Know what the number one headache is for most entrepreneurs? Dealing with back office accounting tasks. In fact, according to recent studies, more than 40% of entrepreneurs and small business owners say bookkeeping and taxes are the worst part of owning a business.
This is because accounting tasks are a thankless, never-ending stream of work. It is the one item on your to-do lists that will never be fully crossed off, no matter how many hours you put in. And when you realize that this work will never be complete, it sometimes has a way of draining the passion right out work to grow your company, build a product, or solve a big problem.
Sounds depressing doesn’t it? Well the good news is, it truly does not have to be. There are dozens of tools and services created by entrepreneurs for entrepreneurs to solve this very problem. And the best part is, that by spending a little time researching these options, you open up hours every week, if not every day, to focus more time on your core business and less time with those endless accounting tasks.
So lets take a look at the top 5 tips that will help you get your time back while not letting those back office tasks slip through the cracks.
Connect bank and credit card accounts to your accounting system
Most accounting systems have the ability to integrate directly with your bank and credit card accounts. We recommend using either Xero or QuickBooks Online, as both are excellent cloud-based systems that connect easily to almost any bank or credit card you might be using. When properly integrated, transactional data from when you buy something on your credit card or receive a payment from a customer, will automatically update directly into your accounting system. No more manual entry from a paper-based statements again.
Use a debit/credit card for purchasing
We all know that using a debit or credit cards is indisputably the best option for convenience. But they also play a major role when it comes to back office accounting. Using a credit or debit card is a far more efficient means to account for business spending than cash or check. Why? Because they provide immediate, precise records of exactly when, where and who the card was used for. Checks take time to process and there are no guarantees of when the check will actually be deposited, leaving your account in flux until the money is accounted for. Checks also require additional data entry to explain who and what it was for.
In the same breath, cash can be just as difficult to track. Cash in business is tricky because there is only one record of the transaction – the receipt. And if you don’t get a receipt, or misplace it, you are completely out of luck when it comes to rectifying, to the penny, your business spending. A card transaction will show up in your accounting system within 24 hours and will provide you permanent record of the who, what, where of each transaction to be immediately categorized and accounted for.
Use a bill payment system
There are some circumstances that just don’t allow for using your credit card. What if you have large purchase orders of inventory? What if you pay a contractor who doesn’t take a credit card? What if you’re a non-profit and require multiple signatures on a check for purchases of certain sizes? The problem is that the time it takes to receive a vendor bill, enter it into your accounting systems, code it to the proper account, get the bill approved, print the check, get the check signed, stuff it in an envelope and mail it. Do that for 20 bills per month and you’ve just wasted a ton of time. Most banks today have bill pay systems that can make this process easier, but the system our team likes the most is Bill.com. Check out some of the best benefits of Bill.com:
Works with any bank
Has great workflow approval processes
Can send both paper checks and electronic payments
Fully integrates with Xero and QuickBooks Online.
If you’re writing a lot of checks, it’s worth using a bill payment system to manage and record each transaction.
Automate your invoicing
Invoicing is critical to businesses as it represents the very beginning of the cashflow cycle. The quicker you bill, the faster you will get paid. But if the entrepreneur is still having to manually generate invoices and remember when to send them, amongst all of their other responsibilities, it can be very easy to stretch out the cashflow cycle because the invoicing process is overly cumbersome.
But there is a way to automate this – your accounting system most likely has the ability to setup recurring invoices that can be schedule to send at specified times each month. If new data needs to be entered on each invoice, than a memorized invoice template can be created to streamline the invoice data entry process. And if the business is charging its customers via credit cards, then subscription billing systems like Chargify, Recurly, and Stripe should be used to both customize and automate how customers’ cards get charged. Invest in automation tools when it comes to invoicing, as receiving customer payments on a consistent schedule is critically important to your business.
Ok, so we’re obviously plugging our own solution here. But relieving entrepreneurs from dealing with back office accounting administration is exactly why we created AcuityComplete. While there are plenty of automation tools and other tips that will help get rid of the bookkeeping headaches, we often find that entrepreneurs want to pay just one fixed price for one solution to handle it all. That’s a great reason why someone might want to just automate the entire back office accounting function and not have to worry about figuring out who’s going to do it, which system to use, and what processes to setup. When you’re first starting out, doing it yourself may make the most sense, but with some growth and success, there will come a point to hand the back office work to someone else so that you can focus on more valuable activities.