To be clear, I don’t have anything against spreadsheets; I actually love spreadsheets! I use them quite regularly for a variety of things. If you’re a small business owner using a spreadsheet for your bookkeeping, you’re still doing much better than many small businesses that use only their bank account and statements. And for a certain size/type of business, a spreadsheet bookkeeping system may be enough.
However, once your business gets past a certain size, there are some good reasons to consider moving to bookkeeping software. Or, even if you’re dreaming of bringing your business to the next level, moving your bookkeeping to a more sophisticated system might be a good step in the right direction. (Fake it ’til you make it?)
Why Switch to Bookkeeping Software?
Here are six (of the many) good reasons to switch to bookkeeping software sooner rather than later:
One thing about spreadsheets is that a lot of manual work is required to ensure they do what you need them to do. With help from a bookkeeping application, you can significantly reduce data entry time by linking your bank accounts and setting up rules to help streamline this process. You cannot, however, let the software do all the work. You, or your bookkeeper, should still look at each transaction to ensure it is posted correctly, as the system will only be as good as the parameters you give it. But your bookkeeping software can help you eliminate much of the tedious, manual data entry work, saving you a ton of time.
Many bookkeeping software applications work really hard to prevent you from making common errors, such as deleting or changing a transaction that has already been reconciled, entering duplicate entries, or trying to change an entry from last year after your taxes have already been done. All of these common errors (and more) can lead to bigger headaches down the road. When you use bookkeeping software, there are often pop-up notifications that will appear when you’re trying to do something that might create a headache for you later. Some find these notifications annoying, but they can significantly help to mitigate or even prevent bookkeeping errors before they happen. And a Google or Excel spreadsheet won’t do that for you.
Speaking of reconciliations, utilizing bookkeeping software to do this can make it a much simpler (and less time-consuming) job. If you’re looking for an efficient and accurate solution, bookkeeping software will win over a spreadsheet any day. The software does the math for you! And some of the software options out there can even download your bank statements for you automatically and link them to the reconciliation report.
Depending on the bookkeeping software you choose, many also offer the ability to track the time spent on each client/customer, along with vehicle mileage (and other expenses), various business-related receipts, and/or inventory. When using a spreadsheet system, this data would likely be tracked on separate spreadsheets, which may or may not be properly linked to your bookkeeping spreadsheet. Consolidating and connecting as much data related to your business operations as possible in one place provides a clearer overall picture of your business expenses and profits, so you can better understand where money is being made and spent at any given moment.
Most bookkeeping software systems, especially cloud-based ones, allow you to access your books (in real-time) anytime from anywhere on your tablet, laptop, or smartphone. This feature enables you to invoice clients or pay bills whether in your office, at your favorite local coffee shop, or halfway around the world. Sure, spreadsheets can be saved in the cloud, but the process of entering information into them from a tablet or smartphone tends to be more challenging vs. using a mobile-friendly bookkeeping software application.
One of the most beneficial reasons to leverage bookkeeping software is that it can help you visualize your financial data with robust and user-friendly reporting capabilities. While reporting can be done manually with spreadsheets, your spreadsheet report won’t be nearly as easy to create, update, or view when you need to. Reports like Profit & Loss and Cash Flow summaries that cover custom time periods and/or compare them to previous periods can be generated with just a few clicks. Additionally, the level of detail in these reports will typically be much more in-depth than anything you can produce with a spreadsheet.
Implementing Bookkeeping Software for Your Business
Now that you’ve heard how beneficial bookkeeping software can be for your business, are you thinking about trying it out? Bookkeeping software is a more efficient and accurate solution than spreadsheets; plus, it will more easily scale with your company as it grows. The biggest hurdle is often making sure the software is set up correctly. Consider working with a bookkeeper who is an expert in your chosen software so they can help you set it up properly and train you on how to use it so your transition is a smooth one.
At Fournier Accounting and Bookkeeping Services, we offer QuickBooks® coaching and training for those who implement this software. As Certified QuickBooks ProAdvisors®, we can work with you to understand how QBO works, how to ensure the information is entered accurately, and how to find the information you need when needed.
Contact us to get started today!