Maintaining accurate financial records is vital for the growth of your small business, which makes accounting one of the most important cogs in the organisational framework.
But when it comes to finance, 60 per cent of small business owners believe that they don’t possess enough accounting knowledge. Due to this lack of knowledge, they often succumb to accounting methods that are either too expensive, time-consuming, or prone to errors.
While outsourcing and in-house expertise may prove to be too expensive, small businesses still can benefit from affordable cloud-based solutions that go beyond spreadsheet accounting to handling diverse financial data effectively.
If you’re sailing in the same boat, find out how automated bookkeeping tools can solve your financial recordkeeping challenges and help streamline your finance management.
Why small business finance matters?
According to the World Bank, small businesses represent about 90 per cent of businesses worldwide and more than 50 per cent of employment. Within a broader economic context, the financial health of small businesses is not only crucial for their sustainability, but also for driving economic prosperity on a global scale.
SMEs are vital engines for economic growth; they foster healthy competition and promote innovation. However, as they expand, their financial data grows more complex. Eventually, handling business accounts in spreadsheets can become confusing, time-consuming, and prone to errors. A growing business eventually demands a scalable accounting solution.
Top bookkeeping challenges solved with accounting software
Accounting software simplifies several processes to help optimise various aspects of your small business finance. With features like tax calculations, invoicing and billing, reporting and analysis, and data governance, you can ensure seamless growth and financial resilience.
Here are four examples when cloud-based bookkeeping software can solve real-world accounting problems.
#1: Cash flow management challenges
SMEs often struggle with designating funds for recurring costs, leading to difficulties in maintaining liquidity. Poor cash flow management can also occur due to the following causes:
- inaccurate expense and payroll management;
- unclear account classification;
- too many receivables or loans;
- inaccurate sales goals; and
- ignoring financial statements.
Small business owners can overcome these problems by implementing a system that utilises real-time data for recording transactions. Online bookkeeping software and on-demand cash flow insights help business owners to:
- know their exact breakeven point;
- maintain reserves;
- collect receivables and extend payables;
- automate payrolls and loan payments;
- manage accounts separately and systematically; and
- avoid missed opportunities and penalties for insufficient funds.
Reconciliation helps you keep track of funds and contains bank errors that would otherwise grow into bigger problems. Reconciliation can be complicated, but it can prevent accounting errors such as duplicate charges, duplicate deposits, and other bogus transactions.
A robust online small business bookkeeping software will seamlessly integrate with your bank account and allow you to receive bank statements electronically. As a small business owner, you can set reminders to review reconciliation reports for any errors in the records.
#2: Compliance with tax regulations
Without a dedicated accounting team, keeping pace with the constant changes in tax laws and industry-specific regulations is a significant challenge, especially if you’re running a small business. It is vital to comply with your tax obligations, manage paperwork, and meet filing deadlines to avoid legal repercussions.
With integrated cloud accounting tools, you get access to built-in compliance management tools. These include risk management tools, internal audit platforms, and governance, risk, and compliance (GRC) platforms. Access to these tools enables you to follow a proactive approach to regulatory compliance for your small business.
#3: Time management
Bookkeeping is a full-time job consisting of several time-intensive back-office tasks. If you manage finances all by yourself, you’ll spend less time on your core business functions.
Instead of spending time managing your finances manually, you can quickly achieve a higher level of accuracy and boost efficiency by automating these repetitive processes. You can leverage bookkeeping tools to manage payrolls and invoices, file receipts, classify accounts and transactions, and ensure transaction details sync across finance systems automatically.
Bookkeeping is a full-time job consisting of several time-intensive back-office tasks. If you manage finances all by yourself, you’ll spend less time on your core business functions.
Instead of spending time managing your finances manually, you can quickly achieve a higher level of accuracy and boost efficiency by automating these repetitive processes. You can leverage bookkeeping tools to manage payrolls and invoices, file receipts, classify accounts and transactions, and ensure transaction details sync across finance systems automatically.
Eight bookkeeping software must-haves for small business operations
Prioritise accessibility
Choose a bookkeeping solution that offers anytime access regardless of your location. This enables you to have better visibility into accounts and manage your small business finances on the go.
Availability of real-time data
Look for a smart tool that works on real-time data and provides updated insights into all financial undertakings.
Automation capabilities
Choose a finance management tool with robust automation features and never look back on menial, time-consuming tasks. Leverage automation to save time and costs and make financial record-keeping error-free.
User-Friendly Interface
Any digital tool with an intuitive and user-friendly interface will simplify the learning curve and allow experts and non-experts to navigate it effortlessly. It also allows for shorter learning periods, faster deployment, and streamlined workflows.
Integration capabilities
When the tool integrates with other financial systems, it is easier to map, import, and sync transactions. Integrations also mean that you can easily automate the exchange of financial information between the software and your bank.
Scalability
Often when a small business grows, it needs to shift to a better solution that can accommodate growing financial data, increasing financial complexities, and transaction volumes. Choose a bookkeeping solution that can scale along with your business growth.
Robust reporting and analytics
Besides making taxes and compliance more straightforward, financial reporting features enable you to make your fiscal activities more considered, seamless, and forward-thinking.
Cybersecurity measures
Protect your sensitive financial information by prioritising security features in your bookkeeping tool. Verify that the software has robust cybersecurity measures in place to protect against online threats to safeguard financial health, your reputation, and legal stature.
Embrace cloud solutions and make business finance easier
Based on the IDG-backed 2023 Digital Business study, 89 per cent of businesses have already adopted, or are planning to adopt, a digital-first business strategy. If your small business hasn’t adopted cloud-based accounting software, you may be missing out on the business benefits, such as streamlined processes and actionable insights.
“The opinions expressed by BizWitty Contributors are their own, not those of BizCover and should not be relied upon in place of appropriate professional advice. Please read our full disclaimer."
