When people ask me at networking events what I do I always say ‘I help people understand their business numbers better’. That usually gets a response like ‘well I need that!’ It’s way better than I am an accountant, and after all they asked what I do, not what I am.
And one of the things I go on about relentlessly is ‘know your business numbers.’ Because numbers are the language of business and it is numbers that will ultimately determine your success. Business is literally a numbers game.
But how should you produce your numbers and who should do it for you?
We recommend that you install an accounting software package designed for small businesses. Why is that? Well whether you pay a bookkeeper or do your books yourself, having accounting software for a small business will keep you in control of your finances. This is so important. However good you are at what you do, being in control of the numbers and cash flow could make the difference between whether you succeed or fail.
If you take the plunge and start off using accounting software, you will be able to use your valuable time to run your business and make it flourish, instead of struggling with your books.
But which accounting software for small business should you use? Will it meet your needs? Just because your business is small, don’t feel you have to compromise. There are plenty of software companies out there fighting over the accounting software for small business market. This competition is good for the consumer. It means that there is a product out there which will meet your needs, at a price you can afford.
Here are our top 7 things to think about when choosing your accounting software for small business:
1. What should it do?
Not all packages are fully functional. Some are geared for cash accounting, which tells you what you have been paid and what you have received, but to really be in control you will also need to know what you owe and are owed. This is vital for projecting your cash flow. It is called the ‘accrual accounting’ system. This package will include branded invoices, an easy way of managing the purchase invoices you owe, banking, reporting, VAT returns (if you are registered for VAT), expense claims, credit notes and managing contacts.
2. Easy to use
We think this is probably the most important of all. Look out for an intuitive, easy to use dashboard or home page. This should tell you at a glance what your bank balance is, what you are owed and what you owe, and what your sales and costs are. Ideally there should be an area which you can flag up accounts which you always want to see, such as your year to date sales, which will give you an up to date snapshot of your business.
Navigation and data entry should be easy. You should be able to find your way around easily to the features you need to use, after all, the whole idea is for the accounting software to free up your time for running your business. If you make a mistake, will it be easy to correct?
All this may be too much trouble; if so ask your accountant what they recommend and why. If they say ‘Because that’s the package we use’ get another accountant! It isn’t about making your accountant’s life easy – it’s the other way round. They should ask what numbers you want to know and how often, who will be keeping the books (you or a bookkeeper), how familiar you are with accounting, how often and from where you want to access your books and so on.
For example, with home working becoming more popular, many businesses require access to their financial information from a variety of locations. You may want your accountant or a business partner to have access to the information, and buying multiple licences can get expensive. This is where online accounting software comes into its own. Secure access at anytime and anywhere that has an internet connection. This also means that the clever accounting software developers take care of all the messy updates, so you never have to worry again whether you are using the most up to date version.
If you prefer the security of knowing that your numbers are secure on your laptop or server (and you back up regularly) then there are excellent packages that you can run from your home or office that will remind you when updates are available.
3. Direct daily banking
A very useful feature that is available from an increasing number of packages is a system that connects to your bank so you can see your bank transactions automatically appear every day, saving you time, and taking away the chore of manual data entry. With automatic bank feeds, it’s easy to keep the books up to date regularly, proving a real time view of the business, so that you are always in control. This is particularly useful if you have a lot of bank transactions.
4. Input from your other systems
A lot of businesses now use separate systems, for example for invoicing, collecting contractors’ hours and expenses, accessing product and pricing information and so on. It is important to be able to link these systems to your accounting package seamlessly to avoid the need for multiple data entry.
Apps are now being developed to use for bank reconciliations, creating your branded invoices and doing expenses. What do you think of the idea of being able to check your up to date bank balance every day from your phone? This may be something you would like, or not important at all. Either way, if it matters make sure it links to your chosen package.
Who is there to support you when things don’t go right? Is it a telephone number? Will you need to send an email and wait for the response? Some systems have a support forum where you can post questions. Another option is to contact your accountant directly from your software. The main thing is that you are satisfied that if you have a problem it will be dealt with.
Easy to use reporting is essential so you can see how your business is doing and so you can easily get your business numbers on a regular basis. For this, reports should be available in a format that you can easily see on the screen, download and print.
7. Audit trail
Lastly, your accounting software should make accounting transparent and provide a clear audit trail available at the click of a button. This saves storing all the physical documents, and saves time sifting through the paper trail.
At Guilford Accounting we partner with several accounting software developers whose packages do everything on this checklist, and are accredited by the Institute of Chartered Accountants in England and Wales (ICAEW). Most also have a forum where you can post questions, and get an immediate answer from an expert. And because they work with accounting and bookkeeping partners like us, we are kept to date with all the latest improvements, and our clients can contact us directly if they have a problem.