Areas where accounting software can make a difference
As your business expands, your financial data grows more complex. Handling business accounts in spreadsheets becomes confusing, time-consuming, and prone to errors. Growing business creates a need for a scalable accounting solution. To adapt to complex financial data, business owners have to think beyond spreadsheet accounting. The solution is accounting software.
Accounting software offers many features to optimize your business. From basic invoicing and billing, to tax calculations and project management, accounting software is an essential tool for your business’ financial data. It also helps manage clients, reconcile bank accounts, and generate insightful financial reports that help your business grow smoothly and continuously.
Let’s take a look at where accounting software helps you.
Invoicing and billing
Invoicing and billing are indispensable business functions and the main source of cash flowing into your business. Managing invoices on paper is tedious, time-consuming and error-prone. When you have recurring orders, it is not feasible to create physical invoices for each time your client buys from you. It is also difficult to track paper documents and remind customers of pending payments.
Accounting software addresses these issues effectively, and provides you with features that make invoicing easy. You can create recurring invoices instead of new ones every time for recurring transactions, and also set up automated reminders to ensure that clients remember about their payments. With an accounting app, you can track all your unpaid invoices, remind customers to make sure they pay on time, and prevent accidental missing or double payments.
The next step after invoicing your clients is getting paid. Collecting payments can be overwhelming if clients are not offered a proper system for making them. There is a two-part problem with payments: security and multiple currencies.
When clients pay you, they naturally look for a secure way to do so, and accounting software can give them that. You can integrate your accounting system with a number of online payment gateways that offer clients a swift and secure means of paying you. Payment gateways use two-factor authentication and 3D secure authentication, among many other protocols, to ensure that clients’ money is safe during transactions.
With clients around the globe, your business must be ready to handle all kinds of currencies. Online payment gateways connected to your accounting app can support multiple currencies and let you accept payments in your customers’ currency while still doing your accounting in your own currency. This removes discrepancies and extra calculations when it comes to foreign transactions.
Tracking expenses is vital for getting a grip on your cash flow. Accounting software helps you keep tabs on your expenses and categorize them to get a clear picture of where your money is going. Accounting apps make it easier to bill customers for the expenses you incur on their behalf. You can also use accounting software to upload expense receipts, scan them, and extract information from the scanned receipts automatically. This removes the need to store paper receipts and the risk of losing them.
Bank reconciliation is the core accounting feature of a business, and accounting software streamlines it. Connecting your bank account to accounting software directly lets you fetch statements from bank feeds automatically into your accounts and also secures your data against third-party threats. You can set up custom criteria and bank rules in your accounting software to categorize and match imported bank transactions automatically. Once your transactions are matched, you just need to verify and confirm them to reconcile your accounts. With simplified bank reconciliation, accounting software helps keep your business audit-ready throughout the year.
Timesheets and project management
A powerful accounting app should include a timesheets module to help you charge customers based on the time you’ve spent on a project. Timesheets help you manage your projects from budgeting to logging time and invoicing customers. Using accounting software to record the time spent on tasks helps you avoid overbilling or underbilling your customers.
You can even get your time entries approved by your clients before you bill them to make sure everyone’s on the same page. After a project is completed, timesheets help you compare your actual hours worked to your original budget so you can plan more accurately next time.
Inventory management is a key part of your business. Good inventory management is a prerequisite to ensuring sufficient stock, understanding your buying and selling patterns, and providing better customer service. It involves recording item information, tracking items, accounting, and generating reports. Accounting software helps with recording Stock Keeping Unit (SKU) codes, adding item images, creating bundles, and tracking the movement of items by serial or batch number.
When you receive an order for items, you can use your accounting app to create a sales order, convert it into an invoice after approval, and associate the appropriate taxes with it. You can track stock and set reorder levels for your goods to receive automated emails and place timely orders, so that you don’t run out of stock. You can also generate inventory specific reports to gain better insight and manage inventory more efficiently.
A good accounting app is designed to adhere to your local tax regulations and make working with taxes easier. When you have to work with multiple tax rates, accounting software can make calculating taxes faster, and help you apply the right tax to your transactions more accurately. It can also give you a better understanding of your taxes by generating tax summary reports to help you stay organized and ready for tax time.
As a business owner, you need to check your business’ growth periodically and make the right decisions to ensure your organization’s good health. Accounting reports help you understand your business’ financial trends and analyze growth patterns. However, generating reports in spreadsheets is very demanding as you need to consolidate data and enter formulas manually to create each report. Accounting software generates reports automatically, saving you time and effort.
There are three crucial financial statements that an organization must know: the cash flow statement, the profit and loss statement, and the balance sheet.
Accounting software has built-in reporting features that analyze cash flow and help businesses stay on top of it. You can generate profit and loss statements and balance sheet reports to help you understand the key financial aspects of your business, draw conclusions, and make informed decisions to steer your business in the right direction.
Besides the three important financial statements, an accounting system also automatically compiles information on other key aspects of your business like sales, purchases, taxes, inventory, and projects. All of this data helps you generate instant reports, make quick decisions, and maintain good business health.
Move to smart accounting today!
Keeping accurate records of your financial data at all times is vital for business growth. However, for maintaining proper accounts, you need a system that overcomes the drawbacks of traditional spreadsheets. Your invoicing and payments are perhaps the most vital cog in the wheel, and accounting software helps managing them efficiently where spreadsheets fail. Handling expense receipts is hassle-free with an accounting app, because it minimizes paperwork and prevents data loss due to missing or damaged documents.
Spreadsheets also fall short when it comes to billing for hours—you can’t efficiently log time for project tasks with spreadsheets. Accounting software solves this problem with timesheets that record hours worked and convert approved time entries into invoices. An accounting app also helps with managing your inventory, reconciling bank accounts and staying tax compliant.
And finally, with an accounting system, you can generate automatic reports, draw conclusions from report data and steer your business forward. Accounting is part of your business every step of the way, and a good accounting app like Zoho Books is there at every step to help you.