small business accounting software

Ask any seasoned business manager how much time they spend dealing with problems in the business and the answer will almost always be a substantial amount. Problems have a habit of leaping out at you when you least expect them. To solve a problem you first have to know that you have one. Business management goes hand in hand with problem resolution.

In summary, every business manager has to have good financial controls. Think of financial controls as a sentries that sound the alarm when a financial problem occurs. Best practise is to design financial controls into the reports derived from small business accounting software. small business accounting software should be able to report cash flow from profit period by period and compare it with the budgeted amounts. The safest way to commence with this exercise and keep it simple is to highlight a group of the key numbers you need to track and creating just a few reports that present them in a simple format.

Monitoring the margins you expect from revenues is critical and any deviations should receive immediate scrutiny followed by swift action to resolve the issue. Pay close attention to any minor change in the volume of products sold or the expected margins as this behaviour can quickly lead to a significant decrease in profits. Fixed costs should be closely monitored in the early part of the financial period to be sure they are following the business plan. Good small business accounting software should let you easily create debtors reports (people who owe you money) and the results in these reports should be monitored closely.

Experience is the way to learn and over time you will learn which financial controls should be highlighted in your accounting reports, just make sure you have the right small business accounting software that can generate these.

business accounting software

I make a least one video per day like the one above to help the people who use this low cost replacement for small business accounting software (for example Quickbooks) to master new skills and improve their business (the video above took about an hour to make). There is a lot of hype about information marketing and there are unscrupulous marketers all over the internet who will try and take your money in exchange for showing you methods that simply won’t work, here is a method that does. Designing and creating your own product gives you a higher return on your investment, builds your confidence and allows you to refine and tune what you have so as you can sell more.

When I first saw how simple it was to create a video and upload it to YouTube or turn it into a podcast it made the hairs stand up on the back of my neck and I concluded I should share this essential skill with everyone. I love these video distribution platforms as they really have helped me sell and build a reputation for my low cost alternative to conventional small business accounting software such as Quickbooks or Peachtree.

I cannot stress enough that the key to a good video is to use a technique called storyboarding, it sets out what you will say, how you will say it and helps you develop the detail of your ideas. Don’t even think about using pen and paper to create a storyboard, you can save yourself a lot of repetitive work and let your creative powers loose by using slide creation programs like Microsoft powerpoint or Apple Keynote. The really good news is that you can produce a storyboard, create your video and fine tune it and get it to market without spending any money what so ever the most this exercise is going to cost you is time and effort and believe me you will learn so much that you will look back and see that this is time well spent.

The most sophisticated tool you can use to create your video is free as a thirty day trial (DO NOT DOWNLOAD THIS YET) and its called Camtasia Studio and its made by a company called TechSmith who also produce some superb and inspiring video tutorials which I recommend you watch everyone of first to learn the art and get some ideas. You have thirty days free use of the Camtasia Studio software once you download the trial and what you don’t want to do is have it lying idle on your machine whilst you finish your storyboard and cut into the time you have to produce and refine your video.

Get stuck into learning about these tools if you are serious about this opportunity and in the next few days I will write the article that will appear on this blog (owner permitting) that gives you an in depth view on how to create the storyboard and I will be using the small business accounting software video as a real life subject to help you thoroughly understand the techniques.

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

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.

business accounting software

If you are running a small business or using small business accounting software it’s vital that you master reading and understanding your profit and loss statement. And if you are stuck You will find videos on Youtube in the Small Business Heroes channel to help you understand this report or statement.

The profit and loss reports the activity in sales, expenditure and profitability over a specified period of time.

The Profit and Loss or P&L is often referred to as the Income statement, it tracks and reports the financial activity of your business over a period such as a month or a quarter.

I am going to give you a brief and basic explanation to help you learn, read and understand your Profit and Loss.

Here I share with you how the profit and loss is generally presented in reports created by small business accounting software

I will also discuss the mathematics used in the profit and loss to express the bottom line or how much profit the business is making.

Just one important point before I begin. Get it clear in your mind now – The profit and loss will NEVER tell you how much cash you have. Its not safe to assume that profit generates cash, profit is just the result of financial activity, it doesnt indicate how much cash you have on hand. The balance sheet tells you the amount of cash you have available and the financial position of your business.

Always first is Sales (in other words how much you’ve sold),it’s also known as Income or Revenue and is always shown at the top of the profit and loss report generated by your small business accounting software The balance or amount on this line is derived from your Income Accounts.The financial activity resulting from what you have sold are recorded in the income accounts.

So if you’re reporting by month and in March you invoiced or sold 1,000 worth of Products or Services. The balance in March will be 1000.00.

The lines in the top section present the resulting balances from transactions that occurred in the time period specified by you