Accounting Services

I came across an article on a website called isnare.com that directly addresses the critical profit-generating support that accounting software provides small business.

Many entrepreneurs—especially those who don’t live and breathe accounting numbers—view accounting software as a necessary evil required for tax compilation and some degree of performance assessment.

In reality, accounting software can provide a powerful tool to boost revenues and cut expenses. Properly installed, configured and understood, accounting system software can provide the lifeblood to sustain a company through many serious scenarios in the days ahead.

Isnare.com article author Terry Cartwright addresses the challenge by noting, “Producing financial accounts may well be an administrative headache for a small business and many self employed businesses put off this essential business and reduce it to an annual event. There are major benefits that small business can derive from operating the financial system as an important part of the business management.

“Big business invests millions in sophisticated accounting software and financial control systems because financial management is seen as a key to financial success.”

The article goes on to say that one major accounting software function is to establish and evaluate gross profit margin in both percentage terms and volume compared with fixed expense levels. Accounting software used to generate a monthly profit and loss calculation will help determine immediately if gross profit is sufficient. Identifying areas where it can be improved can substantially improve profitability.

Adds Cartwright, “That is the benefit of accounting software, the production of actual financial figures that indicate where and how much action needs to be taken to improve the net profit earned. That action may indicate a need to improve sales volume, increase the gross margin through higher sales prices or lower direct costs [through] a reduction in overhead and business running costs.”

Other useful information can be generated by reviewing historical and present financial figures. Comparisons can identify such areas as sales opportunities not being fully explored, ways to improve gross profit margins, and steps that can be taken to limit excess expenditures, thereby achieving cost control.

Although not the most glamorous part of a company’s operation, accounting services undeniably rank high on the list of most important to future survival.

So, I have been writing about the importance of accounting software that can ensure compliance with accepted practices and regulations. Then, along comes Bernard Madoff, who’s allegedly able to circumvent compliance controls and implement a $50 billion Ponzi scheme.

It certainly validates the question of how effective any accounting software can be in ensuring accurate and above-board practices. Of course, it also adds fuel to the regulation fire that inevitably will heighten levels of control and reporting—and consequently the need for secure and sophisticated accounting solutions.

A Dec. 23 article in the Wall Street Journal frames the debate: “Questions about compliance practices at Bernard L. Madoff Investment Securities LLC are troubling many securities industry observers, as losses related to an alleged $50-billion Ponzi scheme associated with the firm’s investment advisor arm continue to impact a widening international circle of investors. ‘How could you have this massive scandal going on in a firm that’s adopted adequate procedures? That’s what compliance is all about,’ says James A. Fanto, a professor at Brooklyn Law School in New York and author of Broker-Dealer Law and Regulation.”

So, what are some lessons to be learned from all of this in the world of accounting solutions?

One, hire honest people. No accounting software, no matter how robust or well-configured, can function flawlessly if the people operating it—or their bosses—have crooked intentions. Just because you have excellent accounting system software doesn’t mean you’re totally protected. People still matter—a lot.

Two, the importance of adequate accounting software cannot be overstated. Notes the Wall Street Journal article, “…investigators issued a subpoena to David Friehling, a New City, N.Y., accountant who audited the Madoff firm’s financial statements, and are seeking documents related to the Madoff firm going back to Jan.1, 2000. Friehling has until Dec. 29 to fulfill the request.” Do you think for a moment that this accountant wants to be caught with his figurative “accounting software pants” down? Obviously, sophisticated, up-to-date accounting system software would aid his cause.

Three, when accounting practices and reports are challenged, how many people want to spend inordinate amounts of time trying to comply? The right accounting software can be a huge time-saver in many types of situations. In some cases, it can be a potential “livelihood-saver” as well.

How will President-elect Obama impact small business accounting services? Let me count some of the ways that the next Administration will both heighten accounting-related requirements and offer rewards that, likewise, will increase needed tracking of finances:

1. Taxation. As the new President grapples with myriad economic woes, you can bet that one priority will be greater oversight of tax bills by the IRS. Given that current revenues fall short of what’s actually owed, look for more government involvement in your accounting services to put more money in the US Treasury. Make sure your accounting software is up-to-date, properly customized to your needs, accurate, and readily accessible.

2. Regulation. Greater government involvement means more rules for small business. Being able to stay on top of them (which the proper accounting software can help do) and comply with them (also a function of the right accounting services), will result in much stress relief going forward. Start asking questions of your present or prospective accounting software companies about how they plan to address regulatory issues and requirements going forward.

3. Incentives/Lending. Look for small business stimulus incentives with the new Administration. These may pose both an opportunity and a challenge: A new/extended Stimulus Package could make buying/upgrading accounting software and other hardware/software much more affordable. Keep your eyes open for expanded lending through the Small Business Administration, micro-lenders, and peer-to-peer lenders—all fueled with government backing. Stay aware of accounting software that will be needed to efficiently capture data and develop financial reporting enabling your company to take advantage of these opportunities.

