How Bookkeeping Software Empowers Your Goals
The best bookkeeping systems are much more than simple spreadsheets for depositing data. This software is designed to sync with your other programs so that the flow of information is uninhibited. When done correctly, you can track nearly every aspect of your business operations with more precision.
Additionally, a good system provides a suite of tools that allows you to analyze your finances from all angles. The better your data, the better you’re able to create effective strategies.
“A successful company has customers at its core,” insists entrepreneurial guru Tanvir Haque. “Long gone are the days of one-size-fits-all advertising and competition based solely on price. If you want to get—and keep—customers, you need to be interacting with them and building relationships on a one-to-one level. But that isn’t enough. As a successful modern enterprise, you’ll be using data-driven insights to understand your customers’ needs in a rapidly evolving world, enabling you to proactively evolve your products alongside those needs. Many of the successful new ‘disruptive’ businesses—including Uber and Airbnb—are using data and its analysis as the cornerstone of their entire business model. Against this background you don’t want to risk being left behind, possibly disrupted into oblivion by a more data-savvy competitor or even one of many new startups driven by data-focused entrepreneurs.”
Yes, your bookkeeping software will undoubtedly have limitations: it’s not an oracle that can provide all the insights needed for your business to innovate and excel. But the insights from your bookkeeping software will help you to understand how your customers interact with your business and how your business delivers on their needs.
Additionally, your bookkeeping software helps to compile the critical statements and documents that your business requires to succeed. Your profit and loss statements, balance sheets, cash flow statements, and statements of retained earnings are more than just window-dressing. Try to apply for a business loan without these documents, and you’ll quickly see how important they are to your business’s ability to access money and thrive.
What to Look For in Your Bookkeeping Software
It doesn’t matter whether you’re shopping for walking shoes or waffle irons, there will always be a range of quality and cost options—and bookkeeping is no different. Your goal is to find the perfect intersection between quality and cost, where you get all the features and benefits you crave while still landing a great price.
Let’s look at some of the core factors that you should consider for a software product:
Does the Price Tag Work for You?
This consideration is among the first questions for every small business owner—and rightly so. If you’re overpaying for bookkeeping software, you’ll counteract many of the cost-saving benefits you’re trying to obtain for your business.
In a perfect world, you could find an à la carte option that allowed you to simply select the most relevant features—but that’s not usually possible. Most software options are based on a tiered pricing model, so you need to pay close attention to the features of each level. With a free Sunrise account, for example, you’ll get all of the basic bookkeeping tools that your small business needs. If you want more robust features, you can pay for a higher tier.
How User-Friendly Is It?
Although software products are designed to simplify your life, they can have the opposite effect if you don’t know how to use them effectively. So it’s essential to find a product you understand and feel confident using. It’s OK if there’s a learning curve involved, but you should be able to master its functions within a couple of weeks.
Complex software takes extra time to use, so it’s possible that you’ll abandon it before it’s even had a chance to make a positive difference for your business. A good rule of thumb is to only choose software that you can realistically picture yourself using for the long haul.
To get a better idea of how the software functions, read all the reviews you can find. Review sites such as G2 Crowd, Capterra, and Fit Small Business allow you to access opinions from a variety of sources.
Another prime way to get insights: talking to fellow entrepreneurs to find out what has worked for them. Talking to others in your industry allows you to identify some of the best software options for businesses like yours. You can also seek input from a trusted mentor. Even if your mentor retired before bookkeeping software came into existence, she or he can clue you in on the most important aspects of the bookkeeping process.
Does It Offer a Free Trial?
Product reviews and demos are extremely helpful, but the best way to find your ideal software product is to take an extended test drive. For this reason, you should seek out the top software options that provide a free trial period. Drawing upon the recommendations you’ve gathered from other sources, you’ll be able to navigate the software more precisely and confirm that it meshes with your ability level and preferences.
During your trial period, try to run through all the scenarios that you’re likely to encounter. Look for weaknesses in the product or features that don’t align with your operations. Going back to the test-drive metaphor, this would be like trying out a new pickup truck before buying it. You’d want to see how it handled on city streets, at freeway speeds, and when towing a load.
