Shouldn’t you use technology to streamline the accounting workflow of your growing business? How about automating it using online accounting software?
In the initial days, your accounting for small business is easy. You are hardly worried about taking steps to make your accounting workflow efficient. It is time when you are trying to grab every opportunity and converting it into the profit.
However, your fight for planting your roots generates financial transactions, receipts, and invoices. You need a strategy to discipline their movement through your business. The right time to do it is when you start transacting.
Keep in mind that the inefficiencies in the workflow can prove to be costly for your growing business. You should start by identifying inefficiencies or the bottlenecks in your accounting workflow.
Using Excel Spreadsheets to Manage Your Books
It is not at all surprising if you, as a small business owner, use spreadsheets to record a few transactions per month. The manual work it involves is hardly taxing.
When you have a few transactions, your accounting for small business is not all that mind-boggling. You can easily track it with a spreadsheet. It is easy to prepare invoices manually, enter it in a spreadsheet, and the payment whenever it arrives.
Similarly, tracking your expenses using a spreadsheet is also easy. You spend money on rent, utilities, raw material, stationery, and business traveling and enter it into the spreadsheet and store the receipts conveniently. However, entering the transaction date, client name, products or services rendered, amounts, and total amount twice is the duplication of efforts.
As your business’s transactions grow, you will find that it is taking too much time to maintain the spreadsheet. If you are at this stage, implementing online accounting software could prove to be an optimal solution to your woes.
And, the digitized financial data of your business stored in the central database can be reused. It can be processed to prepare financial reports and statements. These documents can give you insight into your business’ financial state and can become the basis for making data-driven business decisions.
Paper-Based Accounting Processes
You suddenly decide to check whether a particular client has paid or not. Will it be easy with a paper-based accounting system? You will have to wade through a ton of paperwork accumulated in the office.
If you are not organized and haven’t done the entry in the spreadsheet, you will almost need to retrieve every file you own and search page by page to locate the specific invoice.
That is a lot of time wasted, right? As per the McKinsey Global Institute, businesses waste nearly 20 percent of their time searching for the right information. Implementation of online accounting software puts the financial information at your finger-tips.
Once you have entered it in the central database of the software, you can access it anytime and also from anywhere. That is the benefit of using online accounting software. The business owners On-the-Go find it highly useful for making on-the-spot decisions about business’ inventory, payments to vendors, or for putting in a purchase order.
Get Paid on Time
It is no wonder that you, as a small business owner, have to multitask. It helps in keeping your expenses down. However, it makes you live from task-to-task, and information moves to the back of your mind at a faster rate. It makes it difficult for you to follow-up on the past-due invoices, which can lead to a severe cash-flow problem.
The older your invoice gets, the lesser are the chances of getting paid. You can easily master the situation by using online software. It will stop you from letting your invoices get more than 90 days old. You can use it to check for overdue payments.
In fact, you generate aging accounts receivable report to know all your outstanding payments. You can then send them an email reminder to each of the customers on the list. The best way to maintain your liquidity is to be consistent in following-up.
Remind your customers as soon as the invoice is due. Instill in them the honoring your invoice on time. Otherwise, they may choose to ignore it and jeopardize the accounting for your small business.
Integrate Your Efforts with Online Accounting software
Is it really efficient to manage your clients, vendors, sales, and accounting processes manually? No!
Maintaining a spreadsheet each for your accounting, details of your clients or vendors, email IDs, or managing prospective clients using a CRM is time-consuming. It could lead to various problems, especially when you want to integrate your efforts. It may leave you operating on inconsistent and dated data.
Online accounting software makes it easy for you to manage the client and vendor list. You can update and maintain their details in the central database of the software. It is the place where you maintain their email ID’s and business’ financial information on invoices and receipts.
Yes, manual accounting has its benefits. It saves money for the owner. However, you, as an owner of a growing business, has to think of streamlining your financial transactions, invoices, and receipts. It gives you far more control over the accounting for your small business.