The reports that come out of your accounting system tell the final story about how successful your business operations were. It makes sense to ensure it’s set up as well as possible, to give the best opportunity to learn how well you’ve done and how you can do better in the future.
Having the right type of software for your business is a great start. Many businesses use an ‘off the shelf’ system recommended by their accountant – in most cases this is fine. Unless your accountant had an in-depth conversation about your needs from the software, you could be missing out on great opportunities.
For example, does the system have good stock/job management function or could you benefit from an ‘Add-on’? Does it handle foreign currency transactions?
- Once you’ve got the right system – is it set up right? Have the right opening balances been entered? If not you could be relying on wrong information for vital business decisions. For example, do you lump all sales into one account, or could they be split by type, division, customer type, so you can see which are most/least profitable?
- Are you able to confidently print out reports from the system for stakeholders e.g. shareholders, lenders, authority bodies etc. If your reports are wrong it could cost you much ‘egg on face’ and confidence of lenders etc.
- More importantly, are you looking at the right reports every month? There are hundreds of reports in most systems, however, most people look at just a handful. You could be gaining so much intelligence about business performance if the reports are set up right and understood. For example, if you’ve got a budget setup and entered into your system, you can see at a glance if things are on/off track every month and fix it quickly to improve profit.
- Are you using all the functions available to you? For example Purchase Orders – they allow you to advise suppliers accurately about what you want and check against them when the order comes in that it’s right type, quantity, and price. If you put in place a process for authorisation, you could also save misspent money.
- Cloud based systems can save lots of time in data entry. For example, automatic download of bank transactions could save hours every month. This is time you and/or your bookkeeper could be doing other things e.g. making more sales, chasing debts, analysing information for profit improvement etc.
- Avoiding spreadsheet madness. Often spreadsheets can be eliminated if your system is setup to track the information you’re double entering into them. For example, many systems have a link to cashflow forecasting systems – they automatically suck data from your accounts to populate cash flow forecasting. This keeps you informed of the position constantly without hours needed entering transactions into a spreadsheet.
- Setting up recurring transactions saves lots of data entry time. For example regular monthly payments like leases, rent etc. can be automatically entered.
- Checking your tax codes are set up right and reconciling them could highlight errors in GST returns – creating reclaim opportunities.
- Correct password and access setup could save you from fraud.
- Forms customisation could present marketing opportunities e.g. on customer invoices – up-selling other products/services.
- Using job quotes/budgets helps you to improve profit in the future by what you learn from the reports against actuals.
- Some systems now have a function to send invoices and see when they’ve been opened by customers, to avoid the “I didn’t get it” excuse and speed up payment.