by Clare Galloway, MagicBeans
The end of the paper bag or shoe box job may be welcomed by many accountants, but it is sometimes hard work to educate clients to use accounting software. We come across clients all the time where we are having to ween them off their existing systems and bring them up to speed on new software – but the benefits are significant and the solutions it brings to every business substantial.
The benefits of cloud accounting are clear:-
- Save money – No costly hardware,
- Boost productivity, etc
- Faster Decision making
- Real time results
- Encourage Collaboration
But how do you actually improve your processes to give you back your weekends or stop you running around at your month end / VAT quarter end / year end and give you visibility of your business performance in real time – allowing you to make better business and financial decisions, help you identify any problems early on or allow you to have a clear understanding of how much cash you can afford to take out of the business?
How do you reduce your stress levels, have time for your favourite hobby, spend time with your family or, dare we say it, sit in your pj’s all day on a duvet day?
Here are some tips for staying on top of your finances:
Little and often
Find a 10 – 20 minute window every day to do your basic financial housekeeping. This might include raising invoices, chasing unpaid invoices or adding receipts or purchase invoices to your cloud accounting software. Do these basic tasks frequently and you’ll keep on top of them. You can then keep the rest of the week clear for running your business.
Larger and less often
Once a month or so, prepare summaries of the money you’ve received and invoices you’ve been adding each week. These summaries are the bedrock of your accounts and can be referred to as your ‘management accounts’. This is where a good accountant using cloud software like Xero can add real value to your business and prepare this information for you – provided you are organised enough to know what money you have received and work that is being invoiced!
Review your figures
Now that you have regular management accounts, make sure you understand what they’re saying to you. Your accountant can help if necessary. For example, you can check your gross profit margin by comparing turnover with the cost of products. If this is falling, consider increasing prices, negotiating harder with suppliers or changing your product mix. If you have a cloud based accounting package, you can run reports such as year-on-year seasonal comparisons.
Outsource your book-keeping
A good bookkeeper will love keeping on top of things for you. They can work as little or often as you like so are cost-effective, especially if you’re fairly organised. They are also good at letting you know about potential concerns, such as when you should be VAT-registered.
Connect with an accountant
At the end of the day, it’s important to get a professional overview of your business accounts in order to ensure they are balanced and prepared for tax, compliance, cashflow and growth purposes. With cloud accounting software, you can seamlessly integrate your bank, have up-to-date information and real time visibility.
By following this outline, you can quickly and easily get (and stay!) on top of your business finances. You’ll also save time that you can use to focus on the more exciting parts of your business and what you are good at – and don’t forget the pj days.