So what is an accounting system?
An accounting system has procedures and controls sufficient to collect, record and classify financial information. This data should be accurate, relevant and timely to enable you to fulfil all your filing and reporting obligations. More importantly it should facilitate decision-making within the business.
Managing your business rather than the business managing you: is the benefit to be gained from a robust accounting system.
Depending on the type and size of your business your requirements will vary. You may have to produce sales invoices, capture expenditure, process payroll, produce vat returns and provide sufficient management information to ensure the smooth running of the business.
What type of system do you use?
Manual records
Manual systems can be tedious and time consuming; however some owners are very comfortable with this method of data entry. They understand the single entry recording system and this is sufficient to produce year-end information. A major drawback, however, is the time and effort required to extract detailed management information. A manual system is rarely used in driving the business.
Electronic workbooks
A step up is the use of electronic records such as Excel workbooks. These systems have the efficiencies of built-in formulae to take the tedium out of adding monthly columns of figures. This again is a single entry system and whilst good for collating and analysing data it takes time to produce and keep updated monthly management information.
Computerised accounting packages
Computerised packages come in various levels, from the basic to the sophisticated systems that can cater for such areas as stock and multi currencies. They have the advantage of integration and the ability to produce real time information about the operation of the business. You know your numbers: sales activity, overheads, and profitability. Reporting enables you to track Key Performance Indicators (KPI’s) and drive your business month on month. When choosing a computerised system, you will need to make a solid commitment in both time and money in order to reap the benefits.
We are now seeing the emergence of online systems and with the ease of access and cloud storage these are starting to attract serious attention.
My philosophy has always been to keep it as simple as possible. You need to understand your finance function before investing in expensive systems. Carry out sufficient research to ensure you implement the most appropriate system for your particular business needs. Consider not only the hardware and software but also the installation of the system and staff training. Invest in a system that will grow with your business.
Remember the importance of numbers and choose an accounting system that delivers.
For the first 5 owners who contact [email protected] quoting reference WEB05 we will carry out a free systems health check.
Dawn McLaughlin & Co Chartered Accountants provides a wide range of professional support services for business and community organisations. No matter which sector you are in or size of your business, we have cost-effective solutions that can be tailored to suit your needs.
Understanding what you need to empower you to grow your business is vital for profitability and success. To discuss your business development needs contact Dawn on 02871 370886 or via email [email protected]
