Regardless of size, all businesses are legally required to keep accurate financial records; but that’s not to say that ‘doing the books’ should leave you swamped with admin. The right software can make it a lot easier to keep on top of your requirements, and at the same time give you valuable insight into your business — especially when it comes to budgeting and forecasting. Read our guide to the essential software you need to be your own accountant so you can save money without the stress.
Adopting accounting software doesn’t have to involve a big investment either, and nor do you have to be a financial expert to get to grips with it. So read on to discover how this type of tech can make a difference to your business, as well as learning about the key features that are worth looking out for when choosing a package.
What can accounting and budgeting software do for your business?
Not all businesses need specialist accounting software. To take one example, if you’re a self-employed consultant, you might find yourself handling just a few client invoices a month, and very little in the way of expenses. It’s still important to log these items, both for tax purposes and for forecasting business growth, but this can easily be done without specialist tools. In this instance, you could keep track of everything with just a couple of spreadsheets. One to list paid and unpaid invoices along with outgoings, and a further spreadsheet summarising this information and incorporating your forecast (i.e. predictions) for future income over any given period.
When to think about getting software
Your business might have very few transactions to handle in the early startup stage, but once your customer list gets bigger, and especially if you take on staff and property, your finances can quickly become a lot more complicated. Once you start to feel that juggling individual spreadsheets and tracking transactions is eating into time that could be spent on better things, this is a good sign to start investigating some specialist software.
The benefits of accounting software
The biggest potential benefit is greater efficiency. Instead of inputting the same data in lots of different spreadsheets, you can log a transaction once, and it’s automatically included in all your key financial reports. Automatic calculation means there’s less scope for error, while day-to-day tasks such as drawing up invoices and handling bank transactions can become quicker and easier.
Ease of use ought to be a top priority as well. The software you are looking at might be packed with features, but this counts for little if it’s hard to make sense of it all. As you think about what’s relevant to your particular business, it’s worth paying special attention to the following features…
Keeping track of what’s coming in and going out of your business is a key element of budgeting and forecasting. If you receive a bill for a business expense, for instance, your software should allow you to log it easily, and either pay it immediately or set a date for payment. It’s also useful to be able to scan receipts into the system. For regular commitments such as rent and utility bills, you should be able to timetable automatic payments.
A level of professionalism
When billing customers, the ability to generate personalised invoices with your logo can help to give a professional impression of your business; as can the ability to send e-invoices. Firstly, you enter in the customer’s details, and this information is then in the system, so handling repeat orders becomes quick and easy.
For income and expenses, ‘automatic reconciliation’ is a vital feature to look out for. This means that the figures for each transaction flow instantly into the relevant section of your current balance sheet and all other reports. This is so you can always see an up to date picture of your business’ finance. Linked to this is the ability to ‘tag’ expense entries according to category (e.g. variable or fixed expense) so they will always appear in the correct section of your accounts.
When looking at the reporting features of a particular software, it’s worth focusing less on the number of separate reports it’s possible to generate, and more on whether the software is capable of giving you the information you need in a straightforward way.
The basics include a balance sheet and profit and loss account. But on top of this, you should also be able to generate documents and graphs that give insights into specific financials.
For revenue forecasting, for instance, a graph detailing month-by-month revenue increases in percentage terms allows you to clearly visualise your progress to date. This thereby helps you forecast what to expect in the near future.
Cashflow is another area where reporting can help you better understand where your business is heading. Essential features to look for include automatic alerts and reminders in the event that customer accounts become overdue, and alerts in the event that you are no longer on track to meet revenue estimates.
Choosing the right package for your business
Two of the UK’s biggest names in business accounts for smaller businesses are Sage and QuickBooks. As well as essential bookkeeping and reporting features, the basic packages from each of these providers include the ability to submit VAT online and automate bank feeds. Even if you don’t opt for these providers, they both give a useful snapshot of the type of features to look out for.
Accounting, however, is just one area where the right software can make a positive difference to your business. For further tips on making budget management easier, head over to our help centre.