Are These Cloud Accounting Myths Holding You Back From Using Cloud-Based Software

Let’s face it, it is rather safer to stay within your comfort zone than tread upon an unfamiliar territory. After all, old habit dies hard. However, technology constantly evolves and the first thing that comes to mind when talking about it is cloud. Although using cloud-based software is an innovative way to handle your bookkeeping and accounting tasks, it is still frowned upon by traditional bookkeepers for fear of becoming a hapless victim of new technology. While there are enthusiasts who are drawn to new approach, making the switch may require more than just changing technology, it should start with changing mindset. Here are some common cloud accounting myths debunked.

Myth #1: Cloud exposes data to hackers because it is online.

It is necessary for every business owner to ensure that classified information is stored safely. Some say that cloud makes data prone to breaches and attacks because it is online. The first thing you have to keep in mind to avoid security threats is to check the cloud service provider’s options and features. No two cloud accounting services are created equal so you need to take your time in searching for the service which has increased level of security.

Myth# 2: Cloud-based software is merely marketing hype.

Due to the proliferation of cloud technology, many skeptics dub it as marketing hype. If you are going to check the benefits of cloud accounting, you will realise that it has indeed lived up to its hype. With its ability to store and integrate data, it becomes a valuable collaborative tool for increasing productivity and reducing manual tasks. If you to gain an accurate overview of your cashflow, you can always rely on cloud-based accounting software to update your information. Many business owners are already investing a vast amount of money in order to improve their cloud infrastructure because of its long term benefits.

Myth #3: Cloud-based accounting software is only intended for storing data.

Cloud accounting is not specifically designed for storing information because it can also provide a different approach to collaboration. In the past, it seems challenging to retrieve information critical to decision-making if you rely on spreadsheets. You are not 100% confident that the data you obtained guarantees accuracy. Anything that is stored in the cloud infrastructure can be updated regardless of your location. Even if you decide to check your financial data in the middle of the night, time is not going to be an issue. It saves you from being chained to your desk to manage a bookkeeping or accounting task.

Small Businesses: Tips for Improving Your Cash Flow

achievement-18134_1280If you are currently managing a small business, then I am sure that you are always looking for better ways to manage your finances, particularly your cashflow. This article provides some tips on how you can improve your cashflow in terms of managing suppliers, customers, inventory, and forecasting.

Managing Suppliers
When it comes to dealing with your suppliers, the number one tip is to pay them on time as much as possible. If the situation allows, you could also ask them for credit terms, which basically provides an interest-free loan for your business. Likewise, do not hesitate to ask for a discount or a good deal, especially if you order in bulk or make your payments early. In case you are not able to make a payment on time, communicate with your supplier as early as possible in order to set a formal agreement about the matter. Generally, the main purpose here is to maintain a good relationship with your suppliers.

Managing Customers
The secret to effective customer management is good communication. Whenever you have a new customer, always make sure that the payment terms are clear to them, and that your banking information is stated on your invoices. It is also a good idea to conduct a credit check on new customers, just to be sure that you do not run into any problems. In cases of large transactions, do not hesitate to ask for a deposit or set up a progressive payment schedule with your customers. Meanwhile, if you come across non-paying customers, the best thing that you can do is to offer them a payment plan that will eventually clear their debt. More importantly, regardless of the type of of customer that you are dealing with — be friendly.

Managing Inventory
In terms of inventory management, the two things that you need to watch is your profit margin and stock turnaround. Take a look at your products, identify which ones are making the most profit, and focus your time and investments on those items. Similarly, identify which products are “slow-moving” and come up with a plan on how to move them out as fast as possible. The money that you make from moving out these obsolete stock can eventually be used to invest on your more popular products.

Forecasting Your Cashflow
When it comes to forecasting your cashflow, what you can do is to search for a simple forecasting template and learn how to use it. By doing so, you can analyze your sales as well as identify patterns on when sales are at their highest and lowest.

By considering the ways in which you manage your suppliers, customers, and inventory; plus by learning how to do some basic forecasting — you will find that your cashflow will eventually improve in the long run.

4 Bookkeeping Tasks That Need To Be Automated

Although there are some businesses  embracing business automation, others are still left behind due to retaining traditional business processes such as bookkeeping. The tasks involved in bookkeeping can be long, tiring and tedious because you need to make sure that the information you enter is error-free. There are four essential bookkeeping tasks that need to be automated:

Invoicing

There are other areas of your business that you need to focus on and this can lead to losing track of the people you paid and the ones you haven’t. A bookkeeping software can get you covered because it automatically generates invoices. The bookkeeping software can prevent oversight, which usually happens when you do not monitor payments. Problems with invoicing are a serious matter because it can lead to losing money and cash flow issues.

