I have been struggling for a while with my accounting and I wanted to share with you a shortcut that I uncovered after a lot of trial and error. Most individuals I know in startups want to devote their time to targeting customers and selling instead of doing bookkeeping. Accounting is one of those arduous tasks that very few people look forward to doing but should be performed on a consistent basis to avoid disaster.

When I first started my business my bookkeeper suggested or should I say insisted that I used a small business accounting software package developed by a company called Sage Software. Without even testing software I simply went ahead and bought the cheapest system I could find. This was arguably one of the worst mistakes I made as the system turned out to be really hard to understand and use. OK my first piece of wisdom is that whenever you see the words accounting software proceed carefully as it definitely means the developer is assuming you know a great deal about accounting.

Just like me small company people understand their craft and the product or service they sell and not accounting but in my case I was driven to allocate time to finding a solution that would work for me. The good news is I found a really good answer, it’s an online system known as salesorder.com.

Definitely the best application I have discovered, salesorder.com works on the web and is really well designed and of course lets me work anywhere I can connect to the net. And here is the best bit I want to tell you, the team at salesorder.com know their subject, just like their system they are a pleasure to work with and better still are happy to spend quality time with their users (even the free ones) helping people like me to understand and address real issues in my business and to top it off they have tutored me in the accounting I need to know.

Technorati Tags: sage accounting software, sage software, Small business accounting software

Self discipline more….

Before I give you my portfolio of the top web tools that are sure to assist you to operate remotely, I must discuss one more point related to self discipline and especially to do with keeping your focus and levels of concentration

I’ve spotted and confirmed a consistent trait in acquaintances who work on the net and I’ve been in contact with for some time and I call this behavior the 50 min effect. I discovered these acquaintances who apply themselves and work for fifty mins. and then pause for a complete 10 minute rest and are much more productive and generate a significantly better quality of work than men and women who don’t have such distinct working methods.

OK as promised here is my list of preferred remote working software:

E-Mail

Google Mail won’t cost you a penny. For my money the search & label (a bit like folders) features have no equal. Googlemail can be a little slow on aging PC’s

Phone calls

Skype used to drive me crazy as the service performance was unacceptable, but hats off for the software tech’s at Skype now as they have really improved the quality of the service. For few dollars a quarter ! am able to call and conference in any telephone and Skype user in the world. The current version of Skype has a ton of really good features and there constantly expanding collection of valuable add on applications.

Organising Content

Evernote has secured in excess of a million users in no time at all – it enables you to store, organise and annotate any species of digital media in the Cloud. Just go check it out…it’s free.

Invoicing, Time and Expenses capture, Accounting and CRM

You almost certainly know that my urge to work remotely was originally sparked off by Quickbooks Online, a small business accounting software system. But it is no match for the free edition of salesorder.com – a lead to cash system that’s as easy to use as a hairbrush I looked at NetSuite whose pricing (and people) scared me off. My choice here is salesorder.com – Go check it out.

Technorati Tags: Quickbooks online, Small business accounting software

The top reason men and women fail to adjust to operating remotely is they don’t see the essential requirement of good organisation and rigid self management.

I have been working remotely for nearly 8 yrs since I first found Quickbooks online an ‘on demand’ small business accounting software web application and was mesmerised by the fact that if you can do accounting on the net then why shouldn’t it be possible to do other important types of work remotely?

Whilst working remotely has significant advantages there are numerous traps that people easily fall into which lead to issues that result in reduced work output and reduced morale. The most cited reason for decreases in productivity in remote employees is interruption and it is a confirmed and well publicised fact that it can take a person up to twenty minutes to establish their original output level after experiencing a disruption.

Studies also show that persons who are consistently subjected to disturbances are more likely to be susceptible to decreased memory capability and are prone to developing mental health trouble in old age. We live in an over communicated environment and it is important that you are aware of the problems this causes before you start working remotely. Whilst operating remotely you have to do everything possible to reduce the threat of being disrupted.

Here’s how I do it:

1, Get a consistent schedule, communicate it to absolutely everyone and stick to it!

Good examples are a regular time of day when you look at or send e-mail and make or take telephone calls. Before I began working remotely I used to receive nearly 200 e-mails in 24 hours. Now I think I am unfortunate if I receive in excess of 4. To start over with my electronic mail experience I modified my e-mail address and vigorously took precautions to shield the details being passed on to anyone. I then made sure everyone who I gave my e-mail address to, to use it wisely and sparingly. I also set up an auto-responder that swiftly told anyone sending me mail my schedule for reading mail and if an item required my urgent attention to mark it as ‘Urgent’.

