Why Online Accounting Makes Sense for a Small Business ?
Are you a typical small business owner that wants to be more efficient and save money then read on to learn how an online accounting system can help you save time, and make your employees more efficient, and may even streamline one of your businesses processes to save you money. These are just four common examples that may be indicative of your business. Many other examples exist, however this article will was written to solely address these four examples.
Do You Have These Business Problems ?
1. Your checkbook is out of balance and you or your bookkeeping have to contact the bank daily to get the checkbook balance.
2. Your bills are manually prepared in Word or Excel and then re-entered into your computer without any reconciliation.
3. You prepare estimates and then copy the same information into your bill with cut and paste functions prior to sending the bills out to customers.
4. You do not keep a real time listing of your receivables and payables and its always takes a lot of time to get customer and vendor information or you keep this information on Excel.
By having an online based accounting system, like QuickBooks, you can make changes and have real time access on your notebook computer, or access your accounting information from any web enabled computer from your home, your vacation hotel room, even your customer’s office, or just about anywhere. Or if you choose, you can access and read some of your accounting information on your I Phone or Blackberry. Imagine if you are at a customer’s office, and you or your employee finished the project and your billing arrangement allows you to progress bill, then you can quickly prepare the bill and print it out and hand it to the customer. This step in itself, will improve your cash flow for two reasons. Firstly, the bill is prepared and delivered to the customer in real time and if you can make this simple procedural change and become disciplined to carry out this new process and bill in real time, then you don’t have to prepare the invoice after the fact, in the evening or on the weekend. And secondly, given the particular circumstance, you may be able to save considerable time for yourself or reduce the time required by your bookkeeper. By training employees to bill in the field in real time, they can quickly email the bill to your to you for your prior approval or better yet, you can review the bill as soon as its prepared by your employee in the field or at the customers office, because you have an online accounting system, taking advantage of the wireless internet or WIFI.
Another benefit is achieved by using the estimate feature in QuickBooks or any other online accounting system, you can have accuracy,consistency and completeness between the invoice and the estimate. Two more important benefits is (1) cash flow improvement resulting from quicker billing and (2) by shortening the billing process, you may be able to save considerable time for yourself or that of your bookkeeper. And don’t forget the fuel and time savings by not having to return to your office in order to access your accounting information in order to prepare the billings.
Some small business owners do not maintain a correct checkbook balance and they often spend valuable time contacting the bank to obtain the current cash balance. Running a business without a properly reconciled checkbook is not a wise way to run your business. In fact, not maintaining a properly balanced and reconciled checkbook is a serious detriment to any system of internal control and could have serious ramifications including fraud,and among other things, prevents you from checking on the accuracy and completeness of your bank balance and could result in bank overdraft balances,excessive bank service charges and could strain your banking relationship and further result in your banker terminating their relationship with you.
Many small businesses do not use the accounts receivable or accounts payable programs included with their accounting packages or if they use it, they do not use in real time. This type of information is crucial to running your business. Accounts receivable and accounts payable systems gives real time information to make business decisions and to properly understand your future cash positions. Another benefit of any online accounting system is having one central source, in real time for all of your invoices and support for customer deposits,i.e. a general ledger and accounts receivable and accounts payable journals. With an online accounting system you can view from anywhere the accounts receivable and accounts payable balances in detail or with summary aging reports. One tip, is to use the emailing feature to bill your customers from the accounts receivable program. Save the postage and time.
Its also important to know what you owe, in real time. Having a procedure in place to detect duplicate, erroneous bills or fraudulent bills is key for any business. With real time accounts payable information, you can review the accounting payable reports to answer questions from suppliers right over the phone as to why a bill remains unpaid or to inform the vendor when payment can be expected. QuickBooks or other comparable software gives you vendor information in real time, thereby eliminating the need of your bookkeeper to list what you owe in an Excel spreadsheet or in Word. Providing your bookkeeper is able to enter vendor bills into an online accounting system, like QuickBooks Online Plus, then you can assess in real time, the same report from wherever you are located and choose the supplier bills to be paid. Again, another benefit of an online accounting system is that you can be anywhere and you will know how much is owed. I have only addressed three important areas i.e. cash, accounts receivable and accounts payable. Another useful feature, with an online accounting system, is the ability to compare your budget to monitor your actual monthly profit and loss statements. As we all know, budgets are an excellent planning tool that helps you understand financial problems before its too late. One other important comment, QuickBooks Online Plus does not currently support inventory and purchase orders, thus precluding manufacturers, retail, and distribution companies from utilizing this software, unless you are able to locate and purchase a reliable 3rd party add on module.
Although there are limitations to QuickBooks Online Plus when inventory is a significant component of your balance sheet, the solution is using accounting systems that have remote access like QuickBooks Pro or QuickBooks Premier with remote access or considering a 3rd party inventory add on. This topic has been reviewed in another article that I wrote. Please contact me a copy of that article.
The time savings resulting from your CPA or accountant being able to review and implement corrections online is crucial to receiving timely and correct financial statements. Therefore, if you have a question, and your accountant has web based access to your accounting data, corrections to the accounting information can be made, thereby avoiding the time for the accountant to schedule a visit and drive to your office.
Just like the way electronic calendars such as Outlook or Google Calendar on our Blackberry’s and I phones have improved and changed our need for secretarial skills, online accounting software may very well change and make easier the way we use our accounting and bookkeeping systems to run a small business.
