Some companies try to manage their accounting tasks via Excel, sticky note reminders, and filing cabinets bursting with documents. Maybe they even pull it off. The accounts stay balanced. Vendors get paid. Checks go out. But what happens when the CEO asks for a report on all new customer revenue since the start of the year, or what quantity of a certain product is on hand?
If this is how you do your accounting, it might be time to consider a change. Accounting software can provide a number of benefits to businesses and bookkeepers alike, not the least of which is improved visibility.
Considering a purchase, but not sure you’re ready? Here are the five signs that your business needs accounting software:
1. You’re losing track of customers.
If you find yourself rummaging through your desk drawer or your computer folders trying to find that piece of paper or file where you keep customer financial information such as credit limits, transaction history, and discounts, it’s time to invest in an accounting solution that will let you keep all of this data in one place. Even better, you can include custom fields that help you track more unique information about particular customers.
2. Adding More Employees
The bigger your business grows, the harder it becomes to manage employee financial data. Accounting software can make it easier to track taxes, paychecks, and deductions for everyone on your team or client’s team. With all of your employee financial data in one place, payroll will be a breeze. In many cases, all you have to do is enter the hours worked and let the software handle the rest. Some vendors even help with printing paychecks and making direct deposits. Tax time will be easier, too, because the software can automatically calculate employees' deductions and payments based on the information they provide.
3. You need to keep track of your inventory more efficiently.
With a small operation, it might be feasible to have somebody go to your stockroom to see if you still have products to sell. But as you sell more and more products, this system won’t scale. Instead, you should find a way to store and update inventory data from a real-time system. Many accounting software vendors provide built-in inventory management features that let you record descriptions of each product on your shelves and automatically update your inventory every time you log a sale. Inventory features are especially powerful when connected to a point-of-sale system.
4. Invoices are a burden.
Sales keep a business alive, so you probably won’t complain if you sell “too many” of your products or services. But the administrative aspect of selling—invoicing—can become quite a burden as volume increases. Without the right tools, it will take much more time and effort to create accurate invoices.
Maybe you’re still using pre-printed forms or creating invoices using a Microsoft Word template, which means you have to manually input customer details, the products they ordered, the item number, prices, etc. With accounting software, you can automatically create invoices using the information from the sale. In many cases, you can even customize by adding your own logo and layout and selecting which fields to populate. Instead of typing, printing, and signing, you can use drop-down menus to auto-populate and email the invoice directly to your customer.
5. You need faster access to information.
The beauty of working in an accounting platform is that you can combine and manipulate your data at-will. Instead of parsing through hundreds of spreadsheet rows to reach a foggy conclusion, you can create powerful reports and dashboards with a few clicks. For instance, if you want to know gross profit for all customers during a certain time period, you can pull a customized report on just about every financial transaction your business had. Maybe you need to know what products sell the fastest during a particular month. Same story. You can get the answers you need much faster, which means time saved and a better decision-making process.
The true worth of accounting software for any business is in how much time it saves and how well it supports your growth. The time you spend setting up a series of spreadsheets is probably longer than the time you need to set up a new accounting solution. Most modern solutions are flexible and affordable, and you don’t need to be an accountant to use them.
If you’re trying to decide whether accounting software is the right choice for your business, you really only need to know one thing: do you spend and earn money?