Why don’t businesses make better use of their accounting software?
I recently visited three different companies, all different sizes, doing very different things and they each had cloud accounting software. One Xero and two QuickBooks.
They all had one thing in common – they aren’t allowing themselves to get what their businesses need from their chosen software.
Here are some of the stumbling blocks.
Your accounting software must be your go-to place for financial information – so kick out all those spreadsheets that people are relying on to manage sales invoices, who you owe money to and whatever else.
Create useful reports in your software that produce the necessary financial information and make sure everyone who needs access has access.
Create your management accounts in your accounting software and every twelfth set will become your year-end accounts.
You won’t be a spreadsheet-free zone but use spreadsheets to give additional insight rather than to do the work that your accounting software can do better.
➡️ Your accounting software needs to be the font of all knowledge.
One way to make better use of accounting software is to be aware of and use the various tools that help you produce more useful numbers and shed new light on business performance.
Let’s look at Profit Centres
If you have several different business streams / divisions then introduce profit centres to your bookkeeping so you can see profit or loss by business stream.
Use “classes” in QB and “tracking categories” in Xero to establish profit centres.
Ensure you include the relevant profit centre in the bookkeeping transaction for each sale and expense.
Hey presto! You can measure profit and loss by business stream / division / profit centre.
Profit centres are just one example – more tools such as projects and locations are available.
Financial transactions happen every day – so, to remain up-to-date, bookkeeping should be continuous.
In a larger business daily bookkeeping is imperative.
In a smaller business you can get away with bookkeeping happening less often – but ditch the idea of giving everything to your bookkeeper / accountant once a month.
➡️ Be regular – but not like Halley’s comet
Make sure everyone knows how to use your chosen software properly. This isn’t just to do with data entry, it’s also:
➡️ Make sure everyone knows what they’re doing and how best to do it
The businesses I visited had one other thing in common – they all wanted to start making the most out of their software.
Good for them.
How about you?
We provide in-house training for FreeAgent, Xero and QB users and we do a lot of work with businesses of all shapes and sizes to help get their financial processes and reporting running like a well-oiled machine.
Call Michael Austin on 020 7125 0270 or email info@bluedotconsulting.co.uk and let’s have a free-of-charge chat about your business.
Michael
Related links:
Do you have the right financial information to run and improve your business?
In-house accounting for a growing business – often the right answer but how do you get there?
Complete your team with our Fractional CFO service in London
Blue Dot Consulting provides accounting and business advisory services to clients across Central London, West London and South West London, with particular focus on Fulham, Hammersmith, Richmond, Putney, Wandsworth, Kensington and Chelsea. We help local business owners make better financial decisions and plan confidently for the future.
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