Ensure Your Business Isn’t Losing Money By Using the Right Financial Software

Perception and reality can be two quite different things when a business owner is trying to get a handle on the financial status of their operation. Tax time is too late to make the necessary changes to get a money-losing business back on track. It’s only with solid data on a regular basis that the true picture of a company’s financial health can be created and analyzed so that any adjustments can be made. And the right financial software suite will give you accurate data and meaningful reports to ensure your business is profitable.

Perception of your business’s financial health may be skewed in the following instances:

Cost of Goods Sold Is Not Accurate

Gross margin can be wildly underestimated if you don’t have an accurate accounting of your costs of either products for resale or your manufacturing expenses. Today, many vendors take credit card payments, and if you’re not signing checks for vendor invoices, you may be hiding costs in your credit card statements.

Good accounting programs sync bank and credit card statements, eliminating the need for duplicate entries. This not only saves time, it ensures better accuracy of data.

Overhead Spending is Excessive

It’s easy for overhead and administrative expenses to fluctuate, especially if you’re busy generating sales or fulfilling production. But unless you keep your eye on variable overhead costs, they may become excessive without you noticing.

One example is the hike in fuel prices the last few years. Heating an inefficient building or reimbursing salespeople for driving expenses will drive up overhead without you even noticing what happened. The best accounting programs allow you to break your accounts into direct and indirect costs so you know just where every penny is going and when they are getting out of your control. You can’t put cost-savings measures in place if you don’t know there’s a problem!

A Jump in Sales Masks Expenses

Often a big jump in sales revenue will mask accompanying expenses to get the sale. Good revenue is only that which comes with good profitability, and a strong financial software package is sure to keep your eye on the type of revenue you’re generating. Good cash flow does not mean your business is profitable, and you want to know this before vendor’s invoices come due.

Accounts Receivable Not Aging Gracefully

Cash flow is an important aspect of running a successful company, and you won’t know how to plan for your cash needs if you don’t have a handle on your receivables. The right financial software will create accurate A/R aging reports and also integrate customer billing. You’ll save money by having the use of funds for a longer period of time and reduce the need for expensive capital investment.

Time Tracking Not Automated

The best financial software incorporates employee time tracking into payroll and accounting. Knowing how much time you and your staff are spending on customer jobs greatly increases your knowledge of profitability per job. It’s easy for time to get away from us, and time tracking is essential if each job is to evaluated accurately. Non-profitable jobs or products can then be either eliminated or repriced, and more sales and marketing effort can be directed toward those jobs that are “cash cows.”

All Financial Software Functions Not Fully Integrated

Of course, your company may be losing money due to the excessive amount of time you have to spend on accounting and financial management. The best software will have all functions from accounts payable and receivable to payroll and employment taxes to cash flow, profit and loss statements, and balance sheets fully integrated. By not having to reenter data, you save precious time and reduce the chance of errors.

Many business owners do not add in their time when looking at profitability. If you are charging your standard billing rate for time spent on accounting, it paints a very different picture. Our time is not free, and when you add in opportunity costs from lost sales and marketing work, it’s even more serious. Consequently, it’s worth having the best financial software on the market to help you keep your business profitable.

Getting a handle on your finances will mean the long-term success of your company!

Here are some questions you need to ask yourself when looking for the right financial software for your business:

1. Do I have employees?

This will make a huge difference in whether or not you integrate payroll for a single individual — you — or multiple employees.

2. Do I want to have accounting on my computer or in the Cloud?

Programs can now operate on remote servers, allowing you do work on financial matters or access reports when you’re traveling away from the office.

3. Does my business bill for products and services, or are purchases done immediately at point of sale?

If you need billing, a financial software package that integrates automated invoicing with customer email will be a blessing. However, cash businesses that require payment at time of sale won’t need this feature.

4. What is my growth plan?

You may want to purchase financial software that will grow with your business and allow you to integrate new modules for payroll, time keeping, etc., as needed by the demands of the situation.

5. What’s my budget?

Having a budget in mind is, of course, essential. While you shouldn’t skimp on good financial software, you do need to evaluate what is a good value for your business. Many programs offer levels of products and services that fit any budget. As your business grows and you get busier with other areas, you can increase the level of participation and reduce the time you spend on accounting and finance.

A small number of businesses started each year actually succeed, and most failures are due to lack of profitability. To avoid this pitfall, get the right financial software for your business and you’ll ensure longevity of your venture.


Sarah Boisvert is a business writer who has covered everything from how to integrate social media into your marketing plan to how to chose the best accounting software for your business. She also writes about technology such as 3D printing.

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