If you’re an e-seller, then you know how online technology can revolutionise the way you do business. But are you also making the most of online technology to manage your finances?
By Gary Turner
, UK managing director, Xero
As more businesses are finding, the latest generation of online accounting tools can provide an accurate window on finances, with benefits including improved cash flow visibility, reduced time spent on balancing the books and better cash flow management.
So if you haven’t looked at accountancy software since you looked at a Sage box in PCWorld back in the Nineties, what’s changed? Perhaps the biggest revolution is cloud computing, with its ‘connectedness’ and access to real-time information.
And the recent advent of automated bank feeds means all your bank and PayPal transactions are automatically transferred into your accounts package every day.
If you are a small business that handles large volumes of transactions then this can save substantial amounts of time. We know of one firm that estimates it saves 90 minutes a day just through this, because they no longer have to manually manage or key in transaction data. Plus, they can immediate access to virtually up-to-the-minute information about their cash position.
Integration with e-seller tools
That’s a traditional business example, but in the e-seller world, once you add in integration with third party applications, then the economies of scale really kick in. For instance, an online store can integrate its online accounting system with the likes of PayPal, eBay, Shopify, Magento, osCommerce, BigCommerce or ezimerchant.
Even if you are selling your goods or services through a wide range of online channels, your online accounting system can be used to create a central hub for your all your sales data.
In practice, this means that the amount of administration is hugely reduced, with manual data entry and reconciliation pretty much eliminated (plus, with online bank reconciliation, an e-seller can see who has paid for any non-credit-card or PayPal transactions). For an e-seller handling lots of small transactions on a daily basis, this could free up a lot of time, as well as ensuring an always-accurate set of records.
On that subject, another benefit is that the whole process of creating reports (for instance to ask the bank for more money) or doing the end-of-year accounts is also simplified, because the records exist. No more weekends spent updating the books.
5 top tips for eseller online accounting
Involve your accountant - because your accountant can be online as the same time as you, they can help identify possible issues (is there going to be a dip in cash flow next month that you hadn’t spotted?) before they escalate.
Get mobile – many of the small businesses we work with use online accounting as a mobile app to manage their finances on the move. For instance, they can issue invoices, check debtor status, bank transactions and even upload expenses (using a smartphone’s camera).
Look for the features that suit you – online accounting has got a whole lot smarter in the past couple of years. We’ve already mentioned live bank feeds, but look out for other features, like add-ons that can be used to analyse sales, find repeat customer patterns, drive campaigns and follow-up emails.
Ease of use – you’re running a business, you don’t want to have to spend hours learning to use a system or hunt for information. Choose an online accounting solution that has an intuitive interface and that doesn’t expect you to be a financial expert (for instance, graphs that show cashflow analysis or debtor status, or automatic report generation).
Pay-as-you-go – one of the beauties of cloud computing is that it supports this payment model. So, don’t be tricked into any long term agreements. Request a free trial and make sure you can cancel your subscription at a month’s notice. Goodbye to Old World licence models.
This is set to be a tough year for everyone, but online accounting can really help e-sellers save time, manage their money better and – most importantly – plan ahead.
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Going mobile should be top of your list. I find a lot of indies don’t have very good sites and while their products look nice and their talent is unequivocal, I won’t buy if the process is tricky.