Startups Ditch the ShoeBox accounting!

- January 11, 2012 3 MIN READ

2012 is the time for your business to ditch the shoebox accounting and launch into a serious accounting system so you can proactively manage your profit, cashflow and forecast your business decisions. Working off your bank balance to run your business is no longer sustainable. Letting your business data sit in shoeboxes, files of receipts, invoices month after month letting the data accumulate will not signal to you how your business is performing. Understand why an accounting system is essential for your business survival and prosperity.

An electronic accounting system will collect and organise your business information so you can look at the numbers and understand what these numbers are telling you about your business. These numbers are your businesses key financial indicators. The accounting system will have the following features:

  • Data Collection: Includes business transactions and operations data.
  • Data Organization: A method of sorting data by date and transaction type.
  • Accounting Database: Data entry into  the accounting software program will form the basis of accounting information.
  • Financial Statements and Reports: Balance sheets, income statements, budgets, and timetables comparisons will aid in running your business.
  • Analysis: Regular review of main business indicators to avoid problems like cashflow squeeze and capitalise on opportunities.

The advantages of using an accounting system:

  • Tracking your expenses:Without constant tracking of your expenses how can you know if your business can afford the cost and cashflow can quickly dry up
  • Tracking your debtors: How do you know what customers owe you and whether or not they have paid – do not make it a guessing game – the system will track and age your debtors – do not miss out on money owed to you – you have worked hard to earn it
  • Cashflow crunch: Every business will experience highs and lows of cash cycles. An accounting system will assist to overcome periods of cash shortages and identify funding needs as it tracks who owes the business money and areas for expense blowout and provides a series of reports to manage this process.
  • Data security: How safe is your shoebox? Have you considered what might happen with your records if  something was misplaced, lost or if there was a fire or a flood or theft? An accounting system especially in the cloud provides this data security. The system sits in an independent server that can be accessed via a password and is available 24/7 for any electronic device in the world.
  • Streamline your accounting fees: Bookkeeping and accounting fees will be much less if data is provided this way. Utilise your accountant to grow your business, access funding, project cashflow, budgets and forecasts for your business rather than annual or quarterly processing.

Minimise audit risk: The ATO audit activity is rapidly increasing. Having real time records in order to answer and questions raised is vital to minimise audit risk and time taken and costs associated with this risk

Business survival: The statistics show that most businesses fail in the first 5 years of their life. The biggest reason for this is poor financial management.It is your responsibility as a business owner to maintain and regularly assess how your business is performing so you can take action where needed to maintain the growth and survive. Without an accounting system and proper monitoring you will not be able to manage money losing strategies in time and you will enter the vicious cycle of catch up.

Financial Difficulty: The price of business ownership is responsibility. Not being able to produce a set of timely financials for your business will not assist you to identify financial difficulty and hence strangle the growth of your business.

The future of a business accounting system is an online no version control, no computer operation system based, real time secure system that can be accessed 24/7 by you and your advisor/s to manage the financial area of your business. SAASU  delivers this for your business. It eases the way data is entered in a very timely manner and supplies all reports required for your business to allow you to monitor performance and saves hours of time spent on your business administration . It is the simplicity that provides the value.

Tracey sharah is a CPA and tax agent with over 22 years experience working with businesses. Tracey has been running her own CPA Accounting practice in North Sydney METRO ACCOUNTING for 11 years. Over the years Tracey and her team at METRO have assisted her small business clients with strategies, tools and advice to assist them to be successful. These include business structuring, tax strategies, accounting system advice, integrating bookeeping services and SMSF set up and administration services. Tracey prides herself in being proactive and always available to her clients . www.metroaccounting.com.au