Online accounting software can provide you with information about all aspects of your business finances, to help you recognise which bits are doing well, which bits need attention, and which decisions and plans you will need to deal with the future, whatever it holds.
The challenges of 2020 have highlighted the importance of really understanding your business finances – the key aspects of which are:
1. Cashflow – Online accounting software can project future receipts and payments weeks or months ahead. It will help you identify if there may be a cash shortfall coming up, which can help you make decisions about reducing expenditure, seeking additional funding, or investing further in your business.
2. Managing Customer Credit – no matter how successful you are at selling to customers, if they don’t pay you, you don’t have a business.
Online accounting software can give you a snapshot at any time of who owes you money, and how long the funds have been outstanding. This gives you the actionable information you require to get your money more quickly.
At times like this, when cashflow may be tight, that’s a really valuable tool to have at your fingertips.
3. Profitability – you need to know how much profit your business earns, which means understanding your costs, and knowing how a change in income will affect these costs.
If you have more than one product, or premises, accounting software can help you identify the profit generated by each. This helps you know which areas are costing you too much money, and allows you to focus your efforts on the most profitable parts of your business.
4. Costs – it is generally much easier to manage costs than income, but many businesses have no idea how much they spend. If you allow your costs to run away with you, it is easy to turn a business that should be profitable, into a loss-maker.
Having up-to-date information about costs will help you decide where cutbacks can be made to improve profit and free up cashflow.
The biggest advantage of all, is that all this information is current, up-to-date, and instantly available.
You don’t have to wait until after your accountant has finished your year-end accounts before you know how much profit the business has made. As long as your online records are well-maintained and regularly updated, all of this information will be right in front of you.