Whether you’re a sole trader, pay multiple staff members, or manage an eCommerce store with inventory, the right accounting software can have a positive impact on your business.
It may feel hard to justify spending money to introduce brand new technology in a time of uncertainty, but research has shown that those that do, are better off.
The Xero Small Business Insights report ‘Picking up the pace: trends in small business technology adoption and use’ measured pre COVID-19 investment in information and communication technology (ICT) in Australia and found that the top 25% of firms experienced a sales uplift of AU$28,800. These businesses were also paid 1.9 days faster than the bottom quartile of ICT spenders.
Digital accounting tools have come a long way from the pricey desktop software that required a download to your computer. Now, most use cloud computing, so you can securely access your finances from anywhere, at any time. From Xero to MYOB, QuickBooks to Rounded, each tool has different features, plans and prices - ranging from cheap to expensive.
Here are our top tips to save money using cloud-based accounting tools.
Be your own bookkeeper
Bookkeeping and accounting both have a major part to play in how you manage your finances. But depending on the size and complexity of your business, you could save some of these expenses by doing it yourself.
A good bookkeeper will help you record and organise your financial data – from things like receipts and bills to payroll and invoicing. They’ll use this to give you an idea of your cash flow and ways you can budget around that. A good accountant will interpret and present this data. They help with things like financial statements and reports, your tax return, and analysing your business’s performance.
These days, much of the data processing work is automated and can be as simple as a few clicks. Its accuracy takes the pressure off your bookkeeper or accountant, so they can spend less time on data entry and more time giving you valuable business advice.
What you can do:
- Assist your day-to-day bookkeeping by setting up daily bank feeds from your business bank accounts into your accounting software. These transactions will then automatically appear online without the need to input them manually.
- Most tools offer easy ways to record your receipts, with varying levels of sophistication. Simply upload a screenshot or photo of the receipt and choose the report it relates to. MYOB’s Capture app goes a step further, inputting the information from the receipt for you and then using machine-learning technology to suggest matches to your transactions & bank feeds.
- Generate and lodge Business Activity Statements (BAS) using integrated report features.
- Give your bookkeeper and accountant access to real-time data, so they can help you shape your cash-flow trends into effective business decisions.
Share information with your accountant directly from your software when bigger jobs, like your tax return, come around.
Provide oversight of incomings and outgoings
Understanding your incomings and outgoings is the foundation of cashflow management. But organising all the information, documents and invoices can feel overwhelming. Fortunately, accounting software helps you keep it all in the one place. Most tools can generate up-to-the-minute reports that show your profitability in real time. This way, you’re able to get an accurate picture of your financial health. Because this software allows you to be more hands-on, you’re more aware of where your money is going and better prepared to navigate tough times.
What you can do:
- Generate reports that detail your income, profits and expenses, so you can get the full picture of how your money is moving.
- Some accounting apps offer projection reports, so you can predict how you’re going financially and amend your budgets accordingly.
- Often these tools will have a dashboard that gives you a topline overview of how your business is performing. For example, Xero’s dashboard shows total cash in and out, invoices owed to you, and bills you need to pay.
Streamline your processes
Finicky admin tasks can be a huge time suck for small business owners who have to wear many hats. And as the old saying goes, time is money. Investing in an effective financial process will improve your business’s efficiency and help you manage (and speed up) your cashflow.
What you can do:
- If you’re individually creating invoices on your computer you’ll be pleased to know you can now do this in just a few clicks. Automated invoicing is standard issue with modern cloud-based accounting - and is even available with free products (like Wave). The software will pre-populate information like client details, payment terms and will even automatically send the email for you.
- If you’re a sole trader, accounting app Rounded can help you generate quotes for clients on the go. Once they have approved and the job is done, you can quickly create an invoice from your phone, speeding up the payment process.
- With Rounded and other apps you can also set up automated reminders that get emailed to your client if the invoice isn’t paid on time. This saves you time and energy following up manually. The dashboard also shows what has and hasn’t been paid. This is an easy way to prevent any bad debts piling up.
- If you run a retail store, you can integrate tools like Xero’s inventory tracking. It can link to point of sale and eCommerce systems like Shopify to help you keep track of stock. This ensures you order new inventory in time, so you don’t miss out on sales.
Avoid security breaches
No matter your business, insecurely storing sensitive information can be disastrous if you get hacked. Security breaches can be costly in a number of ways: the time and money it takes to recover from the attack and the loss of clients and customers if their information is leaked. Your business’s reputation and productivity often suffer the most following a cyber attack. Cloud computing works to keep your data private and safe. Cloud-based accounting apps securely store your financial information and protect your business from cyber-crime.
What you can do:
- Store your data securely in the cloud, rather than on a hard drive or desktop. Any time you upload or move files, the information is encrypted, making it difficult for hackers to intercept your data.
- When sharing information with your accountant or employees, you can control the level of access they have. It’s infinitely better than using unsecure methods, like email, to send your files.
- Most tools will offer automatic back ups to reduce the risk of misplacing your files.
- Add an exta layer of security with multi-factor authentication. Xero have launched their own verification app, Xero Verify, enabling faster authentication by automatically sending push notifications when you log in to Xero.
What to factor in when choosing your cloud accounting software.
- If you’re a sole trader who works on a contract or freelance basis, consider tools like Rounded or QuickBooks Self-Employed. They’ll help with basic tasks (like generating and managing quotes and invoices on the go) at an affordable price point.
- If you have a few staff, Sage Business offers Single Touch Payroll (STP) compliant payroll for up to four employees.
- If your business is on the larger side, tools like QuickBooks Small Business, Xero or MYOB will help you manage multiple payrolls, rosters, projects and integrated systems.
- Weigh up the complexities of your business, your revenue, how much time and money you may be able to save and what features you would actually use. This will give you an idea of your budget and how specialised your software will need to be.
- Consider using Australian software with features tailored to Australian tax requirements. Check whether the software package has Standard Business Reporting forms needed to report to the ATO such as BAS statements.
For more information, look to government resources like Business Victoria’s guide on choosing business accounting software.
Whatever your business, investing in the right cloud-based accounting tools can protect your finances, support your business growth, and save you money in the long run.