Remember – time is money! What’s the cost to your business if you have to spend 30 hours a month of your time on your bookkeeping?
With this in mind, follow these 9 steps and you’ll be well on track to choosing the right accounting solution for your business.
1. Talk to your accountant first
There is nothing like expert advice. Your accountant is the best person to advise you on which accounting or bookkeeping system to use. Independent market research has shown that business owners using solutions recommended by their accountants have high levels of happiness (95 percent) and confidence (91 percent) with their bookkeeping – so don’t waste hours of time trying to review all the different options available on your own. Seek expert and well-informed advice!
2. Identify your abilities and preferences
According to the market research, one in three Australian business owners find that time is the biggest frustration when it comes to their accounting, so be honest with yourself about how much time you can afford to spend doing your books. Some solutions will require more time than others – particularly those ‘do-it-yourself’ accounting packages. So make sure you have an accurate idea about how much time you can (and want) to spend on your accounting.
Other frustrations reported by business owners included the stress, cost and complications involved with doing their books, along with the fact that their accountant has to re-do some of their work. Remember time is money and what is the cost to your business if you have to spend 30 hours a month of your time on your bookkeeping?
3. Understand your business requirements
Develop a checklist of what you need from your accounting solution – different businesses have different needs such as invoicing, debtors, bank reconciliation, reporting and/or payroll. This checklist will help you identify the best option for your business which offers just the right amount of features.
Some businesses need a full “do-it-yourself” double entry accounting package, while others are more suited to a simpler solution that handles only a few requirements.
Don’t be fooled into thinking the solution with the most ‘bells and whistles’ is the one that will do the best job. It is often the case that an accounting solution chosen solely on the basis of its features ends up being too complex to use properly.
4. Trying to do all your bookwork will not necessarily reduce your accounting fees
The market research shows that many business owners use their accounting solution because they think it saves them money on their accounting fees. Yet many are struggling with the time and complexity of their solution, as well as often supplying incorrect information requiring extra work by their accountant. The result can often be higher accounting fees as well as the wasted time and frustration from using an inappropriate package. Talk to your accountant about whether the system you are using (or thinking of using) really does reduce your accounting fees.
5. Find out what it costs
If you do decide to operate your own accounting software, make sure you understand the costs associated with using the support system, if there are annual upgrade costs or ongoing monthly costs, and what the potential costs may be if you need help or training. Desktop products usually have higher upfront costs but lower ongoing costs compared to the consistent monthly costs of online products. You should also consider the related technology costs. Desktop products require higher specification hardware whereas online products require a higher specification internet connection. Some packages may seem a good investment initially, until you consider the longer-term costs.
6. Choose a product than automatically imports bank data
While there are many features that you will be considering perhaps the most important from a time saving perspective is the ability to automatically import and process your bank data. Whether you or your accountant use your bank data as your core record of your businesses transactions or whether you reconcile your bank transactions with your invoicing and payments records, you will find that automatically importing and processing that data saves considerable time and reduces the potential for errors.
7. Check out the security of your bank data
Check what level of security your accounting solution offers. If your product get feeds of bank data find out how your data is being gathered. Some accounting solutions use secure feeds direct from the business owner’s financial institution, while others rely on ‘screen-scraping’ methods to obtain these transactions.
Screen scraping requires a business owner to provide their internet banking login and password details to a third party, which stores those details. That third party then automatically logs in to the business’ internet banking account at regular intervals, copies their transaction details and supplies them to their accounting services provider.
Make sure you are aware how your transactions are being obtained, and never disclose your login and password details to any third party. If you do you are likely to be liable for any fraud that may occur – whether or not it is related to the screen-scraping service.
Although the security risks from screen-scraping may appear low, cyber security threats are becoming increasingly sophisticated and ever more frequent, and the consequences of any issues could be significant. Are you prepared to place such mission critical information in the hands of a third party?
8. What happens if the company providing your software fails?
Make sure you conduct some basic due diligence on potential software providers, especially if you are considering a cloud provider where you do your accounting completely online. Cloud accounting solutions can offer great convenience, but make sure you know where your data is being stored, and how you can access it if something happens to your provider. If the provider of a desktop solution fails you will still have access to your data.
Assess the risks – what happens if you lose your data and what processes would you have to go through to get it back?
9. Switching isn’t easy
Make an informed decision before signing on the dotted line – switching providers is not an easy process and it takes time and training for you to learn how to use a new solution.
Make a list of the pros and cons of each potential accounting solution. There really isn’t a ‘one-size-fits-all’ product when it comes to accounting solutions, so review your options carefully. The time you spend now could save you significant time and money later on.
Be informed and seek professional advice. While some products are great for some people, for others they can create even more work. Don’t be swayed by hype or special deals.
