Streamlined Accounting System

Accounting should not be a time draining task, with a streamlined accounting system you can focus on more important things in your business. I come across small businesses all to often that are either behind on their accounting or don't even have a system in place. Let's be honest, you didn't get into business to spend business hours, late nights and weekends doing accounting work. Whether you are just starting out or have been in business for years, your accounting system can always be developed and improved upon to make your life easier.

I like to break the system down into three different categories: Accounting software, document collection and management, processes.

Let's take a brief look at each of the categories of which I will go into more detail in later posts.

What type of Accounting Software do you use?

There is a vast number of accounting programs on the market today and new ones are being developed to everyday. When it comes to small businesses there are typically two types of platforms on the market to choose from.

Cloud software such as Quickbooks Online, Xero, Freshbooks and several others.

Desktop programs such as Quickbooks, peachtree and excel.

Each platform has its own strengths and weaknesses which dwindles down to features and access. I have found working with small business owners that the platforms they choose is a matter of preference. Older more established businesses tend to stay on desktop platforms while new startups or younger entrepreneurs would prefer to work in the cloud thus enabling them to work anywhere they want.

Pricing is also a decision point when it comes to choosing software. Most cloud accounting platforms are a monthly subscription fee, which is relatively low and manageable; but they offer security, no down time,  easy collaboration with your team and backups of your records. Desktop software is usually a one time purchase, loaded with features but you have to make sure the information is backed up, you have to access it on whatever computer it is installed on (unless you have remote access to it) and if something happens to your IT you are up the creek.

Document Collection and Management

see also: Financial Document Collection and Management

How many business owners do you think are drowning in paper? Either you are currently doing it or have walked in businesses only to see the fabled "stack of bankers boxes" taking up shelving or office space. Heck, I have seen them stuffed in the attic or even stored at in a friends basement. The recommend rule of thumb for the IRS, "Keep your paperwork for at least 7 years" takes a toll depending on how much paperwork your business accumulates on a yearly basis.

If you try to make one thing easier in your life this year, let it be streamlining your document collection and management.

There a numerous digital storage platforms on the market; Hubdoc and Bill.com are the two that I use the most with my clients. With unlimited storage, bank level security and access from anywhere, it just makes sense to move filing system from file cabinets and bankers boxes to storing them in the cloud.

With both Hubdoc and Bill.com, you can have your vendors email your bills directly to your account, snap a picture with your mobile device, fax the documents, or scan/upload them to your account. They have made it as easy as possible to gather all of your documents into one place.

One of my favorite features that they advertise is audit proofing your books. Both platforms link up to your accounting software and attach the documents to the transactions. Gone are the days of sifting through files to find a specific invoice or document. Quickly pull up the vendor or transactions and all of the paper trail is right there at your fingertips.

Story Time!

I had a client that was getting audited by the Department of Revenue in my state for sales tax. His industry is notorious for not paying sales tax on materials out of state nor charging sales tax on certain items. They were looking at a 3 year window in which he had to gather the documents for every questionable transaction. Time was spent either sifting through old files or calling the vendors to request old copies of the bills. Everything came out fine in the end; however there was unnecessary amount of labor involved in gathering that information. Per my recommendation, he is now on a platform will lessen the time should he go through an audit like that again. In addition, with his document collection being streamlined, we have drastically cut down processing time.

Accounting Processes

Perhaps the biggest area that can be improved upon is the entire accounting process. We will break this into Accounts Payable and Accounts Receivable. Using Hubdoc and Bill.com will significantly streamline the process for both areas of accounting.

Accounts Payable

Whether you are a large company with numerous employees or a sole proprietor working by himself/herself; the process of Accounts payable is relatively the same. Collecting the bills, entering the bills, approving the bills, paying bills. By utilizing the document storage method mentioned above and combining it with a software such as Bill.com; the entire process could be greatly reduced. Bills can automatically entered and the approval/payment process could take seconds instead of hours.

Accounts Receivable

How often do you fall behind in collecting your receivables? How much time do you spend emailing customers, calling them, fighting with them that they didn't get the invoice? It is frustrating to say the least. Most accounting software programs as well as some of the cloud accounting platforms such as Bill.com make that process more streamlined and easier. Once the process is set up, invoices could be emailed to clients, payments come in 2-3 times faster, follow up emails are automatically sent at requested intervals in the balance is still outstanding.

I use the process for my own business, rather than printing out and mailing invoices like a lot of businesses still do today; I am able to send a email with a payment link. My customers can securely pay via debit/credit card or Bank ACH; all right from the email I send them. I don't have to wait for USPS to deliver the mail, customer write a check and send it back in the mail to me. Big businesses can be paid faster via electronic means, why can't we?

Thoughts?

In conclusion, don't let your accounting system control your free time. You are in business to grow, make money and hopefully have fun doing it! There are plenty of ways to streamline your accounting system. Let me help you with a free consultation.