Accounting software is vital

More than 300,000 Australian and New Zealand businesses are using out-of-date accounting software, resulting in a deficiency of vital information that is needed to perform core business activities, according to Michael Rich, managing director, Attaché Software. This issue is particularly relevant considering we are moving from one financial year to another.

There are opportunities for resellers to advise their clients if their financial software is out-of-date and help them source an alternative solution. Rich explained that as the economy slows the risks increase so it is more essential than ever for businesses to update their accounting software.

This is to ensure business owners and managers are in better control of basic business procedures including vital business lifelines such as cash flow and stock control. Operational benefits typically include more flexible pricing and faster processing.

According to Rich, without such information businesses are flying blind and are ill-equipped to make strategic decisions that could impact on the viability of their enterprise.

Here are tell-tale signs of inadequate accounting software that businesses need to be aware of:

1. How do you recognise if accounting software is inadequate?

If your accounting software was installed around Y2K and the introduction of GST, your business has since doubled or tripled in revenue and your bank loan has increased accordingly, then you are more than likely relying on out-of-date software to operate your business.

2. What business risks are associated with this?

It is likely that financial reports are between four and six months old with inadequate stock and debtors control, poor system security, over-reliance on spreadsheets and too many manual procedures. Accountants’ auditing and banks relying on reports is also a potential danger.

Businesses with more than five staff often have managers who have never experienced a major downturn – this can make them complacent about their financial systems.

To make matters worse, some businesses are relying on outdated 16-bit DOS-based accounting software systems that could fail at any time.

3. Why is the risk of outdated accounting software so important?

In the late 1980s credit crunch, the main reason contributing to business failure was inadequate financial systems.

Being complacent about accounting software in the current economic climate could also result in many businesses experiencing a downturn in their own activities.

4. How do you fix the problem?

MYOB and Quickbooks are suitable for very small business operators. However, if your business has doubled or tripled in revenue since Y2K or the introduction of GST, then it is likely that you are not receiving the most current business reports available and that your business has outgrown off-the-shelf packages such as MYOB, QuickBooks and old DOS-based software.

In the past, the only next step available to businesses was expensive SQL-based packages such as SAP B1, Microsoft Dynamics and Exonet. Mid-market accounting software packages – typically suited to businesses with three or more network users up to 100 network users – have resolved this gap and are recommended for growing small businesses to ensure access to current financial reports, including departmental accounting and prior month comparisons. Such information allows you to make informed business decisions on a daily basis.
Without such vital and fundamental information, your business is potentially flying blind and is ill-equipped to make strategic decisions that could impact on the viability of your enterprise.

5. What are the advantages of having up-to-date software?

Business operators have much better control of their cash flow, payroll, sales, stock control, customer service and financial reporting.

Choosing the right system is vital if you are to be efficient, competitive and profitable. Look for an accounting software system that is powerful, yet easy to use. It also needs to accommodate both current and future business growth.

Benefits of new accounting software can include: improved staff productivity, faster order taking with fewer errors, better stock control and reporting and faster payments.

6. How expensive is it for a business to update its accounting software?

There are very affordable mid-market accounting packages available that operate on a monthly payment system. When you take into consideration the paper and time savings alone, the cost of the service virtually cancels out to nothing except that you also have the added benefit of an up-to-the-minute financial system that helps you run your business more efficiently.

7. What features should I be looking for in new software?

It is recommended you select a multi-user system that allows you to integrate your management, sales, administration and warehouse into one seamless and networked accounting solution. As a result, these key areas of your business will be able to share information instantly, and staff will be able to perform their tasks more quickly and efficiently. You can start with as many or few users as you wish and then add more as your business grows and your needs change. Look for a provider with bullet-proof reliability, long-standing industry reputation, product reliability, effective customer support and a strong history in the marketplace.