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Counting your Beans

One of the toughest things to get right in small business is your accounting. Here’s how you can choose the right software package to suit your needs, and keep the dollars rolling in

Keeping any small business on track financially is a big ask for many business owners – especially if your business is booming and you find yourself taking care of the day-to-day stuff, and leaving the accounts ‘until tomorrow… or the end of the week…’.

It’s okay – we’ve all done it, and it’s the kind of mistake most SME owners only make once. Or twice.

The obvious answer is to hire yourself a bookkeeper or accountant to help you keep track of your dollars and cents – but that can turn into a bit of an expensive exercise, particularly when you need someone to watch the books every single day of the week.

The other option is to keep trying to do it yourself, which sounds like a bit of a time-sink for many people. However, advances in software specifically tailored to suit the accounting needs of small business have made light work of what used to a very onerous task.

Here’s how to make sure you’re getting the best bang-for-your-buck, and ensure that the accounting package you decide to purchase will be the right one for you and your business.

Fits just right

The first thing you’ll need to do is to stop and take the time to have a good, long think about your business – and assess what it is that you need, and try to identify areas of the bookkeeping that could be automated, using the right software.

There is a bit of a checklist that will suit most SME owners who are looking for the right solution to their accounting needs – and it’s been put together by the Australian Government, so you know it’ll be both thorough, and unbiased.

The top seven items to consider are as follows:

1. Does the system calculate all payroll requirements?

Calculating and handling payroll for your employees is pretty easy if your business is only a handful of people strong. But once you’ve grown your business and brought a few more people on board, making sure that your payroll requirements are met – and are above-board and legal – can become a bookkeeping nightmare.

There are many different elements to payroll that need to be considered, including PAYE taxation, annual leave pay and hours owed, long service leave and sick leave. On top of that, there are mandatory superannuation payments to look after, which can be a bit tricky if you’re not familiar with how the super system works.

2. Does the system track stock, work in progress, orders, jobs and other task management requirements?

In an ideal world, especially if your business relies on a high quantity of stock turnover, a good accounting system will plug straight into your Point-of-Sale hardware, and help you keep on top of your stock levels.

Most accounting and stock control software is sophisticated enough to send you gentle reminders (and, sometimes, stern warnings) when stock levels are getting low – and they can help you track how fast particular items are moving, identify new trends in your sales figures and help you to predict how much of a particular item you might need to purchase, saving you time and money by not over- or under-stocking your business.

Better yet, an accounting package that handles order and invoice production, and which ties directly to your accounts, can be a massive time-saver as well.

3. Will the system be able to handle multiple bank accounts

A lot of SME owners tend to have multiple bank accounts attached to their business, which can make keeping track of where, when and how you’re spending your hard-earned a little more difficult than having a single account.

So it’s worth checking whether the package you’re looking at is capable of dealing with multiple bank accounts. The downside is that there will be some back-end work to do on the platform (normally around the time that you’re learning how to use it) to get specific accounts established, and then ensuring that the right transactions are happening on the correct accounts.

4. Does the system need to handle foreign currency?

Handling cash or payments from overseas is still, for some unfathomable reason, a spectacularly convoluted and complex operation. This is an ideal example of when an automated system, to help you keep track of costs, payments, taxes and duties, is extremely handy.

In a lot of cases, especially when you’re dealing with overseas funds transfers from a business, the processes involved can be quite convoluted, as you will need to provide details to your clients and customers that are often more complicated than transferring money between Australian accounts.

5. Does the system track separate financial records for each business or department within the business?

This one’s probably not quite as important from a small business perspective, especially if you’re just starting out and getting your business up and running. However, if your business is expanding – or even if you just have plans to expand your business – then ensuring that the accounting software package that you’re using is scalable, and able to grow with your business as it branches out, is absolutely crucial.

6.Does the system allow for interface with other computer systems such as online payments?

Again, this one is a bit of a no-brainer… largely because most, if not all, of the big players in the accounting software game are well aware of the need for their packages to be able to handle online payment transactions. The growth of online shopping in Australia is continuing extremely quickly – prompting a lot of people who are starting their own businesses to work almost exclusively in the online space.

Handling online payments isn’t just an issue for retailers, though – the ease and convenience of having a payment gateway on your website for goods and services can be costly (in regard to service subscription fees, account set-up costs and transaction fees), however the convenience factor of having the payment gateway there for your customers can mean the difference between someone just ‘kicking the tyres’ on your website, and actually converting into a sale.

7. Does the system keep detailed records on customers, often referred to as a Customer Relationship Manager system?

Customer Relationship Management (CRM) is a big deal when it comes to getting your business running right. Keeping data about your clients can give you some incredible insights into not only how your business is tracking, but also how it could be managed better.

The key parts to successful CRM are the following pieces of data: what they buy, how often they buy, and when they buy it.

