While there are many factors that can cause a business to fail, a common feature is the failure to maintain appropriate accounting records. As the new financial year approaches, now would be a good time to take a serious look at your systems and see if they can be improved.

Blog: What accounting system should I use?

While there are many factors that can cause a business to fail, a common feature is the failure to maintain appropriate accounting records. As the new financial year approaches, now would be a good time to take a serious look at your systems and see if they can be improved.

Good accounting records will help you –

  • Manage your business better
  • Keep track of your dealings with customers and suppliers
  • Prepare meaningful accounting reports
  • Provide information to your bank/the Tax Office/your accountant
  • Plan cash flow for your business, and of course
  • Comply with a number of laws that require them

The real question however is “which system should I use?”

Now, assuming we ignore the shoe-box option, some type of computerised option is the obvious choice. And there are plenty of choices.

Traditional desktop programs such as MYOB and Quickbooks have been popular options even when using those programs properly was beyond the skill-set of the person keeping the records. They were also inflexible forcing the business to adapt processes to suit the software rather than the software supporting the preferred processes.

With the development of cloud computing, the options expanded considerably. Applications such as Xero were developed specifically for the cloud and eventually, even MYOB & Quickbooks were forced to convert their desk-based products to a cloud version.

So, why use a cloud-based application?

  1. The cost factor - All you need is an internet connection and you have access so your IT costs are reduced. The technology is simpler and all the upgrades are done for you.
  2. Security - This is a two edged sword. On the one hand, your data is now in the cloud so you don’t have to worry about hardware failures, backups or unauthorised access to your desktop computer. On the other, your data is now in the cloud so you have to rely on experts with more resources than you’ll ever have to eliminate hardware and security failures.
  3. Scalability - In the past, buying licences for additional users was an expensive process and often access licences were sold in (say) 5 user packages. Most cloud computing models allow additional users at no (or minimal) cost avoiding that impediment to growth.
  4. Flexibility - Xero (in particular) allows the business to add desired features to the basic program via numerous apps that bolt on seamlessly. This allows the business to have a tailor-made system further enhancing the value of an excellent accounting system to your business.

Investing in an appropriate system for maintaining an accurate and reliable accounting system without major expense (dollars or time) makes sense, particularly with the new financial year on the horizon.