Like most other aspects of your business, your accounting needs change over time. If you started small, you likely used a basic spreadsheet to keep track of income and expenses before investing in a desktop or cloud-based software tool as things got more complex. For most businesses, doing it all in house (whether by the owner or an employee) eventually becomes unwieldy. Here are 5 signs it's time to move to the next level of accounting services.
1. You as the business owner are spending too much time on accounting tasks.It makes perfect sense that you kept the business books when you were first starting out. However, at some point, you need to let go of the administrative tasks if you hope to see your business grow. As specialized as business accounting can get in various industries, there's nothing about your business bookkeeping that you can't outsource provided you find a trustworthy bookkeeper, accountant, or staff member. Setting business strategy, pitching the company to investors, driving sales, and innovating on your ideas, however, are much harder (if not impossible) to outsource. Accounting is an obvious and significant task to take off of your plate, freeing your calendar and your brain to focus in other areas. If you're a business owner spending more than 10 hours per month on bookkeeping, it's time to explore your options.
2. The volume of transactions has become unmanageable.Getting bogged down in payables and receivables can have significant, negative ramifications for your business. Again, when your business is new and you don't have a lot coming in or going out, it's relatively easy to keep up. But as you bring on new clients, vendors, employees, and other expenses, there's just a whole lot more to track. If you're paying bills late, holding client checks because you don't have time to get to the bank, or simply missing important deadlines, you're going to see growth slow down. A streamlined accounting system with the right level of support will keep you moving ahead at pace.
3. Your accounting person isn't an accountant.When a business starts out, it's common for an office manager or similar role to handle accounting tasks by default. Eventually though, your accounting needs are going to outgrow your administrator's capabilities. Do you have the right person in the right role? Can your office manager reasonably handle all of his or her other responsibilities on top of growing accounting demands? Not only will a trained accountant keep your books above-board, but he or she can also help you see financial insights that will allow you to make more informed business decisions. You don't have to hire a full-time CFO, but you should consider at what level a professional partner makes sense for your business.
4. You're drowning in paper and double work.This is a big one that many people overlook. They get used to an inefficient process for completing a task and think that's just how that task has to be. The amount of paper flowing into and out of your office is a strong indicator that you're probably doing some things two, three, or even four times. The right combination of cloud accounting software and apps can dramatically reduce paper—imagine no more filing, mailing, or organizing! Further, integrated apps mean you enter a data point once and it flows into every other place it's needed. Here's an example. Say you have a vendor that sends you paper invoices each month. Those come in the mail. You have to record the invoice amount in your expenses, write a check, and add that to your check register. Then you need to mail the check and wait for the vendor to cash it so you can reconcile your accounts. As a one-off item, that doesn't sound so bad, but extend it across 20 vendors. Now, for an alternative. You set your vendor up one time on Bill.com. Going forward, the vendor emails invoices, which automatically pulls them into your Bill.com and then your Xero accounting platform. You simply approve the invoice, and Bill.com takes care of the rest. Xero reflects the payment status and syncs with your bank account to automatically reconcile the transaction. After the initial setup, that whole process required no more than a few clicks from you. Beautiful, right?
5. You have a loan or investment that requires regular financial statements.When you reach the point of needing regular financial statements (e.g. for a bank loan or line of credit), it's a good trigger to take a hard look at your accounting function. In almost all cases, you're going to need someone to help you prepare those financial statements; if you need audited financial statements, professional assistance is essential. Chances are, your business is growing at this point and your past accounting practices just aren't going to cut it anymore.
If even one of the five reasons above describes your business, it's time to take a hard look at ways to save time (and money) by streamlining your accounting. Even better—moving to the right cloud accounting platform and engaging with the appropriate level of support will help you to see areas where your business is thriving, stands to improve, and can reasonably make significant changes. What are you waiting for? Contact us today to schedule your free consultation.