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Accounting software – you’re mad not to use it in your business

Twice this month we did some work with businesses that are beginning to use accounting software for the first time. Both had developed a series of spreadsheets for their accounting which they had long-since outgrown.

That is not all they have in common – astonishingly they are both £1 million turnover organisations!

Good for both of them that they have started to use accounting software but why leave it so late?

Five reasons to use accounting software

  1. Save time and money producing sales invoices that are accounted for at the same time they are raised
  2. Financial reports from the software will tell you how well your business is performing and what problems need to be addressed
  3. You can get on top of cashflow and stay on top
  4. Compliance with VAT is made very easy
  5. Financial controls such as the bank reconciliation are built in to the software and they help to ensure your numbers are correct

All compelling reasons.

However, once you acquire the software it is worth being shown how to use it.

Invest in training

You would not think about driving a car without learning how to drive and it is worth taking some time to learn how to use your accounting software. There are two levels of training:

  1. Basic data entry – to make sure that the data that goes into your system is correct and is entred efficiently. “Garbage in-Garbage out” remains true of all computer programs.
  2. Understanding the reports and terminology used. Accounting can be confusing and some people simply do not get numbers. Nevertheless, take some time to read and understand a profit & loss statement and an aged debtors report at the very least and ask for help if you are struggling.

Too many businesses will see accounting software as a waste of time and money if it looks impenetrable to use or if it won’t produce anything that is meaningful but a training session at the outset should start you off along the right path.

Cloud or desktop?

In five years time, or less, desktop accounting software will more than likely be seen as archaic. But right now there is a good choice in both markets – just watch out for two things in the cloud market.

Firstly, the costs recur monthly and are currently at a level where buying a desktop solution can prove much cheaper in quite a short time.

Secondly, several cloud solutions are marketed via accountants and changing either your accountant or the accounting software you use might not be easy – if you are not careful you can become locked in to a relationship or a software solution that is not good for your business and difficult to change.

 

In summary, if you are not using accounting software in your business, you should be. There are several cheap, powerful solutions available and the sooner you adopt one the better.

You don’t have to wait until you reach £1m turnover!

 

Michael
@michaeljcaustin

 

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