Starting a new business is not easy, especially if it's your first. You'll find that not only will you have to develop and/ or sell products and services, you'll also need to be on top of the marketing of your business. Getting to grips with all the angles of running your own business can be daunting. If you are selling products, your business is growing and money is coming in, it can be all too easy to forget that you also need to be on top of the financial management and accounting side of the business.
For a small business with limited finances, organized accounting is essential to control cashflow and understand if there will be a problem in the weeks or months ahead. Just because money is coming in now, doesn't mean that next month when there are bills to pay, you'll have sufficient cash. Choosing the correct accounting software can help you manage your business finances.
Even simple software for invoicing or recording expenses can help - it's all too easy to lose paper notes and receipts - recording things in a software package will help you to organise yourself. The benefits of getting a good report of where your business is financially will soon pay dividends.If you try to do everything by hand it's all too easy to make mistakes. Using an accounting software package will also save you time and allow you to spend more time in selling products and making your business a success.
These are typical benefits small businesses see from using appropriate accounting software:
• Managing your finances takes less time, allowing you to spend more time on profitable activities.
• Accounting software provides reports that can help you when submitting accounts either to your professional accountant or the inland revenue/ IRS.
• Managing and predicting cash flow is much easier.
• Finding out where your biggest costs are is much easier.
There are numerous accounting software packages on the market. In a future article, I'll write some guidelines to help you decide which package to purchase. In fact there are a number of free packages available and I'll also discuss the pros and cons of free accounting software.
Sunday, 24 August 2008
Analyzing Invoiced Amounts Outstanding & Cashflow
Money is that important commodity which nobody likes to easily part with. This has resulted in companies offering credits to their customers to buy their products. The companies send out the products first along with the invoice and demand that they are paid later- that is on the delivery of the product. Though this helps in boosting of their sale but sometimes they also result in accumulation of overdue cash.
It is seen that generally the customers delay in paying their credits. If more number of customers delay in paying credits then the cash outflow of the company exceeds the cash inflow. This results in a shortage of adequate cash with the company. In this situation the company could crash or fail even when it is showing profit because the company has a shortage of liquid cash. Hence it is very important for a company to keep track of the various invoices and payments. By analyzing the report on invoiced amounts outstanding the company can use the report to analyze its cash flow.
A cash flow analysis is the study of a company’s inflows and outflows of cash so as to maintain an adequate cash flow for one’s business and to provide the basis for cash flow management. This cash flow analysis is done to evaluate the performance or state of a project or business venture.
With the help of cash flow analysis you can examine each and every component of your business that involves and affects the cash flow of a company such as inventory, credit terms, accounts receivable and account payable. Thus, you will be able to easily identify the cause of a cash flow problem and take adequate corrective actions.
The importance of analysing cash flow
♦A cash flow statement is one of the major financial statements of the company.
♦It is used to determine the short term sustainability of the company. That is if the company is showing an increasing or sustained inflow of cash then it is a healthy company.
♦A cash flow analysis allows the company to detect a cash problem which other financial statements alone could not provide.
Thus, with the help of cash flow analysis the company can look into the problem area and make an effort to rectify it.
It is seen that generally the customers delay in paying their credits. If more number of customers delay in paying credits then the cash outflow of the company exceeds the cash inflow. This results in a shortage of adequate cash with the company. In this situation the company could crash or fail even when it is showing profit because the company has a shortage of liquid cash. Hence it is very important for a company to keep track of the various invoices and payments. By analyzing the report on invoiced amounts outstanding the company can use the report to analyze its cash flow.
A cash flow analysis is the study of a company’s inflows and outflows of cash so as to maintain an adequate cash flow for one’s business and to provide the basis for cash flow management. This cash flow analysis is done to evaluate the performance or state of a project or business venture.
With the help of cash flow analysis you can examine each and every component of your business that involves and affects the cash flow of a company such as inventory, credit terms, accounts receivable and account payable. Thus, you will be able to easily identify the cause of a cash flow problem and take adequate corrective actions.
The importance of analysing cash flow
♦A cash flow statement is one of the major financial statements of the company.
♦It is used to determine the short term sustainability of the company. That is if the company is showing an increasing or sustained inflow of cash then it is a healthy company.
♦A cash flow analysis allows the company to detect a cash problem which other financial statements alone could not provide.
Thus, with the help of cash flow analysis the company can look into the problem area and make an effort to rectify it.
Thursday, 21 August 2008
Quicken Home & Business 2008
The 2008 version of Home & Business from Quicken makes it easy to handle your home/ personal finances and the finances for a small business using a single tool.
For people concerned with tracking their expenditure, Quicken have added a new My Saving Plan feature. Using this new feature you can predict how much you will spend each month and then compare with your actual expenditure as the month progresses. Using this feature allows you to predict how much you will save each month or how much you will have extra to spend the next month.
In common with a lot of newer package, Quicken Home and Business includes integration with online systems, particulary online banking, credit card and loan systems. If you are fed up with keeping paper copies of bank statements, Home and Business will allow you to scan in paper documents, allowing all your important documents to be kept in a single location.
For the 2008 version, the user interface has been revamped, making the tool much easier and more friendly to use.
Although perhaps more suited to small business owners than those wishing to manage their personal finances, with improved reporting facilities and extra ease of use, the 2008 version is a worthy upgrade for existing users and is well worth considering further for people looking to purchase a basic accounting package.