4. Jobs. Both in the public and private sectors, look for new jobs and incentives for hiring. Accounting solutions that can reliably capture data and create salient reporting around hiring opportunities will help ensure full compliance to keep the incentives coming.

And this is just the cursory overview. Fundamentally, small businesses that make their accounting services a top priority are much more likely to generate top-notch revenues

After all the campaigning, rhetoric and spin, the choice of our next president boils down to numbers and their reporting. And what has the entire campaign been about, if not numbers—polling numbers, calculations of electoral votes, use of those numbers to motivate constituents, and the like?

How the numbers themselves are determined has been a subject of much discussion and controversy. Different analyses have yielded highly divergent results.

Think about this the next time you view your company’s accounting services as ho-hum. In reality, much of what goes on in a national election process is a macrocosm of what happens—or should happen—every day in your business.

Data must be collected. It must be reported and recast in ways that are pertinent to different audiences. It’s information critical to evaluating how your company is doing, what trends to be aware of, and how resilient you can afford to be in these challenging times.

Your company’s accounting services also are the critical link to financial backers. And it’s not just the raw numbers. It’s how they’re reported, recast and recorded.

Given the weighty role that accounting system software plays in your business, you would think that companies would employ the most effective accounting solutions. Instead, the decision-making process often hinges on finding the most well-known accounting services, often at a lower price. Only after embracing this popular accounting software does a company realize there are shortfalls they didn’t consider.

Once again, this sounds eerily like the nation’s election process. In the rush to embrace popular technology, our country faces uncertainty about how well voting machines will perform, how accurate they will be, how vulnerable they are to tampering.

Popular accounting solutions are just that—popular. It doesn’t mean they are right for your business or unique needs. So, before investing in any accounting system software, investigate the following as part of your overall assessment:
1. Security. Consider multiple versus single layers of protection. Assess how valuable your accounting data may be to a competitor or disgruntled employee, then make sure to protect yourself adequately;
2. Power. If you have employees waiting around to use the system, that’s a problem (in some ways, not unlike voters waiting for hours at under-powered polling places). Think of the lost productivity employers suffer on Election Day because of those long waits—then think about how much money is going down the drain when employees are waiting around waiting on slow or balky accounting system software;
3. Reliability. Evaluate whether or not present or prospective accounting services give you what you need, when you need it, in the ways you need it. Think about connectivity with other critical systems, such as customer relationship management (CRM). Think about ability to tailor reports to various departments (e.g., salespeople and accountants generally do not read off the same page).

Numbers, and how they’re accounted for, are a critical part of any corporate structure. Staying on top of them by using the right accounting software will keep your company at the top of its game.

How does reputable mid-market accounting software reward those who implement it? Let me count the ways:

►Avoid data theft/compromise by disgruntled employees. Mid-market accounting software should include sophisticated theft deterrent features. Care to add up the potentially catastrophic costs of an employee selling sensitive personal data to outside parties? For starters, there’s the expensive and time-consuming process of informing affected parties and offering remediation recommendations. The bad press generated by such an event can destroy a company as present customers pull their business and prospects rule out the company because of the breach.

►Increase productivity and motivation of accounting employees. When employees discover that there are accounting solutions that can make their job easier and more productive, one of two scenarios likely results: they’re really frustrated because their company doesn’t have it; they’re really grateful that their company has it. This ranges from the most minute data entry tasks to ability of concurrent users to get on the system immediately versus waiting for colleagues to log off. It encompasses immediate generation of on-screen information and printed reports.

►Develop a more productive overall workforce. Providing the right types of financial information to everyone from the sales department to fulfillment clarifies roles, responsibilities and objectives. Clear communication of reliable and timely financial information using the right accounting system software generates clear and crisp results; murkiness begets murkiness.

►Keep regulators off your back. Anyone who’s experienced regulation difficulties will attest to their costly, time-consuming and productivity-draining nature. Accounting solutions that handle regulatory issues competently will yield many dividends—both monetary and in peace of mind.

From Roosevelt to Roosevelt, the message is clear: Our biggest enemy is inability or unwillingness to act constructively when adversity strikes.

Teddy Roosevelt said, “In any moment of decision, the best thing to do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.”

FDR proclaimed, “The only limit to our realization of tomorrow will be our doubts of today.” He’s also responsible for the famous line from his first inaugural address: “…the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”

Unfortunately, too many small-to-mid-sized businesses operate mainly from a place of fear. At the first sign of a downturn, they start tuning out the cacophony of bad news by burying their heads in the sand. Of course, once you bury your head in the sand, you—and your company—will run out of life-giving oxygen rather quickly.

Fear drives more business failures and economic malaise than any other downturn-related factor. Hope, determination and perseverance are the antidotes.

At this uncertain time, I call upon small to midsized businesses of America to find renewed hope, fortify it with determination, and rely on perseverance when the going gets tougher.

A sports team can execute its playbook flawlessly, but still lose because of a late mistake. The same problem can occur when implementing new accounting software. You can select the right accounting services for critical business processes, get workforce buy-in, institute change management—but wind up in trouble because data migration isn’t adequately evaluated beforehand. READ MORE »