Bookkeeping software that lets you generate invoices that you can email or print is definitely the way to go. Your bookkeeping software has an automated system that can help you sustain sufficient cash flow while you are waiting for your next payment. The software also gives you the ability to work in conjunction with your bookkeeping software so you can request corresponding funds or select an outstanding invoice for a specific period of time. Payments are also deposited into your account as early as the next day.

Payroll

Payroll taxes are often considered by small business owners as the biggest burden because of the grueling hours spent for managing payroll. Bookkeepers often spend 10 hours or more on a monthly basis for taking care of payroll taxes. In a year, bookkeepers are spending a total of 120 hours per year for this task alone. When you automate your payroll system, you can cut down your bookkeeping load and create an instant paycheck and calculate your payroll taxes.

Inventory

Taking inventory may take days but the time you spend on this bookkeeping task can be reduced when you decide on automating your inventory management. You can create sales report by integrating your inventory management with your bookkeeping software. The bookkeeping software can also help you generate invoices and reduce inventory errors.

Expense Reporting

Not submitting your expense reports is a company policy violation and these variables can also cost you money. Make sure you automate expense reporting for a streamlined bookkeeping process. With automation, you will be able to have the ability to use your mobile devices to take pictures of your receipts. You can also generate reports and integrate them with travel bookkeeping so you can keep track of your travel expenses.

3 Bookkeeper Mistakes To Avoid

While majority of bookkeeping tasks tends to be repetitive, it does not necessarily guarantee error-free results. When mistakes become habitual and the bookkeeper does not make a conscious effort to correct, you are about to face a more serious problem with your business.

You might have dealt with more complex transactions that require a bookkeeper’s expertise, but you only paying fees and penalties because the bookkeeper did not finish the task you assigned. As a business owner, you need to remain vigilant so you can spot the mistake before it worsens.

Business owners are expected to have basic knowledge of bookkeeping or accounting to know what is going on with the transactions. If you do not know how to manage your money, you are not far from going broke eventually. You do not have to acquire the skills of your bookkeeper or accountant to fully understand the information they dish out. As you learn the ropes, you will begin to gain a basic understanding of how bookkeeping works.

Bookkeeper Problems and the Solutions

1. Not addressing the task at hand: The problem starts when your bookkeeper is habitually taking essential tasks for granted. When the tasks are not being addressed, it can either be due to limited time or inefficiency. This can be avoided by checking with your accountant how much time they estimate should be spent on a weekly basis in order to finish the task. You will also have to provide the right resources to ensure that the job is completed successfully. Make sure your bookkeeper keeps you abreast of the unfinished tasks regularly so you will know which work has been prioritised and which ones need extra attention. Being aware of the progress of the task you assigned will help you determine if your bookkeeper needs additional hours or resources.

2. Not recording or archiving: Your bookkeeper is required to keep all your invoices and receipts for legal purposes. In theory, receipts must be filed and archived between 5 and 10 years. This enables you to support your case in case you need to sue or you are sued. If your bookkeeper keeps on forgetting about filing or archiving essential receipts, you need to create a document filing system. It will also be a great idea to go paperless so you can save office-space. Choose a bookkeeper that will give you access to the information you require especially for tax filing.

3. Not coordinating with your accountant: The task of your bookkeeper differs from the task of your accountant, but this does not mean they cannot work together. In fact, if 90% of bookkeeping tasks are repetitive, the bookkeeper should collaborate with your accountant when dealing with 10% of complex tasks.  When your bookkeeper is not coordinating with your accountant, it can result in various problems such as payroll and superannuation errors. Make sure a strong line of communication is enabled between your bookkeeper and accountant so both parties can complete tasks and prevent costly mistakes.

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How Is Your Relationship With Your Bookkeeper?

If you want to have a productive experience with a bookkeeper, you need to start with establishing a long-term relationship. It is essential for a bookkeeper and business owner to have a good relationship because a bookkeeper holds a long-term role. If you are not meeting half way, your bookkeeper can jeopardise your business. Here are five ways you can build a great relationship with your bookkeeper:

Communicate what you need with your bookkeeper

Whether you just need someone to help you with compliance or a person more familiar with your industry, it is important that your bookkeeper knows what you expect from them. If you want growth opportunities and potential partnerships, it should start with knowing what you need. Be clear with your bookkeeper so they have an idea how you are going to work together.

Create a business plan

You cannot expect your bookkeeper to know what goes on inside your head. You need to create a business plan as this will serve as your bookkeeper’s guide. A business plan also serves as an exercise that will help you anticipate problems and get the right solution. When you make it a habit to regularly discuss your business plan with your bookkeeper, you will keep yourself accountable and focused on your company’s key drivers.

