For many small business owners, bookkeeping is one of those jobs that can easily get pushed to the bottom of the list. When you are busy looking after customers, finding new business and managing your day-to-day workload, updating spreadsheets and sorting receipts is unlikely to be a priority.
Accounting software such as Xero, Sage, QuickBooks and FreeAgent can make managing your finances much easier. Here are five reasons why it could be worth making the move.
Save time on bookkeeping
One of the biggest advantages of accounting software is automation.
Most systems can connect directly to your business bank account, automatically importing transactions. You can then match payments against invoices and expenses rather than manually entering everything into a spreadsheet.
You can also capture receipts digitally and store them alongside transactions, helping you keep your records organised throughout the year.
The result is less time spent on administration and more time available to concentrate on running and growing your business.
Understand how your business is performing
You shouldn't only discover what's happening financially when your year-end accounts are prepared.
Accounting software can provide an up-to-date picture of your income, expenditure, profit and cash flow. You can also see outstanding invoices, bills that need paying and other important financial information.
Access to current figures can help you make better-informed decisions about spending, pricing, recruitment, and future investment.
Improve your invoicing and cash flow
Healthy cash flow is vital for every small business.
Most accounting packages allow you to create and send professional invoices quickly. You can see which invoices have been paid and which remain outstanding, and some systems allow you to send automatic payment reminders.
A clear view of who owes you money makes it easier to follow up on overdue invoices and can help prevent late payments from becoming a serious cash flow problem.
Make tax and VAT easier
Keeping your financial records up to date throughout the year can make preparing tax returns considerably easier.
For VAT-registered businesses, compatible accounting software can maintain digital VAT records and help prepare and submit VAT returns under the Making Tax Digital initiative. Find out more in this article: Accounting software for Making Tax Digital.
Using software throughout the year also gives your accountant access to more complete, organised information, reducing the need to reconstruct records when accounts or tax returns are due.
Work more effectively with your accountant
Cloud accounting software means you and your accountant can work from the same financial information.
Rather than exchanging spreadsheets, receipts and paperwork at the end of the year, your accountant can review your records and identify potential issues much earlier.
This can also change your relationship with your accountant. Instead of spending valuable time sorting through incomplete records, they can focus more attention on tax planning, cash flow, business performance and helping you plan for the future.
Which accounting software should you choose?
Plenty of options are available, including Xero, Sage, QuickBooks and FreeAgent. The right choice depends on your business, the features you need, and how you manage your finances.
At Watson Knipe, we can help you choose the right accounting software, organise your systems, and make sure you get the most from the financial information available to you.
If you are still relying on spreadsheets, paperwork and a box of receipts, now could be a good time to consider making the move to accounting software.
For more advice, get in touch by calling 01623 490 120 or email us on