Be sure to put a reminder in your calendar so that you cancel your account before the software’s trial period ends. There’s nothing worse than deciding that a certain product is a bad fit for your business, then forgetting to cancel the trial—and being forced to pay for it nonetheless.
Will It Help You to Save Money?
Small businesses typically operate on small margins, so the money-saving features of bookkeeping software take on an increased level of importance. What matters is that the specific benefits of a product align with the way your business operates.
One of the most prominent ways that software can help your finances is with invoicing. Most bookkeeping software options provide a dashboard that allows you to view the status of all your invoices. When unpaid invoices pass deadlines, you’ll be alerted that they’re overdue. You can offer early bird discounts for those who pay sooner and send out reminders to nudge your slower customers along the way. The best systems also allow you to see when customers view your invoices. This helps you to gauge how they’re handling your business partnership and can inform your decisions regarding late payment fees.
Another way your bookkeeping software can help bring in more money is by making it easier for customers to pay with credit cards and other expedient forms of payment. All combined, these various invoicing features can provide a real boost to your finances.
How Much Time Will It Save?
A good bookkeeping software program will automate many of the functions you’d otherwise be forced to carry out manually. You’ll gain hundreds of hours back each year and spare your mouse from thousands of unnecessary clicks.
Look for a system that helps with all the invoice functions listed in the section above and also lightens the burden elsewhere. For example, a top-notch system like Sunrise will automatically include sales tax for your invoices. You won’t need to calculate sales tax manually or toil over exchange rates because the system automatically adds the relevant taxes to your customer’s state or country.
Additionally, you can send out quotes at lightning speed because your bookkeeping software helps you to create them from templates. Then, once the customer approves, you can convert the quote to an invoice in a matter of seconds.
Will It Provide the Tracking and Reporting You Need?
Every business is different: the ideal bookkeeping software for your brother-in-law’s car-detailing company will likely not be a good fit for your sister’s medical practice. You’ll need to dig into your preferred software’s nitty-gritty to ensure that it includes the right reporting and tracking options.
Common examples include:
- Profit and loss
- Balance sheet
- Customer statements
- Tax summary
- Accounts receivable
- Expense tracking
When a software product checks all your required boxes, you know you’ve found a prime candidate. Take your assessment a step further by considering how well the tracking meshes with your business. For example, the Sunrise software automatically imports and categorizes expenses from your bank account. That elevated level of ease and detail can make a real difference in your day-to-day operations.
Ultimately, the tracking and reporting from your bookkeeping software will enable you to refine your processes and put together more accurate budgets. Life is always better with this kind of roadmap.
Does It Provide Cloud Storage?
The old-school method for financial record storage was a filing cabinet in your office. The newer-school approach: storing these records on servers in your office. These days, it’s probably time you graduated to cloud storage.
One of the main problems with on-site storage is limited access. If you’re in the office, it isn’t hard to walk over to the filing cabinets in the corner. But what if you decide to work from home? Come to think of it, what if a pandemic forces you to work from home? Cloud storage enables you to access your financial books from just about any place on earth with internet connectivity.
Another benefit of cloud storage: it’s more secure than on-site storage. Records are less likely to get lost and are also shielded from unsavory individuals who might want to gain access to them illegally.
Will It Help You to Prepare for Tax Season?
There’s a reason that the words “death” and “taxes” are often included in the same sentence—most people feel like they want to die each time tax season rolls around. The right bookkeeping software can bring your suffering down several notches.
Simply grant your accountant access to your cloud-based records and let them review everything they need. This eliminates the need for you to carry boxes of hard copies into a face-to-face meeting with your accountant. The whole process will move faster, and you’ll likely encounter fewer snags.
It All Adds Up to Your Success
Given the idiosyncratic nature of small businesses, there are probably several benefits that bookkeeping software can offer you that aren’t included in this guide. That’s why it’s so important to speak with your colleagues, consult with your mentor, and learn through a free trial period. Your due diligence will always be more important than a million software product brochures.
As you gather information, you’ll begin to learn which features matter most to your business and which are superfluous. You’ll be able to see how the right software can integrate with your processes. And, most importantly, you can begin to lay a steadier foundation for your business’s future.