Share your vision with your bookkeeper

If you are planning to expand your business or make a big purchase, do not let your bookkeeper be the last to know. Your bookkeeper should be involved when you are making decisions because they can recommend some great practices that can help you maximise your profit and take your business in the right direction. Your bookkeeper can also provide you some money-saving practices that can help you avoid tax penalties.

Collaborate with your bookkeeper in real time

How can your bookkeeper help you if they do not know your numbers? Real-time collaboration must be kept in mind because your bookkeeper also needs to know how your business is doing. Data-sharing and online collaboration tools are important for this process. These tools enable your bookkeeper to analyse data and provide helpful recommendations when needed.

Organise receipts and invoices

Organising your files enable a bookkeeper to know what is going on with your business. Your bookkeeper will be able to work efficiently if the paperwork they need is available. They will also have an idea how they are going to take care of your daily transactions and may remind you of your payment schedule to avoid penalties.

The Role Of Bookkeeper In Growing Your Business

Growing your business is a tough decision as you need to look at all of the aspects of your business. Business growth is a sign that you are doing good at managing your business, but just like other successful companies, it requires team effort to accomplish your business goals. A bookkeeper is essential in every business. You will not realise their importance until you decide to grow your business.

More cash and reduced debts

A streamlined invoicing system is one of the benefits of hiring a good bookkeeping service. You are not ready to grow your business if you have trouble improving the flow of money into your business. When you help your bookkeeper, you will be able to get help in reminding your clients for their payments for the products and services that your business has provided. Aside from keeping your cash flow in check, a bookkeeper can also help you reduce the risk of cash shortfalls by helping you deal with credit control.

Good decision making

Although bookkeepers are not the ones to decide for you, they are going to be a big help when it comes to preparing accurate and error-free financial reports. These financial reports will help you make decisions for your business. Business owners refer to the financial reports when it comes to analysing if the business is performing better than the previous months. When the financial reports tell you where your business is heading, it will not be impossible for you to grow your business.

Resolved financial issues

It is inevitable for businesses to face financial challenges but a good bookkeeper can help you handle challenges. A bookkeeper provides financial data analysis and identifies issues that affect the development of your business. A good bookkeeper can also present tailored solutions that can resolve financial challenges.

Running your business is no walk in the park let alone growing it. However, if you have a good bookkeeper to help you put a good bookkeeping system in place, the goal of growing your business will not be impossible to accomplish. This is why as you decide to hire a bookkeeper, make sure you take qualifications into consideration so you will not end up choosing the wrong bookkeeper. While it can be challenging to hire a suitable bookkeeper for your business needs, taking time to get to know a prospective bookkeeping professional can help you make a sound decision. Even if it is only a small business, a reliable bookkeeper can make a difference.

Constantly Ignoring Your Bookkeeping Task Can Cause Business To Fail

Any business endeavour will not be complete without bookkeeping. Although the task usually involves dealing with numbers, accuracy in entering financial details is also important. For small businesses, hiring a bookkeeper is burdensome because of the cost associated with it. This is why small business owners skip hiring a bookkeeper to save money. Unfortunately, bookkeeping errors can cost more money in the long run. When significant details are not entered properly, these mistakes can impede business growth. Proper bookkeeping procedures are essential because it prevents financial trouble.

Don’t manage crucial bookkeeping tasks on your own

You may be one of the entrepreneurs who are passionate about your business that you tend to do everything on your own, but problem may arise especially if you are only running a fledgling company. If there is only one person handling all of your tasks, this can spell trouble because in due time the quality of service also deteriorates. One of the important aspects of managing your business is maintaining accounts and you need a reliable bookkeeper for that. To prevent frequent errors on your financial report, make sure you pay attention to the financial aspect of your business by hiring a bookkeeping professional to handle your accounts.

Choosing the cheapest methods

When it comes to cutting costs, seeking out for the cheapest methods create a ripple effect on your business. You may think about the least expensive method that can help you save money until you grow your business, but this may not be considered effective especially if there are frequent mistakes on your report. Your business cannot afford to make mistakes in payroll taxes. Instead of going for the cheapest method, invest in people that can help you deliver quality work. The cheapest option may only lead to unsatisfactory result.

