Jun
26Why Online Accounting Makes Sense for a Small Business ?
Filed in: Home Based Business by Sandor Lenner on 06-26-09Many small business owners are interested in efficiency and/or reducing costs. If you are one those individuals then read on to learn how an online accounting may be able to help you save time and money, and make your employees more efficient.
Are You Experiencing these Business Problems ?
1. Your checkbook is not in balance or your bookkeeper has to call the bank to get the daily balance.
2. Your bills are manually prepared in Word or Excel and then re-entered into your computer without any reconciliation.
3. Your estimates/proposals are manually prepared without the benefit of seamless electronic integration to your invoices.
4. You do not keep a real time listing of your receivables and payables and its always takes a lot of time to get customer and vendor information or you keep this information on Excel.
With an online based accounting system, such as QuickBooks, you are able to make changes and have real time access on your notebook computer, or access your accounting information from any web enabled computer, your customers office, your home, your vacation hotel room or virtually anywhere. 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 has completed a project, then you can promptly prepare the bill and print it out and personally deliver it to the customer. This step in itself, will improve your cash flow for 2 reasons. First, the bill is delivered to your customer in real time, then you do not have to prepare the invoice the next day or next week. The second reason, you may be able to save time, by training employees who are working at clients or on the road, to bill in the field in real time, they can quickly email the bill to to you for your prior approval. Alternatively, 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, with wireless internet/WI-FI.
Now it gets better, by using the estimate feature in QuickBooks or any other online accounting system, you can have consistency, accuracy and completeness between the estimate and the final invoice. Two more important benefits is (a) cash flow improvement resulting from quicker billing and (b) the potential to improve the process, you may be able to save considerable time for yourself or reduce the time required by your bookkeeper. Remember, you do not need a wired network when using an Online Accounting system, since youre getting the information from the Internet through WI-FI. And don’t forget the time savings and fuel savings by not having to go to your office to get your accounting information when you are now able to access the information online.
Some small business owners do not maintain a correct checkbook balance and they often spend valuable time contacting the bank to obtain the current cash balance. Running a business without a properly reconciled checkbook is not a wise way to run your business. In fact, not maintaining a properly balanced and reconciled checkbook is a serious detriment to any system of internal control and could have serious ramifications including fraud,and among other things, prevents you from checking on the accuracy and completeness of your bank balance and could result in bank overdraft balances,excessive bank service charges and could strain your banking relationship and further result in your banker terminating their relationship with you.
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.
Likewise, its equally important to know what you owe, in real time. During these times, you need to have a procedure to detect duplicate, erroneous bills or fraudulent bills. As a business owner, if your accounts payable system is up to date, you can review the accounting payable reports to answer a suppliers questions right over the phone as to why a bill was not paid or to tell the supplier when payment can be expected. QuickBooks is easy, there is little excuse not to use these features of this software or any other comparable software. Just imagine, if your bookkeeper enters the bills into an online accounting system, like QuickBooks Online Plus, then you can assess that same report from wherever you are and select the bills to be sent out. It gets better, you or your designee can electronically pay the bill from wherever they are. Once again, 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. I have only addressed three important areas i.e. cash, accounts receivable and accounts payable. I almost forgot my favorite topic and equally important, with an online accounting system, you will always be able to compare your actual monthly profit and loss statements to a budget. With proper analysis the budget tool provides you with a plan for next year and the budget is the tool that helps you see financial shortfalls before its too late. One final comment, QuickBooks Online Plus does not have an inventory module, thereby preventing retail,manufacturers and distribution companies from using this software, unless you purchase a 3rd party add on module
Although there are limitations to QuickBooks Online Plus when inventory is a significant component of your balance sheet, the solution is using accounting systems that have remote access like QuickBooks Pro or QuickBooks Premier with remote access or considering a 3rd party inventory add on. This topic has been reviewed in another article that I wrote. Please contact me a copy of that article.
The time savings resulting from your CPA or accountant being able to review and implement corrections online is crucial to receiving timely and correct financial statements. Therefore, if you have a question, and your accountant has web based access to your accounting data, corrections to the accounting information can be made, thereby avoiding the time for the accountant to schedule a visit and drive to your office.
In summary, just like the way electronic calendars such as Outlook or Google Calendar on our Blackberry’s and I phones have changed the way we utilize secretarial skills, online accounting software improves they way small business owners use accounting and bookkeeping systems to run their businesses.
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