The big problems with most small business financial accounting systems

- Saturday, July 01, 2017

TaxOld-fashioned accounting systems are seriously flawed. And that can have dire consequences for small business. 

 

Until recently there were essentially 3 common types of accounting system:

  • A manual system of books and records, like those big cash books.
  • An Excel or other spreadsheet-based system
  • Desktop accounting systems such as Sage Line 50

And they’re all flawed.

For example, with a manual system it simply takes too long to write up the transactions. And your time is too valuable for that. So whilst cheap, it’s a false economy.

And spreadsheets aren’t much better. Yes, they automatically add up columns of numbers, but it still takes way too long to enter the information.

And did you know…

Accountants hate manual and spreadsheet books and records. It takes them more time too and you end up with bigger accountancy fees.

More sophisticated business owners do things better…

Basically, manual and spreadsheet-based accounting systems don’t cut it. And for that reason, most proper businesses use a desktop accounting system to record their financial transactions. And whilst that is a much better way of doing things, they are still flawed.

But they’re all flawed

Here are 4 big problems with manual, spreadsheet, and even desktop systems:

1.Staying legal – your financial data is critical. If you lose it you risk fines and penalties from the tax authorities for not keeping proper accounting records. So what happens if you lose that information? Whilst theft and fire might seem remote, they are possible. Perhaps more likely, if you have a desktop based system, is hard drive failure.

2.Wasted time – data processing, i.e. entering your invoices, purchases, bank transactions and so on, is time-consuming. It’s the reason why there is a bookkeeping industry. What if you could save hours of time every single week?

3.Hidden costs – with all 3 of those common accounting systems there are hidden costs from the value of your time, maintaining back up routines, software upgrades, additional accountancy fees to solve problems, and much more.

4.Staying in business – running out of cash is the number 1 cause of business failure. The solution is to have access to all your important numbers 24/7. With old-fashioned accounting systems you have to wait until everything is up to date and for the time taken to create useful management reports. That takes time.

So what is the solution?

The world is moving to the cloud. You saw that with banking (now everyone uses online banking). It’s now happening with accounting systems. Over the last 12 months we have seen a big shift to cloud accounting systems.

Businesses are making this shift because there are so many big advantages of a cloud accounting system.

 

Find out about the benefits of cloud accounting

Our firm specializes in cloud accounting systems and are Xero Gold Partners.

We are running a Free Xero workshop on 27th July 2017 from 4-5 pm so sign up here to secure a place
if you want to know more about cloud accounting software. These workshops will be run monthly and are open to both clients and others as they are informative and trouble shooting.

If you can't make it get in touch to set up a meeting