2. Get rid of alerts.

Disable every feature that can send you a perceptible alert. This includes mobile and
conventional telephones and forms of alerts from electronic mail such as on screen pop ups, audible warnings, display changes to your inbox folder and of course facing a window. Get a door on your study and put up a ‘do not disturb’ sign on it.

In ‘Remote Working Part 3 – What should be in your tool box’ I will reveal my favourite tools and software.

Technorati Tags: Quickbooks online, Small business accounting software

Budgeting is important as it provides you with a detailed view of the relationship between the various financial activities occurring in your business and helps you anticipate and get ready for changes that will inevitably happen in the future. Budgeting directs you to focus on you have to do better to boost profit and gets you prepared for the way ahead. A thorough profit budget indicates what fluctuations you can expect in your cash flow.

The more cash you realise from profit the better space you will have for manoeuvre when opportunities or issues crop up. To track your cash flow accurately the best tool to use is small business accounting software which should give you the reports you need to compare your actual with budgeted performance.

Good cash flow is not guaranteed if you make more profit . Do not be deceived by this point

You have to continually track and immediately analyse any changes in your actual cash flow from profit. Any deviation from what you expected] you find should be evaluated to work out if you have an opportunity or a problem.

small business accounting software most often contains reporting tools that allow you to drill down on the numbers and understand the contributing values.

All expenses are detrimental to cash flow and as a general rule increases in sales means inflated expenses and could consume cash faster for a period as the business needs more resources to enable higher revenue performance.

Once again it is imperative that you can easily monitor changes in expenses as they occur and that is why you need good discipline in capturing expenses and sales as they occur into your small business management software so as you can report your cash flow forecasts, see the way ahead and make any corrections to keep you in line with your budget.

To operate and grow a business you must implement a rigid discipline of tracking cash flow against budget, without this you will inevitably face problems that could lead to disaster.

I wish you well and good luck with your business.

Technorati Tags: Small business accounting software, small business management software

Most good business managers can tell you how much of their time is devoted to dealing with problems in the business. I am never surprised to hear people tell me that business problems occur with immaculately bad timing. To solve a problem you first have to know that you have one. Business managers who are not competent problem solvers have no place in a good business.

It is vital that all business managers give adequate attention to the implementation of robust financial controls. Financial controls should be specifically designed to detect financial problems and immediately bring them to the attention of managers. A good reporting system is essential to the support of financial controls, this functionality can be found in most good small business accounting software. You have to be able to do side by side comparisons of period versus period or budget versus period and for this you need to make sure that your small business accounting software can generate the right reports. You should identify a small group of critical factors that you need to monitor and strive to make sure your accounting reports highlight these operating ratios and balances.

It is essential you consistently track margins and immediately scrutinise and address any differences regardless how small. Any change regardless of how minor in the margins or volumes of product sales should be closely scrutinised, understood and addressed as a substantial drop in profits will inevitably follow. Don’t ever let fixed costs deviate from the plan especially in the first quarter of the year. Track your debtors position very closely and focus on the average number of days it takes to receive payment of your invoices, the best way to do this is to use the Days Outstanding or Debtors report that you should find in most small business accounting software packages.

Experience is the way to learn and over time you will learn which financial controls should be highlighted in your accounting reports, just make sure you have the right small business accounting software that can generate these.

Technorati Tags: accounting software for small business, business accounting software, Small business accounting software

I make instructional videos like the one above for business owners and their teams who are using our system to replace small business accounting software such as Quickbooks (the one above took me about an hour). I am amazed more people are not using this really easy way to turn what they know into content and start selling it through the internet to the connected market. I recommend you build your own information product (digital content) from scratch as the return on your investment in time will be higher (profit margin) and you will have the added benefit of being able to learn more about your customers and build more value into your product.

When I first saw how simple it was to create a video and upload it to YouTube or turn it into a podcast it made the hairs stand up on the back of my neck and I concluded I should share this essential skill with everyone. I can deliver my small business accounting software through just about every modal via the internet and guess what the traffic just follows.

The best instructional videos I have seen have always been produced using a technique called storyboarding this helps you decide and refine how you to best share your knowledge with your audience. As opposed to using pen and paper I generally like to use software slide making tools like Microsoft powerpoint or Apple Keynote as they are really easy to put interesting content into and you can use the output in your video. I am a great believer in doing as much as is possible without spending any money what so ever and gaining confidence in your idea and making some money before you start, I call this getting the rope across the river.

To create your videos I recommend a really good program called Camtasia studio from a company called TechSmith, it will enable you to produce high quality videos for YouTube, Podcasts and download to your customers computer in either QuickTime or Windows media format (don’t download the trial yet, just watch all of the tutorials). The reason I said not to download the TechSmith software yet was to make sure you maximised your use of the trial to create and sell your first video.

