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August 2018

Why it's a good idea to use a cloud ERP

6 Reasons to Use a Cloud ERP Solution

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If you have a growing business, you’ll soon find that the way you’ve managed it to that point no longer works. For SMEs, cloud ERP solutions can be a blessing and significantly improve their operations. There are at least six reasons why this is so.

Take a look at the six biggest benefits a cloud ERP solution can bring to your business.

1. Lowers Operational Costs

If you are using an in-house ERP system, that’s a step in the right direction, but it’s not always the cheapest. Usually,  you have to deal with installing new hardware and need people that know how to work on it and maintain it. If we add licences, you can see how much this can impact your budget.

Cloud ERP solutions are often available on a monthly subscription. This means you can use them when you need them and not think of the ERP 24/7. In addition, cloud-based enterprise resource planning solutions can be customized per your specific needs, so if there is something you don’t need, you can leave it out and not pay for it.

Finally, when it comes to costs, a cloud-based ERP is already made and ready for your use, while building a new solution takes a good deal of time and money and those are not things in great supply.

2. Greater Scalability

Cloud technology has a number of benefits, but one in particular stands out and that’s the ability to scale it to your own needs. Of course, the same applies to cloud ERP. Let’s say, for instance, that you bought a licence but in the meantime your business has grown in a way that the current ERP cannot keep up. No problem, you just scale your licence per your needs and get a bigger one.

3. Better Accessibility

If there’s an Internet connection around you, you can access the cloud. For your business, using a cloud ERP software can offer several benefits, including:

  • Allowing your employees to access and use the ERP when travelling
  • The ability to go global. If you use an in-house ERP, you need several system if you want to go global. A cloud ERP will work across the globe.
  • Offers more flexibility for your employees. Today, more and more companies give their employees an option to work from home. If you have staff that takes a long commute just to get to work, they will be more than happy to use a cloud ERP that allows them to work from home.

4. Enhanced Security

One of the biggest reasons why some businesses didn’t adopt the cloud from the start is the perceived lack of security when compared to storing their data as they used to, or on-premises. This really had less to do with security and more with not wanting to abandon already established practices.

Today, reputable ERP cloud vendors  use the tools and have the resources that you don’t have access to and that can significantly improve your security. Simply put, if you want to ensure that your sensitive data is safe, partnering with a cloud vendor is a much safer option than using an in-house system.

5. Stronger Support

With on-premise hosting, you often get only the basics and need to buy additional packages, including support. This can be a hassle when you need to upgrade your software. What’s different with cloud ERP is that vendors include support as part of the deal and will provide it 24/7 in most cases.

6. Improved Performance

All that you really need in order to use a cloud ERP is a good Internet connection. This means you don’t need to worry about infrastructure or that the ERP system will hog all your resources, which is not the case with an in-house ERP. Naturally, this frees up those resources for you to use them on other business processes.

Conclusion

Enterprise resource planning in itself provides many benefits to a small business, but a cloud ERP is the next step. These six points were just some of the many benefits to using such a solution.

Are you using a cloud-based ERP? Do you know of any other advantages  besides these? Let us know in the comments below. Also, if you like software that makes your life easier, you  should give our Purchase Order Plus a free try. POP lets you easily create, approve and send purchase orders on any device, including your mobile phone or tablet.

be careful of these small business accounting mistakes

8 Biggest Small Business Accounting Mistakes You Need to be Aware of

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When running a small business, finances matter a lot and that makes the job of an accountant all the more important. Failing to recognize accounting as an integral part of your business can lead to cash flow problems and put your entire business to a stop.

Accounting deserves much more attention than it sometimes gets. So, to make it work for you, you need to be aware of the common small business accounting mistakes you can make.

Here are the 8 biggest small business accounting mistakes you need to avoid:

1. Not Taking it (Accounting) Seriously Enough

We get it. Your business is small, you don’t need a team of bookkeepers and accountants. But that doesn’t mean you don’t need a professional to make sure your books are in proper order. You, sitting with a calculator in 8PM in your apartment, checking your new company’s general ledger, does not count as “professional accounting”.

In accounting, you need to record every expense and profit, no matter how small or seemingly insignificant it may seem to you. Everything needs to be properly documented and classified in accounting.

Without taking accounting seriously, there is little hope that it will give you an accurate picture of your business finances.

2. Not Separating Home and Office Expenses

According to Small Business Trends, 69% of entrepreneurs in the United States start their new business from home. What many of them fail to do is separate their business from their house when it comes to books.

