Not many people start a business because they are excited at the prospect of doing their own accounting and invoicing. In fact, I dare say that has never happened! Regardless of the reasons why you may or may not start your new business you will need to deal with your accounting and invoicing in a timely and complete way if you want your business to succeed. Even if you plan on outsourcing this work you'll still need some familiarity with it so you can access the system to look things up, so it pays to take an interest in what platform you end up on.
First things first, let it be known that all worthwhile accounting software packages for SME businesses are available on the 'cloud' these days. This means you (and your helpers) can log in from anywhere with an internet connection, you won't need to backup your data, you'll be able to get the bank info (i.e. money in and money out) directly from the bank without the need to manually enter it in and you won't need to upgrade files or worry about any of that nonsense. Cloud computing is here to stay and it makes everything to do with your business finance and accounting infinitely simpler so embrace it!
Okay, so how do you go about choosing a system to run the numbers for your business? First you'll need to ask yourself a few questions:
- Do you want a complete accounting system (i.e. banking, invoicing, payroll, reporting, etc.) or just invoicing?
- How many transactions do you think you'll be processing each month through the business bank account?
- Will you need to pay staff (including yourself)?
- What platform does your accountant recommend?
- What other functions will you need (e.g. rostering, timesheets, inventory, job costing, etc.)?
Once you've had a chance to think about these questions, read the rest of this article to see what product might be a good fit for you.
There are some neat and free solutions out there (Zoho is one of them) that can handle your invoicing provided you don't raise many of them each month. They will do a few other tricks, but they are fairly limited and only really suitable if you're a freelancer who issues just a few invoices a month, doesn't have much in the way of expenses to track and isn't registered for GST. If that isn't you, we'd recommend getting a more comprehensive accounting system.
A complete accounting system will handle everything for you - it'll take in data from your business bank account each day, it can be aught rules to code expenses automatically, it can handle payroll processing and payments of superannuation, it will calculate the figures to put on your BAS, etc. These systems are worth their weight in gold and are highly recommended for any SME.
As for which full system you go with, many of the available choices have the same feature sets because whilst the tech gets better, the underlying game of accounting doesn't really change much! Which system you'll choose tends to come down to price and whether you like the look of one platform over the other. We here at Generate recommend Xero because we think it's a rock-solid product and easy for clients to pick up and use from day one. This means they can jump in and raise invoices, get paid and run reports all without needing to ask for help. Another option you could look at is Reckon One which is cheaper and we'd recommend it for smaller businesses looking to save a few dollars over the Xero option. Two factors that will affect the price here are number of monthly transactions and number of people on payroll.
Check with your accountant to see what they recommend. Most firms these days will have a preferred cloud solution that they've tested and recommend and whilst they will definitely be able to work with you if you're on a different platform, they'll find it easier if you're on the same platform as the rest of their client base (and perhaps your fees will reflect that).
Other things to consider?
One of the best things about these cloud accounting systems is the myriad add-ons that you can get. There are software products that do all kinds of great time-saving things that connect directly back into your accounting package. You might want:
- an automated debt recovery system that sends customisable emails to overdue clients,
- the ability to accept credit card payments via your invoices,
- to manage multiple jobs with timesheets and direct costs,
- to handle complex rostering for casual employees,
- the ability to manage your inventory,
- easily prepare customised business performance reports
Whatever you're after, there's likely to be an affordable software product you can bolt on to your accounting package to get the job done. Have a look at the Xero marketplace to get an idea of what's available. Just be sure to check that the add-on you want works with the accounting package you've selected - many of them work with the big players, but not all.
This stuff is often on the bottom of the list for business owners, especially those running creative enterprises. We get it! We aim to take the hassle out of accounting for our clients by offering a complete solution here at Generate - from setting up your accounting software, training, bookkeeping, BAS & payroll, management reporting, tax all the way through to virtual CFO services. If you'd like to have a chat with someone about streamlining your finance function, why not give us a call? We'd love to help.