- Regardless of their state of progress and size, every business should keep accounting records.
- Fortunately, the world of the Internet and high tech allows for easier integration and use for all savvy business-owners through a lot of online accounting systems.
- Get fresh insight into the benefits, how to's and reasons for using online accounting systems to keep track of your company’s finances.
Every business needs to keep accounting records. I’m not talking about the shoebox of receipts to give to a bookkeeper or accountant at the end of each quarter to prepare your Business Activity Statement (BAS return). I’m talking about a full accounting system.
The internet has enabled the creation of cloud accounting systems like Xero, systems that have been created from the ground up with the primary goal of making it easier for savvy business owners to do it themselves. Over the past few years, MYOB and Quickbooks and a plethora of others have now launched their versions of online cloud accounting systems.
But just like everything else, all cloud accounting systems are not created equal.
Having made the decision to use a cloud accounting system, and you should, the next step is to find out more about the options.
What Are the Benefits of Cloud Accounting Systems?
There are 10 benefits to implementing a cloud accounting system:
- Easy on the cash flow
- No tech knowledge required
- Easy to use
- Always up to date
- Business snapshot
- Integration with other business systems
- Mobile accounting app
- Real-time collaboration
Bank and credit card transactions are automatically entered into the system on a daily basis, eliminating 90% of the data entry time required by desktop software
Cloud accounting systems are available anywhere on any device with internet access. This means that you can access your numbers whilst on holidays (not always recommended, but in many cases a necessity).
3. Easy on the cash flow
There’s no upfront cost, just a monthly fee which allows you to effectively pay what used to be an annual fee in easy monthly amounts.
4. No tech knowledge required
There’s no need for IT support as there’s no installation required, nor are there any upgrades that require your input, it’s all done for you by the system.
5. Easy to use
From the interface that is designed for you, the business owner, to the automation of entries and easy customisation of invoice templates, these systems are designed to make accounting simple.
6. Always up to date
With the automation of bank entry, it’s quick and easy to keep the system up-to-date.
7. Business snapshot
With the use of a dashboard as the first page you land on when you log it, you can easily see your key numbers.
8. Integration with other business systems
Cloud accounting systems allow for integration with various other systems businesses use on a daily basis, eg CRM, booking systems, project management, shopping carts, timesheets and the list goes on. There are also industry-specific systems that will integrate too.
9. Mobile accounting app
With the mobile app it’s easy to quickly reconcile your bank account whilst sitting at breakfast or on public transport going to work in the morning.
10. Real-time collaboration
This allows your advisors to have access to your information to make sure you are on track. It also means that your advisor can access your data whilst on the phone when you have a query or are seeking advice.
How to Determine the Best Online Accounting System for Your Business
If you’re using desktop software or a shoebox for your receipts, now is the time to switch to a cloud accounting system. In my book Connected Technology, I identified seventeen questions you need to ask to determine which system is the best for you.
In summary, the key questions to ask are:
- What industry are you in?
- Do you have inventory?
- Do you have a Point of Sale system?
- What other systems do you use in your business? Are any of these online?
- Do you transact in multiple currencies in your business?
- Do you use or need a project management system?
- What system does your accountant support or recommend?
- Who will be doing the data entry and reconciliations?
Setting Up Your Cloud Accounting System
Setting up a system is a one-off process which you can do if you want to take the time to learn how to do it. However, I recommend that you get it set up by a bookkeeper or accountant so that it is done properly. The small investment to set up a cloud accounting system is well worth it in the long run, as is investing in training on how to use the system.
DIY or Get It Done for You?
Once you’ve got the system set up and had an initial training session, you should do the bookkeeping work in your new system yourself. I have undertaken this process with all my clients over the years and encourage them to maintain their accounting system themselves at least for a year or two.
Janine Allis, Boost Juice and Shark Tank, has written about her experiences with bookkeeping and how she has benefited from the early days of doing it herself with the lessons learnt then standing her in good stead to this day.
Now when Janine was doing her bookkeeping she would have been using an old desktop system and not had the benefit of the automation we have today in cloud accounting systems. The time saving using a cloud system versus the desktop is 50% – 75% of the time. It just isn’t as onerous as it used to be and the majority of businesses are able to reconcile their bank account within 10 to 15 minutes each day.
Once you find you’re spending more than 20 minutes a day on maintaining your accounting system, then it’s time to consider getting a bookkeeper to take over these processes for you. But bear in mind that a bookkeeper may only want to reconcile your accounting system on a weekly, fortnightly or monthly basis and this will mean that your system is not up-to-date every day.
Once you do decide to outsource this work, try and find a bookkeeper who will do the reconciliations on a daily basis for you so that you can maintain the integrity of your data.
This is especially important when you have outstanding accounts receivable and need to be following up your clients or customers for payment.
If you’re not already using a cloud accounting system, switch now. Get an expert to set it up for you and then do it yourself for at least a year or two. The knowledge you gain about how your business runs and what the numbers mean will be invaluable to you for the long term success of your business.
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