There’s a lot to think about when you’re starting up your own small business. At times, the workload can appear overwhelming. Many decisions will have to be made constantly about how you are going to market your goods or services, source your raw materials, refine your services to meet customers’ needs, comply with the legal framework of your chosen sector and keep records of your activities and finances. Let’s focus on the last of these points – making sure you are recording the key operational and economic data which underpin good basic financial management.
Bookkeeping and accounting are not at the top of every fledgling entrepreneur’s ‘to-do’ list for a number of reasons. These might include:
a ‘fear’ of numbers or little confidence in dealing with figures
having limited previous experience of having to keep records of operational activities or sales and purchases
an expectation that the financial transactions can all be dealt with by a bookkeeper or accountant at some point in the future, once the business is up and running
not realising that financial information, when reviewed early enough, can tell the business owner so much more than whether they are making money or not
an unwillingness to engage with a financial management professional because of perceived costs
believing that because a business is 'small', keeping accurate and up to date records is not that important compared to all the other plates you have to keep spinning
It’s true that as business activity increases and there are more transactions to process, managing the finances can become quite a complex and involved activity.
For example, correctly applying VAT and other taxation rules, payroll processing, bank reconciliations and preparing reports for bankers can take up more and more time, leaving less productive resource available to you to actually make money.
However, the good news for ambitious start-ups is that there are some really user-friendly accounting packages on the market that give you back valuable time by simply adopting financial management best-practices from the outset. These packages, such as Xero and FreeAgent,
sit in the Cloud and are available as ‘Software as a Service’ (SaaS) on an affordable monthly subscription basis. Amongst many other advantages, these SaaS products have the following bookkeeping and accounting benefits over traditional desktop package(i.e. one program stuck on one computer in one place) packages:
broadening your understanding of the importance of the role of effective financial management in business as you go about your daily activities
learning how easy it is for you and your staff to keep your books up to date on the job, laying the foundations for real-time management reporting – even recording sales and purchases when you are ‘out of the office’
exploiting the communication links of SaaS by authorising your accountant to share your financial management software – any queries you have about transactions can be sent direct to the experts
for rapid resolution from within the software itself
gaining access to your own data 24/7/52, wherever you are, on any web-enabled device and choose to work on your finances whenever you want to
– this interactivity will help you break down any barriers to understanding or fear of your finances, encouraging you to utilise your first-class management information to improve your decision making
increasing your competitive advantage over rival businesses which have to wait until the end of the month or quarter to be told if they are in profit or loss – with real-time info you can see your results as they currently stand and can quickly fix costly problems or do more of what’s bringing in the cash!
accessing efficient SaaS business accounting packages promotes best practice without any real effort, simplifying your back-office processing and making the production of tailored management reports really easy
So our recommendation to start-up SMEs is to trust your financial management to a SaaS option in the Cloud from the outset. Don’t worry about the security of your data – the market-leading packages all use encryption to internet banking standards. The earlier that your financial management practice is assisted by always-on, intuitive, attractive, even interesting bookkeeping and accounting software (designed for SME users, not accountants!) the easier your journey towards becoming the knowledgeable owner of a profitable, enduring and well-run business will be.