Bookkeeping software is not a new invention. But many small business owners and sole traders still keep paper records and use spreadsheets.
For the most accurate accounting records, however, software programmes can be a huge benefit.
Not only will they save time, they improve your cash flow as you’ll know what money is due in and out of your business and help you chase outstanding debts. They also help ensure you are paying the correct tax and help accountants get a precise picture of how your business is performing.
In just over a year, it is likely that HMRC will start to roll out Making Tax Digital to all businesses. And when that happens you will need to use accounting software to be compliant.
But if accounting software is new to you, let us introduce you to what you’re missing.
It is more accurate
Manual bookkeeping processes involve a lot of mathematical calculations by hand. Also, you need to keep physical records that can be easily lost.
Using something like QuickBooks means you can take a quick image of receipts and they won’t disappear.
Spreadsheets are more accurate than manual bookkeeping but as each person uses their own version it can create issues and slow the process. Plus formulas can be complicated and prone to errors.
We’re not saying accounting software is perfect. Data entry errors can still occur, but they’re a lot less likely if you follow the steps.
It improves cash flow
Cash is the lifeblood of any business, whatever their size. With spreadsheets or manual records, it can be difficult to see who owes you money, how long it’s been overdue or what you owe to your suppliers and by when.
Using accounts software, like Quickbooks shows all this information at a glance, so it’s easier to see the cash position of your business at any point in time, especially if your bank is also linked.
You can send reminder e-mails to your customers who may have forgotten to pay, thereby ensuring that you are chasing all outstanding debts and getting cash coming into your business.
Bookkeeping software can compute figures quicker than a human. It also introduces a lot more automation, so the whole bookkeeping process is a lot faster.
Accounting software can also be configured to do different things automatically which can be adapted for individual businesses.
As a result, it not only makes keeping accounts a whole lot easier but speeds up the process.
Your costs reduce
Maybe we should keep quiet about this, but using accountancy software could reduce your costs. How? Well, it takes a lot less time to look after books if your accounts are fully computerised.
Also, your accountant will probably spend less time if you’ve filled in the correct details and photographed all your receipts.
We say probably because that is the theory. We certainly need less time on the accounts of those businesses who have started to use bookkeeping software.
Of course, if you input data incorrectly it won’t reduce time and cost, so it’s in your interest to do it properly.
But with those costs reduced you can invest them in other parts of your business, such as instructing us to act for you in other areas that improve the financial health of your business.
Reports are more accurate
Directors of SMEs need accurate and timely financial information to help them run the business more efficiently.
Let’s say a director needs to prepare a profit and loss report for a meeting in an hour! Old-style bookkeeping and untidy spreadsheets could mean the figures aren’t accurate.
Reporting modules within the software enable users to create this type of report simply.
File taxes with less hassle
Tax return software can be integrated with accounting programmes. This helps you keep a close track of your business transactions, which helps accurate tax filing.
Again, this automatic function means you spend less time worrying about keeping accurate records while the computer works out the rest.
What type of software?
There is a lot of accountancy software available. You can even access free bookkeeping software but remember its functionality may be limited.
Many free software packages do the very basics and to access a lot of the functions other paid-for programmes offer means you have to start paying anyway.
Of all the well-known software, such as Sage, QuickBooks and Xero, each offers something slightly different. Larger companies who have their own accounts department may opt for Sage.
In our opinion, QuickBooks provides everything an SME company needs. We are a QuickBooks partner and that is because of our view of it.
It’s simple to use and its impressive ability to reduce the need to keep receipts is not only useful but less hassle for our clients. We love the way QuickBooks allows you to see what customers owe you at a glance. We really like how it produces a variety of reports so you can see how your business is doing. QuickBooks offers integration with lots of apps and other software which make your life easier.
If you ask us to become your accountant we will encourage you to use QuickBooks but we are able to work with your software too.
And if you haven’t started to make your tax and accounts digital, it’s probably time to do so ahead of any future HMRC deadlines.
For any questions about how bookkeeping and software accountancy can help your business, contact us now.