A Simple Guide to Computerising Your Accounts
Looking after the accounts is an integral part of running a business. A company needs constant financial management to ensure that it is maintaining its progress in its marketplace, and therefore accurate and realistic financial information should be available at all times. The tasks may appear daunting at first, but there are ways to simplify the process.
Picture the Scene
It’s the end of your financial quarter, or the end of your financial year. Your accounts, although filed and organised, will involve a lot of manual work. Bits will have been kept on a spreadsheet and will be computerised already; other parts will be held manually in books or files, or still be in piles waiting to be filed. If this is a scenario you recognise then it can be well worth computerising your accounts. The cost need not be huge and there are many benefits.
- Saving time
- Accurate reporting whenever you need it
- Tax data always available
- Analysis and forecasting becomes simpler
- Your accountant’s bill becomes cheaper
- Automatic reminders of significant events
- Tasks can be handled by fewer people
- Easy VAT reporting
- Automatic printing onto tailored stationery
One of the main benefits of accounting software is that fewer people can handle tasks more quickly. Accuracy should also be improved through the elimination of re-keying data. Most accounting systems also offer stationery such as cheques, invoices and other business forms, already set-up for your printer and with your company information on them.
Companies can underestimate the importance of their accounts, however they provide the most accurate picture of where you are and where you are going, how much you can afford to pay out and who your slow payers are. More interesting is the extra information you can extract, for example the true picture of the cost of every sale, the profitability by product and by employee or when a payment is overdue.
Analysis and forecasting
Small businesses tend to perform little financial planning due to time limitations. However, having eliminated the need for endless re-keying of data across department and even across individual computer applications, the scope for using the data you have to better effect starts to become apparent. Accounting software coupled with customised parameters can trigger alarms when you go off target or forecast. This can take away a lot of the burden of scrutinising the business and the benefits are immediate.
Hint – Make sure your forecast is flexible enough to take into account any changes in your prices or services and make sure your estimates are realistic.
Accounting systems can be set to provide automated reminders of significant financial events such as statutory returns. You can also set them to remind you of bills due, prompt you to do a cheque run and any other function that happens, at your discretion. It is important to ensure that all systems are cross compatible so that different departments are not using different calendaring or contact management systems. If this is a problem ask a professional IT consultant about integrating your IT systems.
Tax and VAT
Reporting internally for your own business is only one of the functions of an accounting system. You will also need to report to external statutory authorities. Many accounting systems link to statutory authorities’ online facilities, which makes the reporting simpler and automated.
In addition, any competent computerised accounting system will eliminate the chore of filing VAT returns by quickly calculating VAT for you. Nevertheless remember that computerised or not, your VAT records need to be backed up meticulously by receipts.
Choosing the right software
Firstly, make a shopping list. Try and map out exactly what you want the software to do – process orders, create invoices, manage stock – these are all things to think about. That way you will have a checklist of things to look out for and you won’t be persuaded to buy a system with functionality that you may not need.
Think carefully about the cost. Buying bespoke systems is likely to cost a business a lot of money and yet it may not be necessary. Conversely, the cheapest off-the-shelf solutions can often turn out to be more costly in the long run if it means being forced to upgrade soon afterwards because it doesn’t do everything you require. It’s all about making your life easier, and your business more efficient. You will only achieve this with the right product for your business.
Think about the longer term. Where do you expect your business to be in two or even five years? Think about buying software that can grow as your business grows.
Ask advice. Talk to your accountant who may be able to advise you about some packages. Information is also available from authorised software consultants and distributors, large retail stores and professional bodies such as the Institute of Chartered Accountants.
Do you have faith? Being able to completely trust the brand that you are buying from is a big issue. Think about the amount of support and training you are likely to need, also think about their reputation for customer service. When you’re getting up and running it is important to know there will always be support at the end of the phone.
Installing your software is normally simple, and then you will be ready to run it for the first time. You will need certain information to hand – latest bank statement, cheque stubs and receipts for everything since the last bank statement, company credit cards statements and recent transactions, your VAT details and the amounts you hold in petty cash.
Most products will prompt you to set up accounts and enter details into them automatically; beyond this it’s a matter of typing the details you need, and keeping the records up to date.
When you have entered all this “back up” your data – and keep “backing up” religiously.