Don’t put your new refrigerator as a business expense (even though it contains soda you’ll be drinking while working) or the new laptop you’ll be using for work as a home expense (even if, from time to time, you use it to check your Facebook or Instagram).

The same goes for your credit card and bank accounts. Keep them separate for business and home and have one for each. Yes, it is a bit more effort, but you’ll be happy you did it in no time.

3. Not Reconciling Your Books and Bank Accounts

Reconciling your books means making sure that your account balance is without errors and matching the balance in your bank account. This is something you need to do on a regular basis.

This is important if you want to get an actual image of your current financial situation, so be sure to reconcile your books with the bank account at the end of each month and quarter. This way, you can spot and mistakes and make sure your books are in sync with the account.

4. Poor (or No) Communication with the Bookkeeper

We already established that accounting and bookkeeping are not the same. However an accountant needs to have a good communication with the bookkeeper. The two are not rivals, competing against each other, but need to work together.

This means keeping your bookkeeper in the loop about every expense you incur as part of your business so they can properly log it in the general ledger. It saves time for both you and the bookkeeper.

5. Forgetting to Pay Your Taxes

A lot of people have this notion that they only need to document their taxes once per year. That is not true and can cause some serious legal problems for you and your business. You need to pay your taxes every month and your employee tax every two weeks.

There is a “saying” that “nothing is certain, only death and taxes”, and unfortunately, too many small businesses never heard of it. If you are going to run one such business, be sure to familiarize yourself with how taxes work and the entire tax process. Sooner or later, they’ll catch up to you.

6. Not Appointing a Budget for Every Project

When starting a project, you need to be aware of how much it will cost you in the end. Failing to do this usually leads to paying much more than you originally planned. To make sure that doesn’t happen, you need to appoint a budget for every project you have.

Let’s say, for example, that you own a web design and development company and you have several clients. If a new client comes in and ask you to make him a new website, you need to assign a budget to it to see whether it will generate profit or cause you a financial loss.

7. Thinking that Profit Equals Cash Flow

Profits and cash flow are not the same. Let’s say you  just closed a $100,000 deal that should take you four months to complete and it is going to cost you $70,000. That’s a $30,000 profit. Not bad for four months, right?

Wrong. What if, for instance, it takes you six months or a whole year to finish the project. You need to take into considerations the delays that will inevitably pile up on this project. Even something as mundane as a programmer not showing up for work today can slow down the project and increase its cost, not to mention something much bigger happening.

The bottom line here is that you shouldn’t write down each deal as it occurs. Because, if you do this, it will be easy to get the wrong picture of your finances and that eventually lead to further wrong business decisions along the line.

8. Not Following Technology Advancements

Look, you don’t have to use every new technology that comes, but in general, you need to keep up with it. If you are still doing your books in paper and your competitors are using software like Xero, guess who has the advantage?

Technology can be your friend, or at least make your life a whole lot easier. So don’t be stubborn, leave that “I just need a pen and paper” attitude and start using it.

There are a lot of small business accounting mistakes besides these 8, of course. I hope this article will help you better understand them and avoid making them.

Do you have any thoughts or questions about small business accounting mistakes? Let me know in the comments below and don’t forget to sign up for our Purchase Order Plus software and make creating, approving and sending purchase orders much easier for you and your team.

10 small business accounting tips

10 Small Business Accounting Tips Every Business Owner Needs to Follow

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As a small business owner you often need to wear multiple hats. One of those hats might be that of the bookkeeper or accountant, or even both (because, the two are separate, remember when we talked about that?). Or you might be free from having to wear that hat by hiring a professional accountant to come over every months to look over your books.

Well, no matter how you are keeping your books and finances in order (and, trust me, you will want to do that, even be a little “obsessed” with it), these 10 small business accounting tips will make your life as a business owner a lot easier.

1. Always Follow up on Invoices

Because if you don’t, who will? Certainly not the customer you’ve sent that invoice to. If you leave it to them, they’ll probably “forget” all about it. Sending an invoice, doesn’t mean that you’ll actually receive payment for it. That’s why you need to follow up on your invoices.

If you are working with paper invoices that could pose a problem when following up. Fortunately, the solution is very easy. Start using an online or cloud-based accounting software which will help you automate this process.

2. Get Everyone to Use the Same Account Numbers

It’s all about consistency here. If you allow every department to use their own account numbers and code invoices as they please, you’ll sooner run out of stress medication than they will of account numbers.

By getting everyone to use the same account numbers you will rapidly increase the entire accounting process and reduce paperwork significantly.

