Small business accounting software - The join between planning and accounting - Part 1 of 4

by Nicholas Proudfoot on July 2, 2009

business accounting software

The essential reports you need to view the financial activity, the financial position and the timing of the amounts of cash coming in and going out of your business are derived from the data and balances recorded in your chart of accounts.

Well run businesses know what they should track and measure and why. The detail of what they want to track and measure is reflected in the design of their Chart of Accounts which in turn is a mirror of what is in their Business Plan.

Well managed businesses always use business planning to forecast what they expect to happen in the future. They always begin this exercise with the end in mind

Good businesses set less than five clear objectives and then think through and decide the best strategies to achieve them.

Strategies are then translated into Activities with dates and priorities which are then communicated and assigned to the individuals or teams for execution.

The business plan documents the assumptions about what sales are forecasted to happen when, what the future financial activity, financial position and cash flow is expected to be.

Each assumption assists you in determining the financial targets and understanding the future financial impact. So it’s essential you are able to accurately track and measure these critical numbers

Cash provides the oxygen for every business and therefore it’s critical the supply and consumption is carefully managed to keep the business alive and help it grow and flourish.

For the purposes of good management and in support of prudent financial practises supporting information behind the critical numbers has to be accurately recorded and well organised.

This can only be achieved with enduring discipline, a well organised chart of accounts and good small business management software.

Because of the rapid emergence of SaaS systems, online small business accounting software now makes it possible for business owners to see real time view of progress of their business against their plan.

Every number in the accounts of a business has a story behind it containing events and characters the details of which cannot easily be recorded in an accounting system therefore Small business management software as opposed to accounting software is now an essential part of the foundations of a well run business.

Continued in - Small business management software - The join between planning and accounting - Part 2 of 4

 

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Reading the Profit and Loss - Part 2 - Expenses

by Nicholas Proudfoot on July 1, 2009

business accounting software

The next section down, directly underneath the Income section and mostly in the case of folks who sell Products is the Cost of Goods line. Reports in most small business accounting software will display this as COGS

This line represents the actual costs (COGS) associated with the Products you sold in the period you report from your small business accounting software. The objective of this line is to assist companies determine the gross margin/profit (the gross profit realised after acquisition of the stock).

The gross margin (a.k.a gross profit) is calculated by Income minus COGS. Gross Margin is often expressed as a percentage and to calculate the gross margin and express it as a percentage just divide the Gross Margin by the value of sales you made in that period. Now if you’re a Services Business life is a little more complex if you want to determine the Gross Margin you make on Services (and you should). The reports in some small business accounting software systems will help you determine this.

Visit the Small Business Heroes channel on Youtube for videos explaining the Profit and Loss and other accounting elements. It is standard practise to the Operating Expenses (business running costs) directly below the COGS line. The business running costs are known as the Operating Expenses and they tell us what was spent where and when.

Expenses are often categorised into sections representing key functions such as Sales, Admin, R&D and other departments. As you can see these sections represent major functions or centres of activity in a business. These rows detail the amount of money spent in a given period.

The balances in these sections are derived from Expense Accounts and it’s really important that you know and understand that there are two major types of Expense in any business. These are Fixed and Variable expenses.

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Bryan Ellis on the Explosion In Virtual Real Estate Investing

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Bryan Ellis is widely recognized as an expert in the fields of real estate investing and internet marketing, so it’s no wonder he’s regarded as a founding thinker of the new phenomenon of Virtual Real Estate Investing. I recently spoke with him about this topic:
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If You Have a Business You Need a Business Phone System

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It can seem outlandish, but your company’s overall success could be determined by something as straightforward as a small office telephone systems. Possessing a client friendly phone set-up that will manage multiple tasks and assist numerous clients at the same time can be considered one of the most significant elements that you must look at [...]

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Why a Virtual Phone Number Might Be Right For You

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Non-business company proprietors, as well as business proprietors, all over the planet have been looking into virtual numbers. They desire to know what these virtual telephone numbers are and how they may be of use to them. Below is a little information that may solve some of the queries that they have.
These are phone numbers [...]

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