What is the biggest consideration when starting a business?
The availability of capital is the biggest enabler of starting a venture and then turning it into a profitable business.
But, having money to set up the business is not enough. To run a thriving business, you need to manage your finances efficiently.
There are many aspects of financial management that a business owner must take care of. They are:
- Revenue management
- Profit planning
- Financial forecasting
- Managing Inventories
- Making investments
- Operational efficiency
All this becomes hectic even for firms with large finance team. But we just have the right intervention to make lives of financial managers easy and ensure that their company is never in financial doldrum – accounting softwares.
Accounting softwares have simplified financial management for businesses. According to Statista, 64% of small business owners use these softwares to manage their finances.
This blog discusses the advantages of using accounting softwares and how they bring accuracy and transparency to financial dealings of businesses.
Ease of usage
Having web-based accounting software makes it easier to keep track of all your finances and the tasks connected to them.
A usual finance management task involves bookkeeping, a sales record, tax issues, banking transactions, asset management, etc.
These softwares solve the mobility issues for proprietors, accountants, and other members of financial teams. Since all the details are stored on cloud, they can be accessed from anywhere, and there is no need to carry a physical ledger or visit accounts department every time you need to make a transaction.
Data loss and data breaches are becoming a severe threat for businesses all over the world. According to Veronis, there are 3950 confirmed cases of data breaches, in 2020 alone.
According to UniTrends, 94% of companies never recover from a data loss, while 51% of them close within two years of data loss.
Having your data stored in a secure place is important to protect it from being lost. Physical storage is always threatened with the risk of natural calamities, fire, and other disasters.
Similarly, hosting your data stored on insecure web servers also make it vulnerable to ransomware and hack attempt.
Accounting software takes away data protection worries as they implement rigorous security checks to make sure your data is always protected and backed up.
These softwares have multiple-step verification and strong encryption to save your data from any digital threat. Since the data is hosted and backed up on multiple servers, it also mitigates the threat of any natural disaster.
For example, the Freshbooks accounting software implies multiple security methods like SSL certificate, firewall protection, strong encryptions, physical security, breach notifications, etc., to protect their clients’ financial data.
Several research has shown that using cloud servers, as opposed to on-site physical servers, significantly reduces businesses’ security and maintenance cost.
This money can be diverted and used in a more resourceful manner to multiply profits.
Accuracy is critical when it comes to managing finances and expenses.
Finance management is a long process that requires attention to minor details, involves several calculations, sifting through hundreds of columns of data, etc.
Thus, it is prone to human error. According to Forbes, studies have proven that 88% of all spreadsheets have errors.
If you diligently finish this arduous task, there are still chances that you will get some of your calculations wrong.
To avoid these mistakes and improve the accuracy of calculations, businesses can switch to accounting softwares. They store all the documents, process your financial records, and organize them.
With these softwares, you don’t have to make manual calculations. They automatically generate reports based on your numbers and calculate all the estimates, revenues, collections, and projections.
This leaves no chance of a mistake, and all your important calculations are made with 100% accuracy.
Filing tax is not easy, and every business owner will testify to it. You have to break every last drop of sweat to get all the details right. Even then, businesses may file their taxes with miscalculated revenues and mistaken profits.
It results in fines and other prohibitions from the tax authorities and leads to a loss of reputation for the company.
Moreover, with disorganized accounts, you would need to hire the service of a tax expert, which can cause a significant increase in your expense.
But an accounting software can help streamline your taxation process. Since you manage all your finances through software, you would be able to keep a record and design reports that you might need to get your tax calculations right.
With these softwares, your accountant and tax officer can easily access all the records without the need to sift through piles of documents.
Accounting software can also make tax calculations based on your earning and profits. These calculations are very accurate as they are based on the prevailing tax rates of your country.
Analysis and reports
Managing accounts is one thing, and creating a forecast based on those numbers is another thing. Without a forecast and future estimations, you won’t be able to plan for growth.
For example, the amount of revenue you earned in the last two consecutive years will help you project a number for the next year. Suppose you estimate a number and based on it, you create an expansion plan to increase the output, hire new employees or diversify your business portfolio. If the numbers or calculations are incorrect, the forecast won’t yield the same results in reality.
Accounting software automatically generates analysis and reports and even chart future projections to make your task easier.
These reports are like having an in-house financial advisor who analyzes different aspects of your finances and customizes a report to help you make wise and informed decisions.
Not only do these softwares generate projection reports, but they also make reports about payable loans and receivable amounts.
In this fast world of technology, making money has become a lot easier due to several tech inventions. There are software and tools to manage every aspect of your business, from human resources to customer care to inventory management.
You can use them to optimize your business productivity, improve efficiency in tasks, cut the cost of doing business and make accurate projections about future growth prospects.
Erica Silva is a blogger who loves to discover and explore the world around her. She writes on everything from marketing to technology. She enjoys sharing her discoveries and experiences with readers and believes her blogs can make the world a better place.
Find her on Twitter: @ericadsilva1