Efficiently manage your small business accounting tasks with the right accounting software or system. Accurate and time-saving, these tools help avoid costly errors like the one that cost TransAlta US$24 million. Showing that despite being routine, accounting tasks are usually time-consuming and dependent on accuracy, which means that human error can lead to disastrous results.
Fortunately, cloud-based accounting software such as Xero, Eleven, FreshBooks, and QuickBooks is now available to small business owners that need to optimise their accounting functions at scale. Curious about the accounting platforms mentioned? Want to know which accounting system is best for your business?
Choosing a small business accounting software
Most modern accounting software solutions offer a full suite of features in one platform, consolidating functions such as:
- Basic accounting and bookkeeping
This includes preparing accounts and tax returns, monitoring corporate ledgers, invoicing suppliers, account reconciliation, business compliance, tracking Accounts Payable, and financial reporting
- Tracking travel expenses
This includes approving and releasing travel allowances and processing reimbursement claims for business expenses and medical expenses
- Payroll and time trackingThis includes automatically processing timesheets and generating payslips on scheduled days of the month
Ultimately, the best accounting system for your small business is the one that best matches your needs. Of the many platforms out there, the following solutions are generally worth considering:
Xero is often praised for its simplicity, making it an ideal solution for micro-businesses. The platform boasts a clean interface and is compatible with third-party payroll services.
Eleven is a cloud-based accounting software designed specifically for small and medium-sized accounting firms. It offers features to streamline and scale accounting practices, with integrated business intelligence (BI) capabilities.
QuickBooks is one of the most trusted accounting platforms on the market, used by 4.5 million small businesses. Its ability to scale makes QuickBooks a popular option for fast-growing businesses.
- FreshBooksFreshBooks’s advanced invoicing features — such as automatically generating, sending, receiving and paying invoices — make the platform popular with service-based businesses.
- WaveWave offers an outstanding free accounting service for micro-businesses and freelancers that need a solution for sending simple, frills-free invoices.
- Zoho BooksZoho Books’ attractive price point and impressive suite of cloud-based tools make it a favourite of many small businesses. Zoho also offers integration with its other products, such as Zoho People and Zoho CRM.
Why use Accounting Software?
Cloud-based accounting platforms solve many of the financial challenges that small businesses face. These include:
- ProductivityAccounting software enables accountants and accounting teams to operate in a more organised and efficient manner. Because each accounting task is assigned and recorded in the system, managers can see which employee is responsible for it a task and whether it’s ahead or behind a deadline. This creates a system of accountability within the accounting team or department.
- AccuracyAccounting platforms deliver data, calculations, and forecasts in real-time, making them vastly superior to conventional accounting solutions like Excel and other spreadsheet programs. Accuracy is especially important for small businesses that depend on sound cash flow, where the smallest mistake can throw off an entire projection.
- ComplianceIf you are still requesting employees to keep all their receipts with them before submitting reimbursement claims, it’s high time that you move to basic accounting software. Most solutions will let users scan and record receipts, track mileage (for company transport), and approve requests without requiring a signature or email. By implementing a more organized record-keeping system, you can protect your organization from inconsistencies that may cost you during an audit.
- Additional growth featuresToday’s accounting platforms go beyond being simple bookkeeping solutions. These solutions, also known as “super-apps”, integrate data and functionality with other business processes, such as human resource management, inventory management, marketing, and customer relationship management among others. This tight integration enables businesses to perform multiple tasks at scale with the same degree of consistency and reliability, driving growth.
Pros and cons – What you need to know before buying accounting software
As with any major investment, business owners should do their due diligence and get the full picture of the benefits and challenges of using a new accounting system.
Account software benefits
- Bank feedsMany small businesses depend on assigning bank statements into revenue and expense categories to track sales and costs — a process that can take hours of data entry work. Cloud-based accounting platforms solve this problem with bank feeds, which automatically match transactions with invoices for collection or bills for payment.
- Third-party app integrationMany accounting platforms also offer third-party applications such as Wise, Stripe, and PayPal for payments; HubSpot and Mailchimp for CRM; and Deputy and Tanda for payroll.
- TransparencyCloud-based accounting software provides a simple and easy system of maintaining all of your financial records, creating higher levels of transparency across every dimension of your business’s financial health. You can even share financial data with clients and suppliers, allowing them to see updated records of your invoices and payments. This can be useful for processes like procurement, where suppliers simply use the software to send and save invoices.
Accounting software challenges
- Learning curveIf you’re completely new to using accounting software, you can expect a learning curve before getting comfortable with the platform. Some solutions will be more intuitive than others, so consider signing up for a trial before committing to a platform.
- Customer support can vary
The quality of customer support can vary from one accounting software provider to the other. A good rule of thumb is to ask for recommendations from other small business owners and review whether the solution’s core features match your business needs. Again, the best accounting system is the one that helps you achieve your accounting goals.
- Risk of cybersecurity attacksCloud-based accounting software is no more or less prone to cyber threats than traditional, in-house software. However, it’s still important to do your due diligence to ensure a provider meets your security expectations. For starters, you can look for vendors whose security controls have been audited by an independent third party.
However, as great as accounting platforms are, small businesses still need an experienced accountant or bookkeeper with software experience. Apart from the fact that machines can’t provide sound financial advice (at least not yet anyway), the human element is what interprets financial data (such as forecasts) and allows the business to understand their implications.
Partner with Lanturn for tailored accounting solutions
Boost your company’s potential and efficiency by choosing Lanturn for your business needs. Learn more about how to get the right accountant for your business with Lanturn. Our comprehensive range of accounting and bookkeeping solutions in Singapore is specifically designed to cater to the unique needs of early-stage startups and small businesses. Leave your accounting, compliance, reporting, payroll and tax to Lanturn’s experts.
Get in touch with our team and start growing your business, today!