If I were to ask you how much money your business is owed right now, how long would it take you to tell me the answer? If it would take you the entire morning to look through your records, then the chances are you could be losing vital income.
Splashing out on expensive accounting software may not seem a top priority for your business right now. The current economic banter is sending a chill down the spine of even the hardiest of entrepreneurs and we're all clutching on to those purse strings so tightly that our knuckles are getting stiff. But think about this: if we are heading into a recession, wouldn't it be better to feel confident that you're on top of the company finances?
Running a start-up can mean that you become an expert in almost every aspect of business. When it comes to the company finances however, you often need the help of an accountant of bookkeeper. But that's not to say that you shouldn't keep your eye firmly on your money and accounting software enables you to do just that.
But, unless you're a lover of all things financial, "doing the books" is one of those jobs that you put off. Let's be honest, who really enjoys spending their evening reconciling bank statements?
Before you unclench that fist and dip into your money bag, think carefully about what you really need software to do. This will avoid any overspend and also the headache of dealing with a package that requires an accountancy degree to understand. Here are a few pointers to consider.
Try it out: Most software companies will let you try the product for free on a trial basis. This is a great way to find out if it really suits your needs. If you have difficulty choosing between two software packages, you may want to try both simultaneously. This would require, for example, entering the same invoice in both systems. It is more time-consuming, but gives you an excellent idea of which package meets your needs.
Size matters: If you're a sole trader or your company has fewer than 10 employees, you may only need a basic package. You'll probably need the software to handle invoices, payments and bank reconciliation. If your staff is more than 10 then you need to start thinking about more sophisticated software which can handle payroll.
Are you tied in? Some software packages require you to sign up to an ongoing monthly fee. Seriously consider if this is a commitment you want to make as once you're in it can be tricky to move your data elsewhere.
Security first: Find out where your sensitive data is being stored and the security measures that are in place to safeguard it. Some companies do not like the idea of sensitive data being held remotely.
It's worth remembering that accounting software can do a whole lot more than just streamline your processes. It will project the image that yours is a professional organisation. If you're a plumber handing over scraps of paper with the amounts owed scribbled on in biro, it can be hard to get people to take you seriously. But if you're a plumber issuing professional looking invoices with your company logo emblazoned on them, the chances are your clients will think you have an accounts department that's on the ball. Customers are much more likely to pay on time if this is the case. If they're late paying, issuing a bright red invoice screams: "don't ignore this".
Software also allows you to know exactly what's going on with your cashflow at any given time. So before you sign off that next cheque, you can take a quick look at the accounts and see if you have enough money available to honour it.
A small investment now may mean a big saving when you most need it. And don't be blinded by the bells and whistles of some software packages; you may not need anything too complex. It is possible to get efficient software that does exactly what you need and yet comes with a reasonable price tag.
One of the most important points to remember when considering a purchase can be linked to that old adage of not living beyond your means. Don't spend a fortune on a piece of software and then discover that you'll only ever use 10% of its functionality. Only buy what you need. You wouldn't buy a brand new computer just to add up your shopping bill now would you?
Mark McLaren is managing director at Solar Accounts. For more information visit www.solaraccounts.co.uk
