Old-fashioned accounting systems are seriously flawed. And that can have dire consequences for small businesses. Until recently there were essentially 3 common types of accounting system:
- A manual system of books and records, like those big cash books.
- An Excel or other spreadsheet-based system
- Desktop accounting systems such as Sage Line 50.
And they're all flawed.
For example, with a manual system it simply takes too long to write up the transactions. And your time is too valuable for that. So whilst cheap, it's a false economy.
And spreadsheets aren't much better. Yes, they automatically add up columns of numbers, but it still takes way too long to enter the information.
And did you know...
Accountants hate manual and spreadsheet books and records. It takes them more time too and you end up with bigger accountancy fees.
More sophisticated business owners do things better...
Basically, manual and spreadsheet-based accounting systems don't cut it. And for that reason, most proper businesses use a desktop accounting system to record their financial transactions. And whilst that is a much better way of doing things, they are still flawed.
But they're all flawed
Here are 4 big problems with manual, spreadsheet, and even desktop systems:
- Staying legal – your financial data is critical. If you lose it you risk fines and penalties from the tax authorities for not keeping proper accounting records. So what happens if you lose that information? Whilst theft and fire might seem remote, they are possible. Perhaps more likely, if you have a desktop based system, is hard drive failure.
- Wasted time – data processing, i.e. entering your invoices, purchases, bank transactions and so on, is time-consuming. It's the reason why there is a bookkeeping industry. What if you could save hours of time every single week?
- Hidden costs – with all 3 of those common accounting systems there are hidden costs from the value of your time, maintaining back up routines, software upgrades, additional accountancy fees to solve problems, and much more.
- Staying in business – running out of cash is the number 1 cause of business failure. The solution is to have access to all your important numbers 24/7. With old-fashioned accounting systems you have to wait until everything is up to date and for the time taken to create useful management reports. That takes time.