Unable to tell the difference between profit and cash flow

Some business owners mistake profit for cash flow. The profit refers to the money you obtain from sales revenue after the expenses of your company have been deducted. On the other hand, cash flow refers to the money that flows in and out of your company from business operations such as financial activities and investment.  A business owner should also take note that even if the company is profitable, it can still go broke. When these mistakes are frequently committed, it is possible for your business to go bankrupt. To avoid this, it is essential to keep track of the items you are selling and spending. You will also have to take time to review your financial statements on a monthly basis so you will have a clear idea of your financial situation.

Mixing personal with business account

You can mess up your business finances once you make it a habit to mix business with personal finances. When you open a business, create a bank account that is exclusive for your business income and expenditures. Your business bank account should be intended for your business finances only. When you fail to separate your business accounts from your personal accounts, you will have trouble keeping track of your finances. A separate business account can help you get a pain-free record keeping.

Good Bookkeeping Habits For Small Business

For small business owners, bookkeeping can be your least favourite task unless you are a fan of working with numbers. However, there are some good habits you can adopt so costly errors are prevented especially when it comes to record keeping. Once you are busy dealing with the financial details of your business, it is easy to overlook one of the most important aspects of your business. Although you might get tempted to tweak your budget, the problem may worsen once you lose track of your financial activity. It is important that you have a bookkeeping system in place so you can handle your money properly and prepare your records in time for audit.

Track your expenses

When you fail to track your expenses, you may encounter problems with missing tax write-offs in the end. When it comes to business credit cards, make sure they are tracked and kept together. Your payments must be kept up to date and the bill must be categorized into types of expenses. One way you can prepare for audits is to mark your calendars to keep track of important dates. This way, you will be able to substantiate expenses for your tax records. As a result, you will no longer have to worry about being audited.

Monitor deposits

Monitoring business bank account deposits can also help you determine if you are ready to pay taxes or grow your business. Having a separate bank account for your business will help prevent using your money for personal expenses.

Don’t ignore invoices

Another bad habit that can hurt your cash flow is allowing your bills to be left unpaid. A bookkeeper can track your billing and put a process in place so you can ensure that bills are paid in a timely manner. When there are unpaid bills, a bookkeeper can simply make a phone call and levy penalties. If clients are late in making payments, make a plan so you will know what to do.

Plan major business expenses

Analyse your budget before venturing into a big project and be honest about your financial standing. If you are always in denial about the expenses that your business incurs, you will not be aware that your spending habits are already hurting your cash flow. You also have to acknowledge that your business may experience seasonal ups and downs. When it comes to major upgrades, it is important that you forecast them so you will avoid taking money when it is not yet necessary. You may have enough money in good months, but you must also keep in mind that you should have enough cash in slow months.

Common Bookkeeping Problems And Their Solutions

Bookkeeping is often avoided because of the responsibilities that it entails, but in the long run, business owners consider bookkeeping a necessity. Everyday, business owners are plagued with too many worries, most of which is due to the issues with their finances left unchecked. When you intend to expand your business, its financial aspect is the first thing you need to check. Is it effectively managed? Do you have enough cash to grow your business? These questions are going to be relevant because they will provide you an insight on the direction you are going to take.

5 common bookkeeping mistakes and ways to deal with them:

1.Not reporting sales tax. It is a common effort in bookkeeping to neglect sales tax, but this oversight can create a serious problem in the long run because it is a common reason for penalties and fines. If you have incorrect data entry, your business can suffer from a higher total sales amount. Make sure you have accurate sales tax. Discuss these important details with your bookkeeper if you see any discrepancies in the financial statement.

2. Poor communication. Another reason your business suffers is when you and your bookkeeper do not have strong communications. It is necessary that you keep your bookkeeper integrated and involved with your business activities. This way, your bookkeeper will be able to create financial statements that reflect your business’ true operational needs. Discuss the means of communication which both of you can be comfortable with.

3. Inaccurately tracking expenses and income. A bookkeeper should have the knowledge of formal bookkeeping practices. If the person you hired knows nothing about these tasks, you will have difficulty identifying the category that your income and expenses fall under. When you have accurate records on a monthly basis, you are not only encouraging proper filing system but also ensure consistent and clean records.

4. Poor record keeping. Receipts and other important documents must be kept because they are going to play an important role to your business. When accurate records are maintained, there is an assurance that you are saving time and money on your income taxes. You will have proper documentation if your business will be audited by ATO. You will also have accurate records to present and prevent a possibility of tax penalty. The records must be checked on a regular basis to ensure that there are no irregularities. A bookkeeper should consistently provide a report that a business owner can check and interpret.

5. Mishandling petty cash. One of the reasons business owners have problems with keeping track of expenses is due to bad petty cash management. You can prevent losing track of your petty cash if you set up a system, which will allow you to track the cash. You can also buy a petty cash lock box, which you can use for keeping receipts.