Obviously, knowing what your customers want should form the basis of any successful business. However, keeping track of how much of a particular item your customers are purchasing can tell you a lot about how to run your own business, and how your customers’ businesses are tracking as well.

A gradual, steady increase in demand from a customer will tell you that their business is progressing and growing well, whereas an erratic purchasing history over time could tell you that the business is in some kind of trouble.

A sudden decline in purchasing could be telling you one of two things: it could mean that their business is failing, which means that you should be wary of offering them lines of credit, and also considering the impact that might have on your business (and the quantities of stock that you’re creating) as well.

Or, more importantly, it could be telling you that they have found a new supplier who is under-cutting your prices, or providing a better service or product. At that point, with the data in front of you, you have the opportunity to contact your customer and ask them what’s happening – and give you a chance to reconnect with them as a customer, and continue to provide the service and keep your business running smoothly.

Lastly, knowing when your customers are more likely to be buying from you can be a massive does of assistance in running your business. Having a customer with a regular history of large orders at a specific time of year can help you to plan, in terms of staffing, manufacturing rates, stockpiling and ordering your own supplies from other businesses.

8. Does the system come with all of the Standard Business Reporting (SBR) features you need to deal with the Australian Tax Office (ATO)?

This is a big one – and it’s surprising the number of accounting software packages that aren’t fully up to date with the Standard Business Reporting (SBR) forms required to keep on the good side of the tax man.

Most, if not all, of the commercial products available on the market do include functions and features that will automatically produce the forms and data for the Australian Tax Office (ATO), such as your Business Activity Statement (BAS), Company Income Tax Return, and Tax File Number (TFN) declaration.

However, depending on where you are in Australia, and the manner in which your business is set up, you might need access to additional forms and information about your business, especially if you need to be providing reports to the Australian Securities and Investment Commission (ASIC) or the Australian Capital Territory Revenue Office (ACT RO).

Having SBR features as part of the software package you choose is a wise decision – as it will save you an enormous amount of time that could be better spent on your actual business, rather than producing the paperwork and forms required by various state and federal agencies.

SBR compliance is set up to automatically fill out the forms you need to file, with the data from your accounting, CRM and payment systems – allowing what used to take hours of sifting through and compiling data to happen in the push of a button. It can then be filed directly with the agency, and you can get back to the day-to-day running of your business, without the hassles and headaches of spending hours shuffling paperwork.

One thing that you should be aware of – and which you should check with the supplier of your accounting software – is how often the software is updated, and whether those updates are free, or provided at a cost.

As we all know, the government is very fond of changing legislation and paperwork requirements for small business – and if your SBR is out of date, then you might be supplying them with incorrect information, and that can lead to issues that will take time, effort and money to sort out.

9. Is it local, or in the Cloud?

A lot has been written about the benefits of using cloud-based accounting software – and the benefits are pretty clear. Being able to access your information from anywhere, at any time, can be extremely useful if you’re running a business that requires you to be on the road, or agile enough to handle sudden changes in the needs of your clients, even if you’re on-site with them and away from your computer.

The other benefits include the fact that the software, and data, is all stored safely and securely online – usually by a company that maintains multiple redundancy services (meaning that they keep back-ups, and back-ups of back-ups), so that your data is always going to be available.

Also, having a cloud-based solution means that there is a single data-set (backed-up, of course), which is always up to date – so that you, your team, your bookkeeper or accountant, and anyone else who needs access to that data can simply log in to the service, and know that the data they’re looking at is up to date. That means no more emailing reports or spreadsheets or data sets around the place to keep everyone in the loop.

Wrapping Up

Your choices in terms of which package to choose are many and varied – and it will most likely take some time for you to sort through all of the options available to see which one is best for you and your business.

However, there are some short-cuts you can take in terms of how to choose which package or service you want to proceed with.

First of all, take the time to do some research on your own – a couple of hours looking through the questions we’ve asked above, and the sales pitch of any of the commercial products should be enough to give you a basic idea of what you’re looking for.

Secondly, don’t be afraid to ask other SME owners about which products they use – as you are probably very well aware, customer feedback on a product is invaluable, and could steer you away from any potential disasters.

Thirdly, speak to your existing accountant or bookkeeper. Many of the accounting packages will be able to feed information about your business directly to them, which will save them time and effort as well in helping you keep your business on track.

Last, but not least, each state and territory – as well as the federal government – offers a small business advisory service that can assist you with questions on the topic, as well as bring you completely up to speed on what you need in terms of Standard Business Reporting functionality.

Whatever you choose, the final word is this: Remember that you will most likely be spending money on the product, so you will need to figure it out in terms of a cost-benefit analysis. Spending big bucks on an “all bells and whistles” package that contains hundreds of features that you’ll never use is probably not a good investment – so consider what your business is doing now, where it might be in two or three years, and get good information on the precise requirements for your small business.

You could save yourself a small fortune by getting your accounting software needs right – and you could save even more by getting the right package for your business, as well.

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