No matter what line of business you’re in, the Accounts function is one of the most important aspects of your business. And even if you’re a non-accountant, it’s essential that you appreciate the power that accounts knowledge can give you– including how accounting software can revolutionise your business.
Depending on whose figures you believe, the SME sector in Ireland accounts for around 56% of the total turnover in the business economy, representing just under 50% of Gross Value Added.
These companies are involved in everything from manufacturing to software development, or from walking tours to pubs and restaurants. But two things link them all. Firstly, the need to understand how their businesses are performing, and secondly, the need to effectively manage their day-to-day account functions, anything from double entry bookkeeping to preparing a basic Profit & Loss Account.
For smaller companies, in particular, the idea for a new business often comes from either someone with a marketing background, or someone who has worked in a management role within their chosen field.
This means that very few of them are qualified accountants. And until the business is up and running for a year or two, it’s unlikely that they will be able to afford the luxury of a fulltime accountant or financial controller.
Despite this, however, invoices have to be issued, cash has to be collected and accounted for, VAT and tax have to be sorted – plus a whole host of other accounts-based tasks that are absolutely essential to the health and wellbeing of the company.
In this scenario, the owner or management team have a real problem on their hands. At least one of them will have to develop a working knowledge of the accounts function.
But in looking to do so, they can take heart from the fact that top-class accounting software is available to them at very affordable prices. Apart from the time-saving involved on repetitive functions like double entry bookkeeping, software like Sage 50c (formerly Sage 50) is full of handy features that will give them the management information they so desperately need. This can be anything from month-on-month invoice variations to debtor days.
All this is meat and drink to accounting software like Sage 50c. And while the time may come when the company needs to invest in a full-time Financial Controller, choice of the correct accounting software can postpone that day until the company is able to afford it. And even better news is that when you eventually hire a Financial Controller, there will be no need to change your software.
And no matter how little of an accountancy background you may have, you can still understand your business so much better via your accounting software. The main features of your package are explained in simple, non-accounts jargon . Remember, too, that there are practice and demo data section available to you that will you understand the different tools available.
Another benefit of this type of accounting software is that functions such as payroll or credit card processing are available to you as add-on modules, so as your business becomes more complex, you can keep pace with it.
Well for starters, software like Sage 50c facilitates simple and accurate tax computations, This means that management know in advance what their tax liability will be, and can ensure that there are no nasty surprises that will impact negatively on cashflow.
Another benefit to non-accounts members of management from professional accounting software is that they have summary data on hand if they need to talk to their bankers about raising working capital, or perhaps seek private sector investment. The more information you have at your fingertips, the more professional and authoritative you’ll appear.
Also, because Sage 50c automatically deals with all aspects of double entry bookkeeping, it makes it that much easier to observe the workings of double entry. And until you get a firm grasp on this fundamental principle of any accounts function.
Another big plus of a suite of accounting software is that it will automatically spit out the reports that you need on a weekly or monthly basis if you are to genuinely stay on top of your business.
The most common of these are things like:
– Accounts Receivable (how much money is owed to you by your customers at any given moment)
– Accounts Payable (how much money you owe to your suppliers or creditors at any given moment)
– Sales (how much revenue you are generating from selling your goods or services)
– Purchases (raw materials for manufacturing or any other supplies that you buy on behalf of your business)
Even better news for non-accountants is that they can delve down into any of these reports to an almost limitless degree. For example, you could create one report for raw materials, and a separate report for other purchases such as packaging or even postage.
A further benefit to management with little or no accounts expertise is that their accounting software can offer them a greater level of security than manual, paper-based systems. And in many businesses, accounting data may often be sensitive in nature, so it’s comforting to know that it’s hosted in the cloud and offers multi-level security features that make it pretty much bullet-proof. Management can decide to restrict access to only a core team, significantly reducing the likelihood of theft or fraud.
It’s also worth pointing out that accounting software like Sage 50c is highly intuitive to use. And the more you use it, the more confident you become, which means that you’ll soon be looking to explore some of the more advanced features that can add so much to your company’s smooth running. If you can understand the inner workings of your digital TV service, then you definitely have enough ‘smarts’ to investigate the mechanics of your accounting software.
The bottom line is that, although you may initially just use it for simple functions like double entry bookkeeping, you will soon be using your software like a pro. And when the time comes when you eventually have a Financial controller on board, you’ll be well equipped with the accountancy grounding needed to converse with him in a meaningful way.