How cloud accounting helps small businesses keep on top of their financials

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How cloud accounting helps small businesses keep on top of their financials

"We didn't start a business because we love the financials." That could be just about any small business owner speaking, but in this case, it's actually pantree.co co-founder Josh Chittick.

There are plenty of reasons why people start businesses, from 'buying yourself a job' to 'changing the world.' Wherever you sit on that spectrum it is important to keep on top of financials, but that's just a means to an end.

Even if your business is completely self-funded and you don't have to impress your bank manager or investors, it still makes sense to use proper accounting software rather than messing with spreadsheets or other homegrown systems. Your time is valuable, and creation and ongoing management of such systems isn't what your business is about.

The hours you save can be devoted to core business tasks, whether that's cutting hair, developing new or improved products, or seeking new customers. And the reports and dashboards provided by modern software will almost certainly provide you with more - and more timely - insights into the financial health of your business than homebrewed systems do. (Though as we observed in our comparison of accounting packages some businesses are so simple that paper-based systems can be a sensible choice.)

There are several advantages to cloud-based accounting software, and one of the biggest is that it provides anywhere, any time access to your books without being tied to a single computer. An associated benefit is that your accountant or other advisor can be granted the same access, so they can always see your latest numbers.

pantree.co, which develops collaborative supply-chain services for the hospitality sector, picked Intuit QuickBooks Online, which is how we heard about the company. But there are several other options for small businesses including those from MYOB, Reckon, Saasu and Xero, and there may be more to come.

"Cloud accounting is helping simplify the books, letting us get on with building pantree.co," said Chittick.

Co-founder Leigh Sherman added "Having cloud accounting set up from the get-go would have made life easier, saving a lot of time and energy," and he advises others to take that approach from the outset when starting businesses.

"When you start up, you don't always think about the finances. But often you need seed money, you need to bring people on board and it's all about managing the business for long-term success."

Intuit cites local statistics (PDF here) showing that one in four new businesses don't survive their first year and only half are still operating after three years. One in three businesses fail due to financial mismanagement, and one in eight due to inadequate or inaccurate records.

While having your business's financial information at your fingertips doesn't guarantee success, not knowing where you stand is a recipe for disaster.

To get an idea of how well you can use the information provided by accounting systems, you could take Intuit's financial literacy quiz. Don't beat yourself up if you fail to get full marks, because certain questions are not relevant to every business: services businesses don't carry inventory, and not all businesses are employers. But there's definitely room for improvement if you only get an average score.

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