Is Accounting Software Just Another Brick In Your Business Wall?

You probably already know the statistics regarding the survival rate of start-up businesses in this country, nearly 80 percent of small businesses don’t survive the first three years. Only 5% of online businesses survive that same period.

In the words of Professor Julius Sumner Miller, Why Is It So?

Firstly, The World Bank Study suggests Australia is the seventh easiest place to start a business (out of 189 regions in the world) and the 4^th easiest to get credit. We have very few start-up barriers and on average it takes just 2 days to get up and running. Baited by the reach and power of internet there is a generation of people now looking to ‘get rich quick’ using online tools including social media. They are impatient and tend to pull the start-up trigger before seeking professional advice. As such, their business is built on rocky foundations which might explain the poor survival rate.

Laying the foundation ‘bricks’ of your business is critical and they include the right business structure, appropriate insurances and a business plan that incorporates a marketing plan and cash flow budget. Entrepreneurs in a hurry often bypass getting professional advice yet the consequences of the wrong tax structure, inadequate insurance coverage and a lack of legal advice can be catastrophic. In this blog we are going to specifically examine the importance of having the right accounting software in your business.

Another Brick In the Wall

When it comes to accounting software, a lot of business owners think like Pink Floyd, “All in all it's just another brick in the wall”. However, your choice of accounting software is the cornerstone of your business foundations. Poor record keeping is one of the most common reasons why businesses fail and one of the biggest mistakes small business owners make is they buy accounting software beyond their business needs and level of accounting skill. This usually means your accountant has to deal with ‘computerised shoebox’ records that cause frustration, delays and extra costs. Our mission is to help small business owners like you reduce the cost of compliance so before you rush out and buy a software package you need to consider:

1. Your Business Needs – do you simply need basic bookkeeping or do you also need invoicing, debtors control, creditors, inventory management and a full general ledger?

2. Your Level of Accounting Skill - Do you understand double entry accounting (debits and credits) or do you just have basic bookkeeping skills?

3. Do you want to use a cloud based accounting solution where all your data is stored online or do you prefer a desktop solution where your data is stored on your local computer. (There are pro’s and con’s that we will address another day).

If you match your business needs with your level of accounting skill you will reduce your bookkeeping frustrations and fees. As an entrepreneur you probably work long hours and let’s face it, the bookkeeping aspect of running a business isn’t glamorous. This probably explains why the bookkeeping function is often a low priority but without a system in place you can’t measure and monitor your business’ performance. If your record keeping is a dog’s breakfast you’ll end up with paperwork everywhere and miss paying invoices that could impact on your credit rating. You’ll probably delay sending out your invoices and monthly statements that will slow your cash flow. Remember, your debtors could also be facing similar cash flow issues and you need to be paid first, not last.