hard basket". But I also believe a few small steps can make a big difference in making the numbers easy to understand and (dare I say it) fun.

Once there's good accounting system in a business, it's quite easy as a business owner to:

  • Understand your numbers;
  • Create consistent cash flow; and
  • Receive insight into your numbers from your accountant.

Before understanding the numbers, you must have great accounting systems.

Accounting System

Great accounting systems provide for great reporting. It gives you the ability to dive down into the numbers - something when working together with an accountant enables you to make sense of. Aside from allowing business owners to work with their advisers to create consistent and better cash flow, a great accounting system has a reporting process that provides insight into what the business can do to grow the bottom line and the bank account.

Once a business has a clear handle on their basic numbers and reports such as their Revenue, Profit, Cash, Receivables and Payables, the focus can shift to optimising cash, and measuring other numbers that really matter to their business.

But what is a great accounting system?

The best accounting systems are supported by software. Not Excel. Not a handwritten cash book -- but software. Over the last five years, businesses have seen the introduction of cloud accounting software. Not only is having your numbers so easily accessible a great feat, but cloud accounting software has really empowered the business owner by integrating with other business software and apps.

There are 5 core functions of an accounting system:

  1. Invoicing and Debtor Collection
  2. Tracking Purchases and Accounts Payable
  3. Running Payroll
  4. Bookkeeping and Bank Reconciliations
  5. Financial Reporting

For this, we do definitely recommend a cloud accounting system. And there are plenty of options available to businesses too, such as Xero, Sassu, Quickbooks Online. And it is important to choose the one that best suits your business, not the one with the best marketing, and not the one that suits your accountant the best.

Spend a bit of time researching the different options. Talk to users of different options for their feedback. And then make the jump.

Cloud Gets all Your Systems Talking

We recommend that your accounting system be the center of your business' systems. Cloud accounting software and other cloud business apps allow this to happen seamlessly. Why? It is because of the power of automation. You need to only enter your customers' details in once.

Xero as an example does a very good job at integrating many other cloud apps that will enable your business to run smoothly. (I mention Xero, but it is important to note that Xero is not for every business, just that it does a sensational job at integrating with other apps.)

So what other apps should you integrate with your accounting system? Here's a few to start with:

  • Marketing tools like a CRM and email marketing software
  • Sales tools like proposal software and engagement management
  • Workflow, fulfillment and project management apps

It just makes light work of a smooth running business, and when you update one system, it flows through to the rest.

What's left for you to do to run your accounting system?

If we review each of the five key functions of an accounting system, you've got a choice to make as the business owner:

Automate
Delegate; or
Get it done.

We've put together a basic table to outline what has to happen, and also what is best practice in our eyes of how it's done.

  What has to happen? Best practice:
Invoicing and Debtor Collection Generating and sending invoices and following up unpaid invoices after due date. Create invoices from your sales tools, and automate debtor follow up with a system like Debtor Daddy.
Tracking Purchases and Accounts Payable Create bills in software and mark as paid once paid.

Use a system like Receipt Bank to automate the data entry.

Then use batch payments to create files which you can upload into your internet banking to pay all invoices in one hit.

Running Payroll Employees enter timesheets if required, then payroll process to be carried out at each payroll interval. Employees enter their timesheets straight into software, then using pay templates, roll forward the pay run with ease and as much automation as possible.
Bookkeeping and Bank Reconciliations Bank transactions are entered in and checked off against invoices and bills.

Bank statement lines are automatically imported using bank feeds and then transactions are easily checked off against invoices or bills.

Remaining transactions are "bulk coded" or reconciled to their respective accounts.

Financial Reporting As a business owner, you must take responsibility for the financial performance of your business. Use the built in reporting with your accounting system.

You can also connect your accounting package with other reporting software such as Fathom, Crunchboards or Spotlight Reporting.

Once you do this, it's best to look to an adviser to work with you, providing insight into the numbers to grow your business

If you have any more questions about your accounting systems, do leave a comment and I'd love to help out more.


Ben Walker

Chartered Accountant at Inspire CA

Ben is the Entrepreneurs’ Accountant and founder of Inspire CA, a Brisbane based Chartered Accounting firm. Ben started Inspire CA to head in the opposite direction to the traditional, old way of the accounting industry. Ben is a qualified Chartered Accountant and spent his early years learning the ropes with KPMG, a global, “Big 4” accounting firm. He is also a winner of the Anthill Online 30under30 award for 2014 and was named a finalist as the Brisbane Young Entrepreneur of the Ye


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