If you have to balance the books, chase invoices, manage suppliers as well as generating new business, worrying about the latest technology is probably the last thing on your mind. And if you are more comfortable with a pen and paper than the latest software, it could seem that buying, installing and learning it might not be the best use of your time.
Wrong. This is exactly when you need to worry about it. Buying an accountancy software package can slash the amount of time and effort you put into managing your finances.
From reminders for chasing payment to generating invoices, a good package is like a virtual accounts department. It can tell you how much you are owed and by whom; how long it takes you to pay your bills; what you have in stock and what you have in the bank at any moment in time.
More importantly, it could also give you those vital breakdowns of how much you are making on each job, product or sale. And if you enjoy working with numbers you can produce your own profit and loss account (P&L) or balance sheet. Apart from anything else this could drastically reduce your accounting bill every year.
But if you are like the majority of owner-manager businesses, perhaps you are still working from a box of receipts and calculations on the back of an envelope. If you don’t run a big stock inventory, employ a large workforce or send out a lot of invoices there probably is no need for an all-encompassing system.
It is perfectly possible to work with an excel spreadsheet. That is exactly what Adrian Perkins, proprietor of Cambridge Traditional Products has done. Having tried an accounting package several years ago, he uses a spreadsheet that his accountant helped him draw up. Perkins is happy to spend slightly more on fees knowing that he has peace of mind.
“I feel happier having an accountant as part of the process one of the important reasons for having an accountant is that they have a watching brief and can see alarm signals coming. If they are just looking at a print out of your P&L they won’t necessarily see it,” he explains.
At the other end of the spectrum is just-sites.com. Financial controller Gavin Hockley explains that after the company was bought out from its previous owners they had to invest in a brand new accounting and payroll system. And while the company started small, they had to take into account future growth.
“We are still growing. If you are running at a 100 miles an hour you just want to concentrate on the revenue rather than unnecessary changes. It is worth spending a bit of extra money on software that is a bit more flexible. So when it comes to a time when you want to concentrate on the business day to day you can.”
Among the main considerations was the system’s ability to integrate with windows; segregate profit centres and cost centres; analyse information by product line, department code or job number; as well as the potential to cope with internet transactions in the future. That meant a five-figure investment – but the system should last quite a few years.