This past year has presented unprecedented challenges for businesses but especially for small businesses. In these uncertain times, companies need to get a sense of how to navigate the future.
Forecasting, with the help of an advisor, can bring optimism or at least a certain comfort in knowing what’s possible. However, a company must have its bookkeeping up to date so the analysis can be done in real-time.
“For many small business owners, bookkeeping and other accounting tasks often take a back seat to more pressing daily concerns. They’re trying to run a business and also keep up with deadlines for their tax returns. Getting the bookkeeping done for a small firm can be onerous and stressful when trying to handle it independently,” says Graham Rogers, a manager at Manning Elliott who specializes in helping entrepreneurs and privately held businesses.
Rogers says many business owners aren’t aware of the newer cloud-based options available to simplify their bookkeeping so that it’s always up to date.
“Traditionally, a lot of business owners would do their bookkeeping on a desktop-based accounting program, or maybe even an Excel sheet,” Rogers explains.
“It’s a time-consuming process. There’s a lot of manual data entry, and it’s not always a business owner’s area of expertise. Often what we see, when we help them with their tax returns or help with their financial statements, are a lot of mistakes—because they’re not accountants.”
These newer cloud accounting platforms, QuickBooks Online and Xero being the main ones, make the process easier and more efficient.
Rogers says that a small business owner may find that they don’t want to deal with the bookkeeping at all, preferring an accountant take it on for them.
“Leveraging the technology helps us to do it more cost-effectively. Whereas, if we were to do it traditionally with some of the older programs, it would be too costly, and it wouldn’t make sense for us to do it for them,” Rogers explains.
Not surprisingly, there are complementary apps that connect with the platforms to streamline all things financial from receivables and payables to payroll. One such app is Receipt Bank, which does precisely what its name suggests. It takes a jumbly mess and transforms receipt organization into a Marie Kondo dream come true.
Snap a photo of a receipt or invoice and all the data is read and automatically put through into the system.
“Instead of having a box of receipts to go through and manually type out all the information, this allows you to take a picture of it, and that’s it,” says Rogers.
“Plus, it keeps a backup copy, should there be an audit.”
To help automate payroll, Wage Point is one of the most widely used apps.
The employee’s pay is calculated, then paid via direct deposit, and it pays their income tax to the CRA (Canada Revenue Agency).
Rogers says business owners don’t have the stress of meeting yet more deadlines, which if missed, incur penalties. “This helps streamline this process and automate it,” he says.
Plooto is a program that tracks payables and pays vendors: invaluable but straightforward. “An owner can just pull up a listing of their payables and then say, ‘I’ve got to pay this person by this time,’ and then just click a button and the payment goes out,” Rogers explains.
As imperative as it is that businesses meet deadlines for taxes, payroll and maintaining their supply chain, keeping finances current means seeing opportunities for growth or surviving in a challenging economic climate.
If not keeping up with the financials, then businesses are more likely looking backwards to gauge their financial state rather than seeing an accurate financial picture to make informed decisions.
“Not having access to that real-time information, they can miss out on opportunities,” Rogers observes. “I’ve seen clients launch a new service or product and not know how profitable it is. A year later, they look back and realize they didn’t have the pricing right or missed out on an opportunity to get a lower cost through a different supplier.
In a lot of cases, they’re looking back in time and realizing they made a mistake.”
With all the company data on the cloud, the accountant gets access to it by logging onto a website to assess finances at any point in the year. There could be meetings every few months to see if the company is on track with its goals.
“We would play more of an advisory role instead of just doing their year-end taxes and financial statements,” suggests Rogers.
Rogers recalls how one client’s timely switch to a cloud system helped them keep up with a high rate of growth and allowed the business to more easily adapt to the COVID restrictions of the past year. As they were already set up on the cloud, they didn’t need access to anything in the office and were able to maintain their regular bookkeeping. And, as importantly, they could have Rogers evaluate their financial situation.
“They were concerned about their cash flow as sales had dropped. As an advisor, I was able to go in and look at their cash balance and forecast for them what their next few months would look like. It gave them peace of mind that they had enough cash on hand to survive without having to get more financing.”
For more information on how to switch your company to a cloud-based platform or connect with a business advisor, visit www.manningelliott.com.
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