For people concerned with tracking their expenditure, Quicken have added a new My Saving Plan feature. Using this new feature you can predict how much you will spend each month and then compare with your actual expenditure as the month progresses. Using this feature allows you to predict how much you will save each month or how much you will have extra to spend the next month.In common with a lot of newer package, Quicken Home and Business includes integration with online systems, particulary online banking, credit card and loan systems. If you are fed up with keeping paper copies of bank statements, Home and Business will allow you to scan in paper documents, allowing all your important documents to be kept in a single location.
For the 2008 version, the user interface has been revamped, making the tool much easier and more friendly to use.
Although perhaps more suited to small business owners than those wishing to manage their personal finances, with improved reporting facilities and extra ease of use, the 2008 version is a worthy upgrade for existing users and is well worth considering further for people looking to purchase a basic accounting package.
Wednesday, 20 August 2008
Microsoft Office Accounting Express
In many ways Microsoft Office Accounting Express could be the ideal package for a small business looking for a complete accounting system. Firstly it's free for the first 6 months and secondly as it's part of the Office Accounting range of software produced by Microsoft, if your accouting requirements grow you can always upgrade to the full version of the package.
Even though it's free, the Express version includes most functions a small business will need. All the basics are included such as producing invoices, quotes and credit memos as well as recording cash sales.
Additional features include built-in integration with Paypal as well as other online services such as Ebay and Equifax making e-commerce much easier for small businesses.
To get you started, Accounting Express can even import data from QuickBooks as well as Microsoft Excel and Microsoft Money.
There are some downsides to using Microsoft Office Accounting Express however. For one thing there's over 300Mb to download to get an installable version and, perhaps predictably, you do need to have other, non-free Microsoft software to use Express, e.g. you have to purchase the 2007 versions of Microsoft Word and Microsoft Excel and extras such as Business Contact Manager.
All in all, Microsoft Office Accounting Express is definitely worth looking at if you are a small business with 1 or 2 employees looking for a low-cost accounting software solution.
Even though it's free, the Express version includes most functions a small business will need. All the basics are included such as producing invoices, quotes and credit memos as well as recording cash sales.Additional features include built-in integration with Paypal as well as other online services such as Ebay and Equifax making e-commerce much easier for small businesses.
To get you started, Accounting Express can even import data from QuickBooks as well as Microsoft Excel and Microsoft Money.
There are some downsides to using Microsoft Office Accounting Express however. For one thing there's over 300Mb to download to get an installable version and, perhaps predictably, you do need to have other, non-free Microsoft software to use Express, e.g. you have to purchase the 2007 versions of Microsoft Word and Microsoft Excel and extras such as Business Contact Manager.
All in all, Microsoft Office Accounting Express is definitely worth looking at if you are a small business with 1 or 2 employees looking for a low-cost accounting software solution.
Tuesday, 19 August 2008
The Role of Excel in Managing Customer Accounts
Businesses are not run by skill alone; you also needs good management. One of the essential elements in running a successful business is managing the inflow and outflow of numbers concerning customer accounts, cash flow details, etc.
With the help of Excel you can quite easily manage much of the customer account and cash flow transactions. With a little programming knowledge, or some familiarity with macros, Excel allows simple automation of regular tasks. With Excel's help, the creation of basic invoices can be fairly easy to do. All you have to do is select a format for creating the invoice and then you can create as many copies as you want of it. Apart from invoicing there are a lot of other benefits of using Excel in managing the customer accounts.
Limitations of Excel
With the help of Excel you can quite easily manage much of the customer account and cash flow transactions. With a little programming knowledge, or some familiarity with macros, Excel allows simple automation of regular tasks. With Excel's help, the creation of basic invoices can be fairly easy to do. All you have to do is select a format for creating the invoice and then you can create as many copies as you want of it. Apart from invoicing there are a lot of other benefits of using Excel in managing the customer accounts.
Benefits of Using Excel
- By searching on Google you can find many free Excel templates for common office items like invoices, credit notes and purchase orders. Using these templates, all you have to do is fill in the blanks at the required places and your invoice or bill is ready to be sent to a customer.
- Excel allows the company to define the appearance of the spreadsheet with respect to fonts, character attributes and cell appearance. Apart from creating invoice, Excel also helps in the calculation of the invoice amount.
- With the help of Excel’s Active Template Technology, small businesses can manage their customers, products, payments and invoices with quite an ease.
- Excel provides the company with comprehensive data for reporting, formatting, analyzing and calculation. Excel helps a company in making sales report.
- When Excel is combined with backend database; it provides the company with a highly customized invoicing solution.
- With the help of Excel a company can estimate a purchase order creation.Excel helps a company in managing its fund more effectively while it grows bigger.
Limitations of Excel
- Role of Professionals: Many companies selling hybrid Excel software claim that anyone without proper training can use it to generate sales reports. But, in reality it is difficult to produce a sales report without a proper programming knowledge or, at least, in-depth knowledge of Excel macros. Aside from that, a sales report produced by a non-accountant will not provide all appropriate information. Hence, one must not replace professionals with Excel.
- Competitive Comparison: Excel is often used to carry out analysis of pricing and products. However, it should be noted that Excel is not designed specifically for this task.
- Pricing Analysis: Excel is not ordered around the complex nature of the pricing environment. Therefore, performing an analysis is quite a task using the Excel software.
Thus, we see that though Excel gives us quite a few advantages in managing customer account, still they are no substitute for real professionals. Hence one should assign specific role to Excel in their company keeping in mind its various advantages and disadvantages.
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