Software revolution offers tools for instant analysis
Technology for smaller enterprises has come a long way. Christopher Niesche reports.
Accounting software is probably the last thing a small-business owner thinks about when they start working for themselves. But the software has moved beyond being merely a tool to comply with tax laws.
Many software packages can now help owners keep track of how their enterprise is performing and whether it is meeting their goals. "It's useful information that you can use in your business to make decisions," says Heather Smith, who provides training and support to small businesses on how to use accounting software.
Many programs, such as Xero, give users a "dashboard" that displays the key metrics of the business.
"They're business information tools that the senior manager can just jump into and get a very high-level strategic overview of the business and monitor the business performance just by looking at the dashboard, which may contain graphs and bar charts and will contain links to drill down to get further information," says Smith.
"For the business owner who's perhaps not too into numbers they can just get a high-level view of simple statistics, like how many invoices were sent out last month and what was the average value of invoices sent out."
Smith, who is not paid by any software companies, notes that a software package called Fathom HQ can augment existing software such as Xero and MYOB to make them more powerful business analysis tools.
For instance, transactions related to individual jobs can be tracked, allowing the business owner to work out how much profit they made on each job.
Users can set the key performance indicators and goals they want to achieve and the system will let them know how they're going.
"It enables them to map their journey out, identify how they want to get there on their journey and use the dashboard to monitor how they're getting there and keeping them on track to the goals of the business," says Smith.
Greg Pritchard, of Dedication Group, which runs technology and change projects, says there has been a revolution in small business accounting software that has helped save time and money.
The introduction of online accounting software by Xero has driven other providers such as MYOB and Quicken to catch up and add new features, he says.
First, software needs to offer mobility. Gone are the days when the software is loaded onto a single PC, usually at the business premises itself, and that machine is the only way the accounts can be accessed. Now company accounts are accessible from anywhere. "You can check on the state of your debtors from your iPad while you're sitting on the bus," says Pritchard.
Second, any software needs to be interconnected with other accounting and bookkeeping software packages, and this has been made easier with data storage on the cloud. For instance, with a single click users can tell the software to get the point-of-sale data from another program. "It means that you're not having to download a file, convert it to another format, upload the file and have that sort of manual grunt all the time, or worst case, rekeying data, which is just insane."
This feature can also bring significant cost savings because there is less work required from a bookkeeper.
Third, unlike older software packages, accounting software is getting easier for the non-accountant to use. But related to this is the need for software to be able to operate at different levels, so that along with the basic features that non-professionals use, the software also has the advanced features that accountants need to prepare tax returns and so on, such as depreciation schedules.