SMEs - even with a smaller budget, limited resources and smaller IT department - can implement 'big-business' tools to help them automate business and financial processes more effectively.
The dreaded tax-date looms
Clearly labeled boxes of invoices and receipts are lined up across your desk. In each, layers of records meticulously filed throughout the year in alphabetical order. The documentation has been lovingly prepared for early July when you will sit down with your calculator to prepare your financial statements.
June 30 arrives and all of a sudden, what seemed like a foolproof process throughout the year comes drastically un-stuck. You realise invoices offer no value filed in this manner. Accountants, whom you are paying through the nose, will spend days re-organising the documentation into chronological order.
Not only have you created the need for dual-processing, but you have jeopordised data integrity, introducing the opportunity for human error through manual processing.
Issues with data integrity and accuracy are two of the greatest concerns for most small to medium businesses at tax-time. Manual processing and data entry can mean that preparing GST BAS returns blows out to five or more hours while balancing accounts can take a full day.
This is time most small businesses simply cannot afford to lose. Time that could be better utilised servicing customers and growing your business.
Further to the lost time, the increased stress and pressure caused by seeds of doubt about data integrity permeate in small business owner's minds. Lost sleep joins lost time and your cash flow, service delivery and ability to plan strategically can be impacted.
Far from dreading the approach of June 30 and its inevitable number crunching, today's business owners should be confident that their financial information is accurate and prepared efficiently and quickly.
The business case for business software
Savvy use of business technology can ease pressure not just at tax time but throughout the year.
Business software has come a long way from its clunky and expensive origins, now offering greater flexibility, improved usability and better value for money.
Today's business software solutions are a vital resource for helping reduce repetitive manual tasks and increase efficiency and accuracy. They also offer managers timely reports on the state of their business, arming them with the information they need to make better decisions about inventory, hiring needs and cash flow. What used to take countless hours with spreadsheets and calculators can now be done virtually in minutes with the right software in place.
Tangible dollar benefits of this approach can be measured in time and cost savings. For example, one supply chain management company identified that staff members were entering data up to seven times into separate spreadsheets and accounting software products, wasting valuable time and compromising accuracy.
By implementing a business software solution, processes were streamlined and data entry automated. This equated to seven or eight additional staff days per month across the business and thousands of dollars in increased productivity per year.
Savings for small businesses are often obtained in automating repetitive tasks such as bank reconciliations, inventory management, debtors, creditors and balancing ledgers. Hours can be slashed to minutes by using business software across most small businesses.
Those using customised business software solutions often find preparing data for tax reports like BAS and IAS is automatically generated and will balance to the cent with an accurate audit trail. This means time taken to prepare quarterly or annual IAS and BAS statements can be reduce by more than 75 per cent.
Greater access to accurate and timely information will also help to manage and grow your business. For example, insight into management reports helps identify areas to focus your attention to keep your business growth strategy on track.
What you should look for in business software
Selecting the right business software can be as confusing as tax laws! So what should small businesses look for when deciding which products to choose?
Following these simple rules should improve your business software purchasing decision:
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Understand your requirements
Identify in your business inefficient and time-consuming processes such as spreadsheets, number crunching, manual data entry, reconciling and paper handling. These areas of inefficiency can often be quickly automated by today's simple and easy to use software.
Clearly document these time-consuming processes and ensure your preferred solution effectively addresses and automates them.
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Look for a solution specific to your industry
Each type of business has different accounting, tax and reporting requirements. It is important to ensure your preferred solution has a pre-configured set-up for your industry (e.g. retail, farming, professional services, etc.) This will allow you to quickly customise the software and reporting capabilities to your industry's particular requirements, and is more efficient than adapting your business to conform to standard accounting software capabilities.
Ask colleagues within your industry or industry bodies for advice and recommendations.
- Select a solution that will grow with your business, for the life of your business
Beware of software vendors who may try to shoehorn you into purchasing large-scale, complex business software solutions of which, realistically, you require only minimal functionality. Look for software solutions that allow you to add or customise modules as required. This will ensure you are only paying for the features and functionality you need at the time but the solution will grow with your business.
Similarly, look for business software solutions delivered by vendors committed to research and development and with a roadmap that reflects your business needs, now and in the future. For example, is the software you're considering enabled for web deployment, does it automatically update or are upgrades provided when new tax or accounting regulations come into place?
- Think global, not just local
The Internet is fast-tracking businesses selling to international markets, so consider whether the solution can manage multi-currency transactions. Can the software comply with other country's tax laws and is the software vendor supported globally? Local software firms may find it difficult to update their software in line with the rapidly changing international tax-landscape and regulations.
- Look for local partners who have 'been there, done that'
Ensure the software vendor is supported by a strong local implementation partner network that has installed and maintained the solution (many times) before. You want someone down the road from you who is familiar with the software when you require help, not a technology support team based in a call centre overseas.
- Seek professional help to maximise your investment
Once you've paid good money for your new software solution, work with the local implementation partner to get to know the capabilities of the technology and how you can use them. This will help ensure you experience maximum return on your investment.
Beyond tax-management, effectively utilised business or accounting software can also discover trends in your business, e.g. customer's payment patterns, allowing you to predict cash flow in the near future. Your IT acquisitions need not only address immediate tax-management and financial reporting needs, but can be used to identify emerging patterns and ‘red-flag' operational problems, providing you with the information you need to keep your company's growth strategy on course.
- Consider simple solutions
If a fully-fledged accounting software package is out of your budget range, consider other practical solutions to reduce your accounting and administration requirements. For example, consider using a single credit card for all business purchases. With most credit cards today, you can download spending data from the Internet and import the information into a spreadsheet to help compile month-end accounts.
Automate for growth
Busy business operators need to remain focused on the customer and service delivery to stay ahead. Reviewing business processes and identifying administration efficiencies can be viewed as a ‘nice to do', rather than a ‘have to do'.
However the immediate and long-term benefits of automating administration via business software often result in the question "why didn't we do this earlier?". The time and cost savings, together with the additional management information, improve business performance and allow business operators more time to focus on their customers.
The first and most difficult step is seeking professional help from a software vendor, your IT support or an accountant, and committing to reviewing opportunities to improve efficiencies across your business. From there you and your advisor can evaluate business software solutions that can help you automate processes.
Rather than shifting into administration overdrive at tax time, stop, evaluate and commit to an approach that will see you automate for the future.