Four Practical Reasons to Use Online Accounting for Your Small Business
If you a small business owner that is interested in being more efficient and/or saving money then read on to learn how an online accounting may be able to help you save time, and make your employees more efficient, and may even streamline one of your businesses processes to save you money.
Do You Have These Business Problems ?
1. Your checkbook is not in balance or your bookkeeper has to call the bank to get the daily balance.
2. You do not use an accounting program to bill your customers, rather you prepare your bills in Word or Excel and then re-entered the bills into your computer and as deposits when you collect the cash.
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 track your receivables and payables in your head and its impossible to obtain customer and vendor history in real time.
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.
Too often small business owners do not reconcile their bank statement to a checkbook balance and rely on daily calls or online inquiries to the bank to determine their daily cash balance. At a minimum every business should know their daily checkbook balance and to do otherwise, is not a good business practice. Without a procedure to reconcile a company’s checkbook monthly to a bank statement, is a serious weakness in any system of internal control and could very well create the opportunity for fraud.
Unfortunately, some businesses do not have the time to use the accounts receivable or accounts payable programs included with most accounting packages or if they use it, they do not use in real time. This information is critical to effectively running your business. Among other things, an effective and operating accounts receivable and accounts payable systems gives you real time information to make business decisions and to properly understand your future cash positions. As a business owner, you can review your accounts receivable aging reports on a daily basis and make those calls for money to pay your bills. Another benefit of any online accounting system will also result in one central location or repository in real time for invoices and support for customer deposits. More importantly, when a customer says they paid, you are able to see the customer deposit and billing histories from anywhere. It also provides the business owner with a tool to make sure that all customers were timely billed. With an online accounting system you can be anywhere or even be on the go, that is traveling to appointments and you will know how much is owed to you. One quick tip, is to make sure that you are emailing your bills to your customers from the accounts receivable program. Not only is there a small monetary savings, an electronic bill helps your cash flow, because there is a time savings from not mailing or faxing the bill.
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.
To stress a very important point, there are limitations to QuickBooks Online Plus accounting when inventory is a major component of the balance sheet, the solution is using an accounting system that has remote access such as QuickBooks Pro or Premier with remote access or a 3rd party inventory add on. This topic has already been discussed in another article that I wrote. Please contact me for a copy of that article.
Another time savings is that your accountant or CPA, can review and make necessary corrections online from the accountant’s computer in real time. So if you have a problem, the accountant has easy access to your accounting information to quickly fix the information, thus avoiding the time for the accountant to schedule a visit to your office.
As electronic calendars such as Google Calendar or Outlook on our Blackberry’s and I phones have changed the way some businesses utilize secretarial skills, online accounting software may very well be able to improve the way small business run and operate their businesses.
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