Using Accounting Software For Small Business To Help You Meet Your Goals
Accounting software for small business can help you keep up to date in a cost efficient way. The more up to date you keep your management accounts, the clearer the picture you will have on the health of your business at any time. This is why we advocate using accounting software for small business if you want to meet your goals.
On Day One of your business, you spent a lot of time and effort creating your vision and business plan showing your sales forecasts and cash flow predictions. So you know how many sales you have to do, and how quickly you need to get paid to keep the business solvent and profitable. Your business plan also tells you your projected profit. All this effort is wasted if this information is sitting in a file gathering dust. You need to be in the habit of using this information regularly to compare it to what is actually happening.
Even just knowing whether you are making a profit is not enough – you need to know where you are making it, and if you are not making a profit on all your products or services you need to know that too. Revenue is not profit! At the heart of successful business management is keeping your eye on the pennies every single day.
"Remember: if you are not making a profit, you don't have a business, you have an expensive hobby" Levi Roots, Reggae Reggae Group.
If you have a system that works for you, it won't be a major task to keep up to date, and you will always know where you are in your financial picture. This is why we especially like cloud accounting software for small business. A low cost solution, no software to install and no messy updates, and it's completely secure, available any time and any where you have an internet connection. Even if you are not a numbers person you can use accounting software for small business to bring your actual and budget information to life.
We are often asked how this works in practice, so here is an easy 5 step guide to setting up this information in Xero accounting software. Other systems may vary, but all should have a easy mechanism for managing your budget.
In Xero, simply click on Reports tab, and then the second option, Budget Manager which gives you a blank Overall Budget.
Click on Export and the .csv option to download your blank budget into a .csv file.
Copy and paste your actual data from your business plan onto your Overall Budget .csv file and save this document.
Finally, click on Import and select your saved Overall Budget .csv file to put your business plan information back into your cloud accounting software.
You also have the option of completing your Budget Manager manually line by line, don't forget to click Save when you're finished.
Now every month end you can go into Reports, All Reports, and the second option is Budget Variance. That's it! In 3 clicks you have your finger on the pulse of your business finances with your current month's actual and budget figures and year to date actual and year to date budget figures. All on one single screen in an easy to read format.
If you are still sticking your head in the sand, there may be a good reason. But unless you change what is happening, you may be stopping your business from achieving the goals you were hoping for. Don't delay, dust off those forecasts and take a good hard look at how you are going to achieve them. Comparing your actual and projected numbers is the best possible feedback on the performance of your small business.
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