The key to a satisfying and long-lasting relationship with your business’s accounting software is, first, choosing the most appropriate solution, and second, extracting maximum value and performance from it. For advice on how to achieve all that, read on.
Ask any business owner what is the single most important tool for successfully running their business and the answer will inevitably be accounting software.
Therefore it’s vitally important that plenty of research should go into choosing the right option for your business.
Business owners are united in their concerns and considerations around selecting and optimising accounting software – and providers are generally in agreement over how to satisfy them, and on the issues business users currently face.
Reckon New Zealand GM Catie Cotcher reports forecasting, cashflow and compliance continue to be top-of-mind for businesses, and benchmarking is always a hot topic too.
However, what’s becoming increasingly key for business owners is getting up-to-date and accurate information about their business as soon as possible.
“By having the right accounting software in place, it helps create a seamless relationship between the business owner and their accountant, book-keeper or financial advisor,” says Cotcher. “As part of this, businesses also want advice on how to get the most out of their accounting software, ensuring it is giving them the information they need, and that they’re paying for the right features.”
Oliver Smith, Xero New Zealand’s partner sales director, says the most important element for business owners to consider when choosing and using accounting software is time.
“Specifically, how much of it is this software going to require? And will it take them away from the day-to-day management of their business?”
Accounting software needs to be efficient and intuitive because most business owners don’t have an accounting background, nor do they want to spend tens or hundreds of hours understanding accounting terminology, adds Smith.
Cloud platforms and apps particularly come to the fore, he says. “With cloud software the ability to access your system from anywhere in the world saves business owners much more time than traditional desktop software.”
Having an app on your smartphone makes the world of difference for someone like a tradesperson too, as they can invoice customers on-site the second the job is complete, which means less admin back at the office and, in most cases, faster payment.
“The other big issue to consider is visibility of the performance of the business and, most importantly, cashflow,” says Smith. “Small businesses live and die on cashflow and they need to be able to see at a glance where they stand at any given moment.
“This is where cloud solutions win out. Being able to access your data anywhere, anytime, with real-time information from your bank loaded in, gives a business owner the ability to make decisions much faster and with more information at their fingertips than ever before.”
Upgrading or switching?
For businesses looking to upgrade their accounting software or switch service providers, the advice is to seek professional help first.
DIY might be tempting, but fixing mistakes and any unnecessary re-work will be costly.
Lisa Martin, MD of specialist
book-keeping and accounting firm GoFi8ure says it’s important to first make sure your old system is in order.
“Are all your bank transactions, GST, payroll, debtor and creditors reconciled? A professional will understand any risks involved, mitigate them, have industry knowledge and uncover alternative options. Plus ensure business disruption is minimised and perhaps even implement better internal systems and controls.
“It is their job to think of things you may not have considered.”
Nowadays migration is relatively straightforward, with streamlined systems available to lessen downtime and disruption.
Xero’s Oliver Smith says it’s important to talk to your industry peers to see what they recommend, and why.
“Also, set aside time at the beginning to properly understand the new system by using the education and training tools provided. A few hours invested upfront will pay off dividends later.You’ll make fewer mistakes and better understand the more efficient ways to manage your business.
“If you use an accountant or bookkeeper, work with them during the switch-over. They will likely be more familiar with the system than you, and should be able to help you through the process.”
What are the warning signs?
There are many instances of a mismatch between software platforms and businesses, and many SMBs don’t actually require all the features of their accounting software, says Catie Cotcher.
Reckon’s research reveals that most businesses only use 20 percent of their accounting software. The other 80 percent is largely redundant and adds a level of confusion.
“A solution like Reckon One comes in handy because it allows you to connect to what you need, pay for what you use, and it keeps it simple. There are also third-party apps designed for specialist industries and services that are useful,” says Cotcher.
Of course, often businesses simply outgrow their initial business software. So what are some of the early signs?
Lisa Martin says it could be as simple as a single sign-on versus the need for multiple-user access. Perhaps reports don’t run, transaction limits are reached, the number of staff has reached its maximum, or you now are selling offshore and need foreign currency capability.
You may be unable to obtain key metrics from software needed for external financers or shareholder board reporting. Can you easily identify profitable and non-profitable areas in your business? How long does it takes to get month-end data? Is it timely and still relevant?
“Moving back and forth between different systems is OK provided the data is flowing back and forth and you trust that this is happening correctly,” adds Martin.
“Can you teach someone else the system? If not, likely the system or systems are not right.”
