Do businesses understand the value of software?
In the UK today there are around 3 million registered businesses.
around 60% of these businesses typically use a spreadsheet to manage their finances!, yes that's 1.8 million of you out there using an Excel spreadsheet.
Don't get me wrong, I still use Excel to hold large lists of data which I need and as an Accountant, I had to cut my teeth with purchase / sales day books all the way through to creating a set of accounts. I had to know my Debits and Credits and triple check that all my journals were put through correctly. Excel forced me to become a better accountant.
That's also my problem..... It forced me to become a better accountant but why would a small business owner need to go through that?, surely as a business owner you only need to worry about the key indicators such as Cash in, Cash out, Future cash in and future cash out. Accuracy of information is also key, I had to check my own work multiple times to ensure I didn't misrepresent a transaction or misplace a decimal point or keep my finger on the zero button for a second longer. Why would a business owner want to worry about these factors?, surely their concentration and efforts are best placed on growing their business and creating a brilliant offering.
So whats the problem, why are many businesses not adopting accounting software which takes much of the data entry pain away whilst significantly reducing the risk of errors?
Speaking to many business owners, I'm going to list 3 reasons that I've come across for sticking to Excel
1) Everything is fine as it is; Yes, because you're hitting your sales target and you can see a few 'Paid in' entries on your bank statement, you feel that its all running well. This could be the case which is fine, however, how much time do you spend on your spreadsheet vs the time you could be spending on growing your business. Do you have complex customers, do some of your customers take 3 months to pay you for that sale and some pay you on receipt?. As your business grows and expands, you will come across many different types of customers, managing the cash flow becomes even more important and tricky.
2) Perceived Cost of Software; A spreadsheet with macros, bells and whistles can cost just £10 to download, if you have an accountant who also uses Excel, they probably provide you with one for free. Obviously there is a cost for downloading MS Office, most people will get this free when they purchase a laptop/pc or still use the older versions from their CD. Now calculate the number of hours you spend on updating your sales column, fixing errors, finding the invoice and matching the invoice number to your excel sheet and searching through your C:Drive for the correct worksheet for the correct month. What if you spent that time on growing your business, setting up a social media channel to advertise to a wider audience, customer care and collecting valuable feedback from your customers. Long term, dropping that spreadsheet may prove more valuable than you thought. Software now days is also very affordable, you just need to google 'accounting software' and you will see various viable solutions with discounts attached to them.
3) Lack of awareness around software; I think this is an important point, if you have never had the opportunity to use, feel and play with an accounting/business solution then you don't understand the value it brings. Most accounting solutions do all the 'messy' work for you. They allow you to create good looking Sales Invoices and do the accounting element automatically! yes, no more manual data entry, just email your customers your good looking invoice and sit back. Some solutions even connect to your bank, so you get daily bank feeds of all cleared transactions in your bank appearing in your accounting software, you can simply reconcile your bank account and keep a close eye on your cash flow from a click of a button.
So what can be done?, the major accounting software companies today are making their solutions more and more user friendly. Gone are the days where 'Accounting software' was exclusively for SAGE Accountants, now small businesses around the globe are adopting software and making key decisions based on key information which is all available from a click of a button or a swipe of your iPad and iPhone.
Accountants are now becoming more involved in your business, with the growth of cloud solutions around the world, the modern day accountant is no longer just a number cruncher. With information being updated on a real time basis, your accountant/adviser can now within a few seconds see the state and health of your company, they even send reports to you on a monthly basis directly to your email address to ensure you have all the key information to hand. If you have an accountant ask them for their opinion, you should also shop around and spend 30mins of your time taking a free trial of a few to see which one best fits your needs.
So do business owners understand the value of software?, well 1.8m don't, however I'm sure many will start to and adopt these easy to use, pick up and play accounting solutions. Whatever you do, honestly take a look at accounting software, it could be the best business decision you make.
As for Excel, I'm going to keep using it to maintain my lists of data but never will I again pick it up again to manage the books of a client. Accounting software is not only becoming a god send for businesses but also for us accountants :)