Real-time knowledge of business financial position highly beneficial (Summer 2012)

The introduction of accounting programs like Xero, Banklink and MYOB has provided major advantages to business such as speed and accuracy of operation, and perhaps most importantly, the ability to see the real-time state of your business’ financial position at any time you choose.

A typical computerised accounting package will offer a number of different facilities, but there are distinct advantages, including:

  • Management information – reports can be produced to help management monitor and control the business, for example the aged debtors will show overdue accounts, trial balance, trading and profit and loss account, and balance sheet.
  • Availability of information – the data is instantly available to different users in different locations at the same time.
  • Up-to-date information – the accounting records are automatically updated and so account balances are always up-to-date.
  • Accuracy – there is less room for errors as only one accounting entry is needed for each transaction rather than two (or three) in a manual system.
  • Speed – data entry onto the computer with its formatted screens and built-in databases of customers and supplier details and stock records, can be carried out far more quickly than any processing.
  • Automatic document production – fast and accurate invoices, credit notes, purchase orders, printing statements and payroll documents are all done automatically.
  • GST – automatic creation of figures for GST returns.
  • Efficiency – better use is made of resources and time; cash flow should improve through better debt collection and inventory control.
  • Cost savings – computerised accounting programs reduce staff time doing accounts and reduce audit expenses as records are neat, up-to-date and accurate.
  • Deal in multiple currencies easily – many computerised accounting packages now allow a business to trade in multiple currencies with ease. Problems associated with exchange rate changes are minimised.

We review three key programs:

Xero

The main benefits we have found with clients switching to Xero are:

  • Interactive credit control – the simple graphs and diagrams make it easier for businesses to manage outstanding sales invoices; each invoice can host a complete audit trail of phone calls and notes to enable multiple users to pick up the trail.
  • Online bank feeds – the daily bank feed means the status of sales invoices (paid / unpaid) are in real time providing the best possible information to business owners. Performing bank reconciliations is a very simple process and transactions can be categorised automatically. This includes credit cards, PayPal and support for over 160 foreign currencies.
  • Interactive fixed asset register – although many desktop products offer this function, none have the pending file, which means the accountant can assist in the original setup of assets. By accounting for depreciation correctly, clients can avoid nasty surprises when the year-end accounts are drafted.
  • Expense claims – a relatively new idea in accounting systems, this function enables multiple users to input their own expenses into the system for authorisation and payment. Again as the system can be accessed from anywhere on any computer, this has been particularly beneficial to companies with regional sales teams.
  • Job tracking – very similar to the job costing models in most mainstream packages; however the job tracking has two reporting levels, which can really enhance management information.
  • Cloud – the benefits of this are there are no upfront costs of buying the software, software is automatically updated, the user and advisors can access the data from anywhere, data is stored and backed up regularly, and doesn’t slow down your computer.

Banklink

  • Banklink frees you up from bookwork enabling you to focus on growing your business by:
  • Simplifying the accounting process.
  • Saving you time and money by virtually eliminating manual data entry and significantly reducing time spent doing bookwork.
  • Reducing stress as you won’t need to understand everything about accounting, you’ll have fewer queries from your accountant, and you won’t need to supply receipts, bank statements or files from other accounting software.
  • Providing accurate and timely data supplied to your accountant daily, weekly or monthly.
  • Providing financial information with timely business reporting such as cash flow, Profit and Loss, and GST.

MYOB

Key benefits to MYOB (Mind Your Own Business) are:

  • Software is presented in easy to understand modules so that business staff can easily input data, which the software then sorts and analyses.
    Exchange rates are tracked at a transaction level.
  • Chargeable time is monitored and it is easy to bill work in progress.
  • A vast number of reports to help management in day to day planning.
  • Stock control allows monitoring of stock levels for cost-effective ordering.
  • Accounting packages can help businesses in daily tasks and, in turn, improve efficiency and the cost structure of the business. When selecting accounting software, it is advisable to sit down with your accountant and work out which one is more suitable for your business.

Published in WINE Hawke’s Bay Spring 2012.

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