What Accounting System Are You Using?
If your answer to that question is, “I put all my accounting records into a file box and delivering it to our bookkeeper or accountant once a month or once a quarter (the catch up system),” then you really need to pay attention to this article.
In most cases, you are better served inputting your accounting data into some sort of accounting software yourself. This allows you to review your data in a more frequent and timely manner. By doing this consistently, you will prevent accounting mistakes that can occur when the data is outdated and all memories of what happened have faded. The system you use doesn’t matter as much as the fact you are using one. Using old manual systems are better than using no systems at all.
Most small business owners are way too busy to even think about entering their own accounting information. They may not realize though, that by doing so, they are giving themselves valuable information on a timelier basis, which in return will help them manage their business more effectively. There is nothing better than knowing at any given point in time how much cash you have in your account. Without entering your data on a daily basis, you will never know this information. You can call the bank and get a balance, but most likely there are many items in transit that aren’t reflected. How do you know what you owe your vendors if you haven’t entered your accounts payable into some sort of system?
Even if you have a handful of different manual systems to handle these types of issues, you are better off than being without a system. With modern technology and software, obviously we recommend some sort of computerized accounting system. Useful programs may range from the simplest (QuickBooks) to the most complex (JD Edwards). These types of systems offer consistency between all the different information streams of your operations (i.e. cash, accounts receivable, inventory, fixed assets, credit cards, accounts payable, debt, etc.).
Most small businesses would be fine with a simple system like QuickBooks or Peachtree. If your business has special needs for certain areas such as inventory control or point of sale, there are many software vendors that have specific programs designed for this which also integrate with QuickBooks or Peachtree.
There are two critical steps that need to be performed before you can implement a system. The first is the identification of your needs. The second is training you how to use the system. The time and money spent on these steps will go a lot further and will most likely be less than the time and money you are spending on the catch up system referred to above.
Business owners are the ones who have come up with the idea for their business. They are the ones who invested a lot of financial and sweat equity into the business, and they are the ones spending most of their time running the business. Based on this, business owners have the right to know where their business stands at any given point in time. Implementing an accounting system gives the business owner the power to exercise this right.
Another benefit to entering the information into an accounting system is the ability to provide timely information to your financial institutions, your bonding companies, your investors and any other users of your financial statements. The bottom line is that the more you control your information, the better you will be able to monitor your business and to provide the users of your financial information the information they need to help you. So, if you’re looking for a more advanced system for your growing company or you’re looking for a basic system for your new business, we can assist you!