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Accounting Systems are not just for numbers

Guest post by: Betty Penny

Article Overview: Many businesses believe the main reason to invest in an accounting systems is to keep records for the purpose of filing for income taxes and to keep their accountant happy. While this may be true, there are other benefits that can assist an owner managed business in being a sound business person and help them in running their business effectively. There are literally hundreds of accounting systems to choose from. A good accounting system is not just about numbers as they can keep track of your best customers buying cycles, inventory,money that is owing to the company, and suppliers terms and discounts. And some systems can serve as a sales and marketing tool.

Accounting Systems are not just for numbers

Many businesses believe the main reason to invest in an accounting systems is to keep records for the purpose of filing for income taxes and to keep their accountant happy. While this may be true, there are other benefits that can assist an owner managed business in being a sound business person and help them in running their business effectively.

Access to financial information is instantaneous with a few keystrokes, as long records are updated on a regular basis.

Here are examples of generic situations that a business owner may experience without a system. The answers could have been provided on an accounting system with ease.

1) Purchasing on impulse without knowing the real position of your bank balance. When you go to the ATM, the bank says that you have money in the account, you then write out a cheque not realizing that some cheques have not cleared the bank, leaving you short.

2) A customer asks for credit terms for 30 days, and you say okay only you have been too busy to monitor the customer’s outstanding balance, it has now reached 120 days and then find out that they are out of business.

3)You've been dealing with a supplier for a number of years, but do not know how much you spend with them. You spend 2 hours adding up the invoices and pull them from two different boxes.

4) Sales have been increasing and then they suddenly come to a slump. Was it like this last year in the same month? Is the sales slump related to the season or economics.

5) You need to know the financial position of your company on a monthly basis as money is tight and you only get this information at the end of the year from your accountant.

6) You noticed that some inventory is missing but don’t remember selling the product and need to know the cost of that product for a customer who wants one. You spend an hour hunting for that information.

Do any of these generic situations fit in your business? As you can see, a lot of productive time can be spent in trying to locate documents, when information can be at your fingertips. With the above scenarios, 3 hours of time had been lost looking for documents, if you charge $60.00 an hour that means lost revenues of $180.00. Then examine the bad debt due to poor monitoring which means a loss of money. This all adds up to loss profits and your unrecoverable time.

There are literally hundreds of accounting systems to choose from. A good accounting system is not just about numbers as they can keep track of your best customers buying cycles, inventory,money that is owing to the company, and suppliers terms and discounts. And some systems can serve as a sales and marketing tool.

There are many off the shelf accounting systems that can be purchased quite reasonably. The range price for a small business accounting software package starts from about $150.00 and up. Depending on the type of reports and functionality, the costs will be higher.

During the last 15 years, I have taught the most popular off the shelf accounting software packages such as Simply Accounting, Accpac Plus, MYOB, Quickbooks and several others. I have found that Quickbooks was the most user friendly and chose to be a certified QuickBooks Pro Advisor.

Any small business cannot afford to exist without a good accounting system. You can sleep better knowing that you are not guessing at how you are doing by printing off monthly reports to see if your sales goals have been met and expenses maintained. By having information at your fingertips it will help you “Think Smarter” before making any financial decisions.

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Article Tags: accountant, accounting systems, income taxes, sales and marketing



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