If you’re spending an extraordinary amount of time on your accounting system, that can be a sign too. Or if you’re having to constantly export things to Excel and manipulate the data to understand it.”
“The best accounting systems require very little time to maintain,” says Smith. “The data should flow quickly and easily from your bank to your system, and things like reconciling your bank account should take just a few minutes.
“The reporting should be easy to use and provide you with genuine insights about how your business is performing in easy-to-see visualisations. If it isn’t happening like that, then maybe it’s time to look for a system that can make that happen.”
If you’re just starting out in business you may need to change software as your business grows. But there are many solutions that can grow with you – and scalable solutions that don’t require you to purchase all the ‘bells and whistles’ when starting out.
No one accounting system will do everything for your business. An important consideration, says Oliver Smith, is how well the system links into other systems you want to use.
“Most start-ups will look at cloud systems to manage the non-accounting side of their business – maybe Shopify if they run a web store, or WorkflowMax if they are a design business looking for a job management tool.
“It’s crucial that whatever accounting system you choose, it links seamlessly to those other systems so you don’t waste time importing and exporting data.”
Matching accountants and software
There was a time when accountants might favour one particular software solution and encourage clients to adopt it. Today, however, they’re moving to a more agnostic and generalised approach because they realise there are solutions that may, or may not, be best suited for a certain client, says Reckon’s Cotcher.
“These days it isn’t necessarily a one-solution-fits-all – more what is going to be best for their client. This gives customers options which is always a win-win.”
She says certain software, like Reckon One, can be optimised to suit a client’s specific needs and adjusted and tweaked as their business develops.
GoFi8ure’s Martin believes accountants and book-keepers should tailor their requirements to suit your business.
“Having a business plan allows you and your advisors to see what’s required for your business.” Many local education providers have night classes explaining how to complete these, she says, or a Google search will often find prepared ones.
“Prepare a checklist for your current needs and potential future needs. A bookkeeper will talk you through this process and should have a checklist asking questions such as: Do I need point of sale systems? Or inventory? Do I need to be GST-compliant? Will I have staff and, will I export goods?
“A retailer versus a manufacturer will have various differences, such as POS systems but commonalities, such as inventory systems. Both may need a payroll system.”
Oliver Smith says while your accountant’s advice on software is important, it doesn’t mean you should be forced to use a system that doesn’t work for you or your business.
“Most accountants are flexible enough to allow you to use the system of your choice, but if you feel like you are being railroaded into something that won’t work for you, then you can always switch accountants.”
Switching to the cloud
In 2017 cloud-based accounting software is still winning converts. Software-as-a-Service (SaaS) is pretty much the default mode of delivery.
The benefits of cloud delivery are now well-known by business owners. The big one is the risk factor. Smith reminds us that data is far more secure in the cloud than sitting on your desktop. “Your office laptop can be stolen, or you can lose it in a fire, but as long as your data is in the cloud, it’s totally safe.”
So in terms of business continuity in the face of natural disasters, such as earthquakes and flooding, the cloud is the way to go.
“Cloud technology is great for staff who have family or lifestyle commitments and may need to work from home for a day or be a virtual team member,” explains Lisa Martin. “You don’t need everyone in one location to get the work done.
“Globalisation is narrowing geographical boundaries so offering a cloud based solution has become quite important for software providers. Why would I choose to be bound by location and desktop software when cloud software offers flexibility and anywhere, anytime advantages?”
Being on the cloud means your system is always up to date and there is no waiting for downloads or patches to apply, adds Smith. “It also means you can give your trusted advisors, your accountant or book-keeper, access to your financials and you can collaborate in real time.
“No more emailing insecure copies of your data or only talking to your accountant at year-end or tax time, when it’s too late to fix any problem.”
Looking at accounting solutions from a macro perspective, Smith believes global platforms have the edge.
“A global platform means bigger scale, which not only means more money to invest in product development, but access to a wealth of data about what different businesses want and need from their software.
“Global also means that if your business is looking to export, you already have a leg up into that market and can easily connect with other businesses there.
“Xero is available all over the world and has over one million paying customers, which means that our New Zealand customers are benefiting from that global scale.”
“We’ve also started rolling out data about credit scoring. So when a Xero user is adding a new business customer, they can get a quick view of that business’s credit rating,” he says, adding that to use Xero business owners don’t need accounting knowledge.
“Our machine learning algorithms figure out what kind of transaction you are inputting, and suggest the correct account code – just like autocorrect on your iPhone.”