OK this was a brief overview of what tools you have to have to hand and get to grips with and in the next lesson which hopefully will be published on this blog in the next few days (owners permitting) I will go through a detailed description of how I create my small business accounting software videos.

Technorati Tags: accounting software for small business, business accounting software, Small business accounting software

The essential reports you need to view the financial activity, the financial position and the timing of the amounts of cash coming in and going out of your business are produced from the information and balances recorded in your chart of accounts.

Good businesses know what they have to track and measure and why. The detail of what they want to track and measure is reflected in the design of their Chart of Accounts which in turn is a mirror of what is in their Business Plan.

Well run businesses use business planning to forecast what they expect to happen in the future. They always begin this exercise with the end in mind

Good businesses set less than five clear objectives and then think through and decide the best strategies to achieve them.

Strategies are then broken down into Activities with dates and priorities which are then communicated and assigned to the individuals or groups for execution.

The plan details the picture of what sales are forecasted to happen when, what the future financial activity, financial position and cash flow is expected to be.

Each assumption helps you define financial targets each of which has financial implications for a business. So it’s essential you are able to accurately track and measure these critical numbers

Cash provides the oxygen for every business and therefore it’s critical the supply and consumption is carefully managed to keep the business alive and help it grow and flourish.

Prudent and diligent financial planning and management can only be achieved if the underlying financial and supporting information behind the critical numbers is accurately recorded and well organised.

This can only be achieved with enduring discipline, a well organised chart of accounts and good small business management software.

Because of the rapid emergence of SaaS systems, online small business accounting software now makes it possible for business owners to see real time view of progress of their business against their plan.

Every number in the accounts of a business has a story behind it containing events and characters the details of which cannot easily be recorded in an accounting system therefore Small business management software as opposed to accounting software is now an essential part of the foundations of a well run business.

Continued in - Small business management software - The join between planning and accounting - Part 2 of 4

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In businesses that sell stock you will find a line directly below income called Cost of Goods. Reports in most small business accounting software will display this as COGS

This line represents the actual costs (COGS) associated with the Products you sold in the period you report from your small business accounting software. The objective of this line is to assist companies determine the gross margin/profit (the gross profit realised after acquisition of the stock).

To calculate Gross Margin subtract the COGS balance from the Income balance. Gross Margin is often expressed as a percentage and to calculate the gross margin and express it as a percentage just divide the Gross Margin by the value of sales you made in that period. Now if you’re a Services Business life is a little more complex if you want to determine the Gross Margin you make on Services (and you should). The reports in some small business accounting software systems will help you determine this.

Visit the Small Business Heroes channel on Youtube for videos explaining the Profit and Loss and other accounting elements. The next row underneath the COGS row details the running costs better known as the operating expenses. What was spent in the period on running the business is reported as Operating Expenses.

Expenses are often categorised into sections representing key functions such as Sales, Admin, R&D and other departments. As you can see these sections represent major functions or centres of activity in a business. Each of these rows details the expenses incurred in a period for example a month or a quarter.

The balances in these sections are derived from Expense Accounts and it’s really important that you know and understand that there are two major types of Expense in any business. These are Fixed and Variable expenses.

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If you are running a small business or using small business accounting software it’s vital that you master reading and understanding your profit and loss statement. And if you are stuck You will find videos on Youtube in the Small Business Heroes channel to help you understand this report or statement.

The profit and loss statement reports how much you’re selling, how much you’re spending and how much profit you are or aren’t making over a specific time period.

The Profit and Loss or P&L is often referred to as the Income statement, it tracks and reports the financial activity of your business over a period such as a month or a quarter.

I will give you a basic overview of the profit and loss to help you understand what it does and how it works.

I’ll show you how the profit and loss is formatted and the order in which it arranged in the report generated by your small business accounting software

I will also discuss the mathematics used in the profit and loss to express the bottom line or how much profit the business is making.

Just one important point before I begin. You will never ever be able to tell how much cash you have from looking in the Profit and Loss. Reporting or making a Profit doesn’t automatically mean you have Cash. The results of the financial activities of the business animate the cash positions to be found in the balance sheet.

Always first is Sales (in other words how much you’ve sold),it’s also known as Income or Revenue and is always shown at the top of the profit and loss report generated by your small business accounting software The balance or amount on this line is derived from your Income Accounts.The financial activity resulting from what you have sold are recorded in the income accounts.

So if you’re reporting by month and in March you invoiced or sold 1,000 worth of Products or Services. This line will show a balance of 1000.00 for March.

The lines in the top section present the resulting balances from transactions that occurred in the time period specified by you

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