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How Important is an Accounting System to My Business?

by: SBC Staff

 An accounting system is not important at all.  IF . . .

  • You donít want to know how your business is doing

  • You donít want to have professional looking financial statements for your bank, potential vendors or other interested parties

  • You want to process sales orders, purchase orders, invoices, payroll and other business functions manually

If you want to run an efficient business you need to automate your business functions.  This is true no matter how large or small your business is.  Consider the sales order processing function:

A call comes in from a potential customer.  After talking for few minutes the prospect is interested enough to ask you for a quote.  You prepare the quote on your computer system and fax it to your prospect from your computer.  The call ends, you save the quote and go about your business.  A day or so later, the prospect calls back to place the order.  You retrieve the quote prepared previously and confirm that he wants the items you quoted.  You convert the quote to a sales order and fax it to your customer from your computer.  You print the shipping copy of the order and route it to your shipping department or fax it to your drop shipper.  Once you have confirmation that the order has been delivered, you retrieve the sales order and convert it to an invoice, which you then fax, or mail, to your customer.  The system updates your accounts receivable showing the customer owes you the amount of the invoice.  When the customer pays, you apply the cash receipt to the invoice and your accounts receivable balances are updated to reflect the payment.

Notice in the previous example you did nothing more than prepare documents you would normally have had to prepare manually.  The system made preparing these documents much easier than doing them manually.  You also didnít have to worry about misplacing any documents since they were always stored on your computer and could be retrieved at will.  The same types of processes are repeated with purchase order processing and other routine daily tasks. 

So the system made your everyday work easier to perform.  But it actually did more than that.  While you were preparing your documents the system was recording accounting entries in the background.  The amount of time you save using an accounting system is too significant to ignore.  The use of an accounting system in your business is an absolute must!

Even if you are a very small business, there are accounting systems available that are very inexpensive and quite capable of saving you loads of time.  Get one and use it!

You probably already know that you frequently have to provide financial statements to your bank, to vendors or other third parties.  Once your accounting system is set up and running, it will be easy for you to provide these at any time.  If youíre tired of having to call an accountant every time you need something, your accounting system will relieve some of that pressure.  Iím not saying you will never need an accountant, but you wonít need him or her quite as often.

In order for the system to properly record accounting transactions in the background, the system will have to be set up properly.  Youíll need a chart of accounts that fits your business and modules like accounts payable, accounts receivable, payroll, inventory, purchasing and sales order processing will need to be configured to post to the proper accounts.  If you have no accounting experience, youíll need to find someone to help you with this, but it should take no more than a couple of hours at most, so that wonít be expensive either.  If you donít have someone locally who can help you, call us and weíll be happy to help.




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