So your business has been growing, and now you are wondering if you need new financial software or accounting software to accommodate your growth. There are certain things you can do to make your financial software more manageable for your growing business.
Budgeting: Your business may have been running along just fine for years without a budget. However, as time goes on and you grow from a small to mid -sized business, you can start to reap the benefits of a budget. A budget can help you make better decisions and can also uncover the strengths and weaknesses of your business, as well as help you to keep your spending under control.
Accounting Method: Many businesses start out using a cash accounting system: a system in which only cash income and expense transactions are recorded. Cash accounting systems are very easy to learn and use, and they can provide sufficient information for tax purposes. However, the system does come with its limitations. It does not record non-cash transactions, so transactions that in fact affect the debt structure, such as a purchase on account, are not considered. You may have also used a single entry accounting system that does not provide the built in system of accuracy checks that a double entry accounting system does, and in fact it does not follow the standard accounting principles of professional accountants. A double entry accounting system can track the value of all assets, liabilities, and inventory in a business, and can also generate valuable reports such as an income statement and balance sheet. These reports show the financial 'big picture' and can help a business make smarter decisions and become more profitable.
Chart of Accounts: You may have started your business with the standard and generalized chart of accounts offered by your more basic accounting system. Over time you start to develop categories within your chart of accounts, and it may be beneficial to create more detailed accounts that fit your business just right. For instance, wouldn't it be useful to know what makes up a marketing expense, rather than just putting it into a general expense account? This is when it can be helpful to create an additional layer to your chart of accounts.
Implementing business financial software can accommodate the growing needs of your business, and can help you understand your numbers, which, in turn, aids the growth of your profitability.