When you start a new company, it may be perfectly fine to use spreadsheets to handle your accounting and bookkeeping. However, you should be prepared for a time when you will eventually have to bid farewell to spreadsheets or paper records and will have to switch to an accounting application.
If you don’t make the switch on time, you will end up wasting valuable hours sorting out your company’s ledger accounts. As a result, your business will be affected.
As you expand your products/services range and your client base also increases, you should seek out an appropriate accounting application to handle your accounts and finances.
If you aren’t sure whether you should switch to an accounting application or not, this blog can help you.
Below are 5 indicators that may tell you that your business should switch to an accounting application.
When people start new businesses, they generally use spreadsheet software to budget and plan out their accounting. At the initial stage, spreadsheets will do fine when it comes to managing your business's finances.
But, mind you, you can’t keep relying on a spreadsheet always. As your business will flourish, you would notice that things are getting out of your hands.
Managing several spreadsheets and paper records for auditing bills, estimating cash flow, and other small tasks can make you frustrated.
When this time comes, you should know that it is the perfect time to switch to an accounting application and save time and energy with streamlined financial operations.
Furthermore, accounting apps offer features like access to more than one device and user restriction configuration that makes it easy for multiple team members to manage the accounts.
Entrepreneurs tend to try to manage all or many tasks related to their business. But trying to be a jack of all trades is counter-productive.
You are a business owner and not an accountant. The good news is you don’t even need to hire one. An accounting mobile application can free you of juggling between various responsibilities and contradictory priorities.
You don’t need to waste your valuable time on manual repetitive tasks like accounts tracking, handing out transactions, and billing clients. You can digitalize all these tasks by switching to an accounting app.
You can save a lot of time and mental energy time and use it to grow your business.
Many entrepreneurs have great expertise in their respective fields but they lack technical knowledge of accounting and bookkeeping. To make your start-up successful, it’s a must to possess a strong understanding of finances and accounting.
Many business owners aren’t good enough at handling tasks like bookkeeping and accounting and they often lack knowledge of cash flow management practices.
Another big issue is not having an appropriate accounting system to manage accounts. Both these problems can be solved by an accounting app.
It will allow you to automate many of your accounting and bookkeeping tasks, like creating comprehensive accounting reports.
An accounting app will give you an edge over your competitors with its useful features. You can manage your accounts on the go, multiple team members can manage the accounts on their devices, and reduce errors in your ledger accounts.
When you notice that your customer base is expanding and spreadsheets are making it difficult to handle a growing volume of business information, it's time to say goodbye to spreadsheets.
With spreadsheets or physical records, evaluating the economic position of your business will take a lot of time and its crucial to know the current financial position of your business to make informed business decisions.
Moreover, you can’t derive data insights instantly from spreadsheets as you would need to acquire knowledge of spreadsheet commands and formulas first.
Plus, you would need to constantly keep updating your spreadsheets manually, otherwise, the financial reports may not give a clear picture of your business’s performance.
Delayed business decisions can mean loss of revenue and customers and you don’t want it. An accounting application can come in handy at this time.
With a cloud-based accounting application, you can automate your data backup and can acquire comprehensive summaries of your revenue generated, costs, cash flow, etc.
Furthermore, if any problem arises in your accounting or bookkeeping, an accounting application allows you to recognize and rectify it immediately.
Several studies have suggested that 88% of all spreadsheets contain significant errors. Human error is almost unavoidable while manually recording your financial data.
If the majority of your business information lies on spreadsheets, it means that a majority of your business data may have a lot of errors that can easily add up.
These tiny mistakes can make adverse effects on your business like mistaken invoices or lost tax credits.
You can minimize these manual errors with the help of an accounting application. An accounting application provides a single platform to keep all your business data and allows you to automate multiple tasks and operations prone to physical entry errors.
Once you have decided on whether your business should use an accounting application or not, the next step is to figure out what features you need.
There are many sophisticated accounting applications available but you need to choose one that offers the features that can benefit your business.
Essentially, as a small business, you need a user-friendly accounting app that keeps your data secure and backed up via cloud technology.
Digi Khata is a free Pakistani cloud-based accounting app that can help you to manage one or multiple businesses. You can easily handle debit-credit transactions, send free payment reminders to collect your money three times faster, create free business cards to market your business, and more.
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