Online Accounting Systems Can Result In More Effective Services

Taking your accounting online can help you streamline your finances, making for more organized accounting and reliability in other areas of your services offerings.

Organized data and better management

When your accounting moves online, human intervention is greatly reduced, automatically resulting in heightened accuracy. Because accounting is one of the basic functions in a business, scattered or poorly-maintained accounts can create problems across all your business offerings and client services. Online accounting automatically results in better organization of your records and helps you maintain updated and current records across the services and solutions you provide your clients.

Online accounting systems do not mean you no longer have control over your accounts. On the contrary, it takes off the drudgery from your day-to-day operations so that you have time and resources for your business concerns. Online accounting takes over data entry and management so that you no longer struggle with complex data or spend quality man hours in training staff to meet your specific needs. Once you hand over your needs to a qualified vendor, you will find that an online accounting system actually speeds up your operations overall, allowing you to provide deliverables and services to your clients better.

Complete and updated data

An online accounting system provides you with complete financial information at your fingertips. What is the money owed to you by your clients, what is the exact amount and by how much time is it overdue - all of these questions can be answered when you look at your accounts, provided they are updated. Low on cash? An online accounting system can help ensure you don't face crippling cash crunches that could force you to disable your client deliverables and regular services.

Further, having updated accounting means you are on top of your expenses and balance sheets. This is vital not just from the perspective of a business owner, but also from the point of view of investors who will examine your credit-worthiness. Here are some specific benefits that prove how an online accounting system can help you spruce up operations and deliver better solutions and services.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Evaluating the Efficiency of your Financial Processes

How do you ensure the efficiency of your company's operations within the framework of your existing financial department? Keep a sharp eye on the performance of your business processes and key metrics associated with them. Below are some suggested metrics you may consider integrating into your financial analyses in order to measure whether your current financial processes are optimized or not.

Receivables Turnover Ratio- This is a company's credit sales divided by average account receivables, and it is an indicator of how efficiently a business collects credit extended to customers or clients. Maintaining a sound accounts receivables practice can greatly help maintain the liquidity of a business, reducing the possibility of money lost as a result of missed collections. As a small business on a budget, you might already be following established practices to ensure that your financial processes are on track.

Days Sales Outstanding (DSO)- Metrics that reduce the amount time it takes to collect receivables can help you tighten your cash flows and ensure that more cash stays within the business. One rule to remember is that you should not keep accounts receivable open for an indeterminate period. The longer your money remains unpaid, the higher the chances of uncertainty on collecting it.

Month-end Closing Period- Ideally, month-end closing should be wrapped up within a one month period. However, in practice the month end closing often extends into the next month as well.

Month-end closings that move beyond the first week of the subsequent month indicate a need to streamline your processes. If your paperwork is not in order, your actual month-end closing can last for an inordinately long time, depending on the volume of work that needs to be completed.

Rapid Follow-up for Accounts Receivable- Your accounts receivable needs an efficiency check if it is taking more than 30 days, or if cash remains uncollected and pending for more than a month. It may also be helpful to establish a maximum collection time period, for example 35 days. Consider automating certain key functions and enabling reminders to notify you about which accounts to pursue as they approach that maximum collection period. Also, consider incenting early payments by offering discounts.

Daily reconciliations- If you've defaulted on your daily reconciliations, your month end closing can become a daunting task. Ideally, reconciliations should be performed on a daily basis. Banking especially should be reconciled everyday instead of being pushed back. As with accounts receivable collections, banking reconciliations in addition to general ledger reconciliations lend themselves well to automation, which could provide enormous gains in productivity.

Consider evaluating your financial processes based on the above metrics and practices to improve efficiency for your business.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Five Business Functions to Automate

Although small to mid-sized businesses may operate under constricted budgets, this does not imply a decrease in quality of work, regardless of limited infrastructure or manpower. Optimizing existing resources can help you remain within budget parameters, while ensuring that client deliverables and client expectations are met.

Automation can assist small businesses in optimizing existing resources. With automation, companies need not invest in expensive new machinery or hire highly skilled human resources. Identifying key areas to automate can produce significant productivity results. Often times, vendors or partner companies can assist with automating certain functions. An experienced vendor who is familiar with your business may also help you identify areas which could benefit most from automation. As a starting point, following are five suggested business functions worth investigating for automation.

Financial processes: Due their significance within the daily operations of a small to mid-sized business, financial processes can benefit immensely from automation. Timely access to data and data accuracy are equally important in recording financial transactions. Automation improves the quality of both.

Accounting: Accounting functions are the backbone of every business, including start-ups or solo practitioners. Accounting is also an area which requires maximum attention to detail. A minor error that occurs when recording revenues can result in major revenue losses, or worse significant tax implications.

However, for many small business owners, minimizing accounting errors while meeting client requirements often are at odds with each other. Business owners can only perform a finite number of functions and do them well. They can either work diligently to ensure client deliverables are met, thereby often neglecting accounting tasks, or they can pull key resources from business deliverables to focus on the companies financials. However, automating accounting functions can assist in ensuring both objectives are met. In addition, automation reduces dependency on human resources therefore freeing up an employee's time to focus on more client focused work.

Bookkeeping: Bookkeeping is the foundation for accounting. When companies automate bookkeeping functions, business owners can feel confident that record keeping is completed in a timely and accurate manner. Automated bookkeeping assists in creating timely records. For example, regular, periodic transactions can be recorded instantaneously. This eliminates the possibility of omitting particular entries, as well.

IT processes: As a small business, dependence on IT can determine the speed and efficiency with which you service clients. Automating your IT processes can help radically reduce actual time incurred to execute. Besides execution, IT automation can assist in ensuring better record-keeping and adherence to deadlines through a system of automated triggers, email-reminders, etc.

In addition, automated IT processes also help track initiation and the progress of various assignments and projects, as well as promote business continuity.

Training and Communication: Automation can enhance communication needs as well, including training. In the case of small businesses where employees may work remotely or in various geographic locations, business owners can create frameworks which serve as information and training portals, thus cutting reducing time and expenses involved in live training and knowledge transfers.

In summary, for many companies, these five areas are worth investigating as areas which could benefit from automation.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.