With St. Patrick's Day and spring arriving, March is a great month to have "green" on the mind. There are green shamrocks, green beer, new green vegetation, and there's even green accounting too. Here are five ways to make your accounting a little more green:
When you spend money on your business, ask for an emailed receipt rather than a paper one if you have the option. More and more vendors are offering this as a service. Then when the receipt comes in your email, you can forward it to your bookkeeper and/or upload it to your accounting system.
Smile for the Camera
If the vendor does not offer an emailed receipt, do the next best thing: take a picture of the receipt with your cell phone. Some accounting systems allow you to upload the receipt right from your phone, and if you don't have that feature, you can always email it or upload it to your PC.
If you invoice customers, send a PDF invoice via email. More and more businesses are abandoning the snail mail and getting things to customers faster with email. They're getting paid faster, and speeding up your green is usually a good thing.
Many people adopted online banking about a decade ago. If you're still getting paper statements, you can get those stopped and download your statements once a month from your online account. It's better not to get your statement in the mail anymore anyway; it reduces your risk of identity theft from stolen mail.
Software and Supplies
When possible, purchase your software online and download it rather than making a gas-guzzling trip to the store and purchasing a box. You can also order your office supplies online and have them delivered. As long as you buy local, it should be a green purchase, and it will save you tons of time too.
These five ideas will help your accounting become a little more green.
Chances are, you have at least one recurring transaction each month, whether its a bill or invoice, or maybe a credit card or bank fee. Do you find yourself entering these transactions after-the-fact, days, weeks, or even months later than they occurred? These types of transactions are perfect candidates to be setup as memorized, or recurring transactions in your accounting program. You wont have to worry about trying to remember to enter them every month, and it's a quick, easy way to streamline your bookkeeping just a bit more. The next time you encounter one of these transactions, memorize it, and then you can forget about it!
Many businesses operate with seasonal peaks and valleys. Retail stores just completed their busy holiday season. Construction contractors are busy when the weather is good. Accountants are very busy from January through April, but also experience a quarterly peak in July and October.
Your business may have its own calendar of busy and slow times. If your business goes through slow times, then your cash flow may suffer at certain times of the year. But having seasonal sales is only one of the reasons for a bumpy cash flow.
You might also have a business where annual payments are made for many items such as equipment purchases, software licenses, insurance renewals, and other large costs. On the revenue side, it could be that your clients pay you annually, which can be hard to predict.
There are many solutions that can help to smooth out the seasonal bumps, and here are a few ideas for your consideration.
Plan for Prosperity
When income and expenses go up and down and up and down, it's really hard to know if you have enough money for obligations coming up. Creating a budget can help a great deal. Consider creating two budgets: one that shows the ups and downs and one that averages a year's income and expenses into twelve equal parts.
With both budgets, you'll be able to see which months will be deviating from average and by how much. From there, it's easy to create some forecasts so you can stay on top of your cash requirements.
Cash vs. Accrual Basis
It might help your business decision-making to convert your books from cash basis to accrual basis. This is a huge decision that should be made with an accounting and tax expert, as there are plenty of ramifications to discuss.
In some cases, the accrual basis of accounting will help keep those annual payments from sneaking up on you as 1/12 of the payment can be accrued on a monthly basis to a payables account. This also keeps your net income figure steadier from month to month.
If your clients prepay their accounts on a yearly basis, you can book the income monthly and keep the difference in a Prepaid account. This spreads your revenues out and recognizes them over time.
If you feel accrual basis accounting is a little too much of a commitment, your accountant can still work with you to help you avoid the impulse of spending too much during the cash-rich busy season. Perhaps the excess cash can be put into a savings account until it's needed. You can draw out 1/12 each month as you need it. A little planning such as the above suggested forecasts will help you determine how much you can take out each month. You can even name the Savings account "Do Not Spend!" or "Save for a Rainy Day".
If it's just too tempting to have all that excess cash building up in the good times of the year, try one of the ideas above to take back cash flow control and smooth out those bumps.
Finding the right accounting solution for your small business can be tricky. Applications like QuickBooks and Xero sometimes offer too many options and features, making them overwhelming or intimidating for business owners to learn and use. As a result, some people try to use programs to run their business that aren't meant to handle accounting tasks, like Word or Excel. If you or someone you know has been avoiding using an accounting solution, FreshBooks may be the answer.
FreshBooks is an ideal application for small, service-based businesses. It offers convenient features and controls so you can track time worked, record basic in and out transactions, and prepare useful reports, while staying simple and easy to use.
With up-to-date financials, you can get more information and insight to allow you to make better decisions about your business. FreshBooks will also save you time that you can dedicate to more profitable tasks, and can even help you get paid faster by customers with convenient online payments.
FreshBooks' award-winning support is always free, so you don't have to be intimidated about using the product without any guidance. If you're interested in a product demo, or want to learn how to sign up for a free account, contact us for details.
Have you ever tried on a shirt or jeans and found they didn't fit at all? They looked great on the hangar, but that was the end of it. Accounting systems come in all sizes, shapes, and colors just like clothing; but just like clothing, some accounting systems fit your business better than others. It's not that easy to spot in a mirror when an accounting system does not fit a business, but there are other signs that will give it away. Here are five of them:
A workaround happens when your current system cannot do all the things you need it to do. A workaround can take the form of a spreadsheet, a report, a program, or a database that is created with extra time spent every month so you can get the information out of your system and manipulate it the way you need it to run your business.
Since no accounting system is a perfect fit for any one business, it's normal to have some workarounds in place to meet your unique business needs. If you have too many, it might signal that you've outgrown your current system and need to find an accounting system that provides you with more functionality.
Downtime or Wasted Time
If you are unable to access your system when you need to do your job, then you are experiencing downtime in one form or another. You may be waiting for a file to be fixed, or the system may actually be down. If your system runs slowly, then that's another form of downtime that wastes your time. If you have to take time to make backups and perform restorations, this type of activity does not add value to running your business. When you have too many of these time-wasters, it could be time to look for a better way.
If your accounting system is more than three years old and you've chosen not to update it, then you may be missing out on newer time-saving features that could help you reduce the amount of time you spend doing your accounting. If your accounting system is more than six or seven years old, then you are definitely losing productivity. It's time to bite the bullet and learn a new system so you can experience better profit margins in your business.
Limited Users or Security
If your current accounting system does not provide you with enough users, then you might have more expensive employees doing lower level jobs, which is costing you in payroll expenses.
You may also need certain user permissions to be more granular than they are in your current system as you grant access to certain parts of the system to different users. If you're on QuickBooks, that's a really easy fix, so please talk to us about this.
We find that user access is a hot button issue with a lot of business owners, so if it's true for you, please reach out and let's have a conversation about this.
Limited Physical Access
If your accounting system is located on a private PC or server in your business, this limits access to your files. If you have more than one business location, you like to work from home, or your employees work from their homes occasionally, then you may want to look for a system that accommodates "anywhere, anytime" accounting. This is a pretty easy fix too, as this requirement is now quite common with business owners today.
The same can be said for mobile access. New apps enable many accounting features to be completed from your mobile phone, such as checking bank balances, approving a bill, and taking a picture of a receipt and uploading it, to name a few. If you want to do your accounting from your mobile phone, ask us about mobile apps that we can link to your system to enable this functionality.
Boosting Your Accounting Productivity
We might be a little biased, but accounting has gotten to be a lot more fun in the last few years with advancements in technology. If you see any of the signs listed above, it might be worth a conversation to see if your accounting system is the best fit for your business.