3. Don’t Forget to Track EVERY Expense

Just because it might be “just a few bucks”, it doesn’t mean you can ignore an expense. Whether it’s $2 or $200 or $2000, you need to track, label and categorize every, and I mean EVERY expense you have. Because those things add up faster than you can say Jack Robinson.

But wait a second. Wouldn’t all those receipts be too much paperwork? Not if you use your business credit card, which will also let you earn cash back and rewards (when applicable) on your spend. Neat.

4. Make Use of Lockbox Processing

Lockbox processing can be a lifesaver if you are receiving large customer payments. What it essentially means is that, instead of getting payments to your business address, they instead go to a PO box from where your bank will process those payments for you and then deposit them into your business account.

Not having to manually process every payment will save you a lot of time.

5. Use Separate Coding for Ongoing Projects

If you have ongoing projects, you should think about setting up separate line items. Why? Because if you enter the project cost into your general ledger at a later date it will only lead to processing one invoice twice. You don’t want to do that.

Instead, by setting up separate coding for your ongoing projects, you get clean and easy-to-read reports.

6. Hire a Professional

Look, I understand. You’ve just started your SMB and you think you might be able to save some money by doing your own bookkeeping and accounting. Perhaps you even have a knack for it.

But here’s the thing. You are not a professional accountant or a bookkeeper and very soon your hubris is going to make you pay badly. To avoid this, hire a professional to keep an eye on your books and you in return, you can deal with other stuff. Which are probably going to be more interesting.

7. Use an Accounting Software

There are plenty of reasons why you should consider using an accounting software app like Xero for instance. This will allow you to automate your entire accounting process, plus you can use the full suite of their professional tools and features and that’s not something you can get with your in-house system.

8 Look Better Into Credit Screening

You’ll often be in a situation where you will have to accept credit from a customer. The question is, who should you accept credit from? Certainly not from a customer with bad credit.

You need to perform a credit check before accepting it from a customer. Otherwise, you are running into a risk of not getting paid. The least you can do is screen those customers with a software like Credit Karma and ask for a deposit.

9. Consider Labor Costs and How You Reimburse Employees

One of the biggest (if not the biggest) expenses you’ll have will be paying your employees. Of course, you want this to be fair, which is why you need to keep tabs on any perks, overtime work and benefits you want to offer them in order to avoid either underpaying them and overpaying them.

One big problem here is that, when asking for reimbursement for travel and other expenses they accrue, employees will often send you messy receipts, which may even contain a bunch of errors. Instead, get them to use an automated electronic entry system when scanning their receipts.

10. Don’t Forget to Separate Your Business and Personal Expenses

You know what they say, “separate your love life from your business life”. The same logic applies to your expenses. I hope I don’t have to tell you this, but your grocery expenses do not belong in your business general ledger. Keep these two separate with a high fence.

There you have it. 10 small business accounting tips you should follow as a business owner. If you find only one of these useful, I’ll consider my mission a success.

We’d like to hear from you in the comments below and don’t forget to sign up your email to try Purchase Order Plus for free and make creating, approving and sending purchase orders on any device easier and faster.

Differences between bookkeeping and accounting

What are the Main Differences Between Bookkeeping and Accounting

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Every business needs a bookkeeper and an accountant to support them in various stages of their financial cycle. The problem is that many consider these two to be one and the same, which is clearly a mistake. Yes, a bookkeeper and an accountant do share similar goals, but they both serve two distinct functions.

If you are convinced that a bookkeeper and an accountant are interchangeable, it’s time to dive into this article and learn the differences between bookkeeping and accounting.

What do Bookkeeping and Accounting Seek to Accomplish?

Both bookkeeping and accounting observe and record financial data and transactions and generate reports based on them. That’s basically where the similarities end and the  differences between bookkeeping and accounting begin.

Bookkeeping is primarily concerned with recording day-to-day financial transactions. This is done through a general ledger, where the bookkeeper records amounts from sale and expense receipts.

On the other hand, you could argue that accounting is a more advanced process that takes the information gathered by the bookkeeper and uses that to create a financial model necessary for the business owner to understand their profitability, cash flow, tax planning and filing and predict finances.

5 Big Differences Between Bookkeeping and Accounting

There are several differences between bookkeeping and accounting, but for this post, we’ll concentrate on the 5 biggest.

  1. They have a different objective

Bookkeeping seeks to create and maintain a record of all financial transactions within a company, while accounting aims to evaluate the current financial situation and help the business owner or relevant higher-ups in the company better understand it and the next steps they need to take.

  1. Their impact on management making decisions

Bookkeeping merely provides a record of financial transactions. On its own, the management can’t use this to make a decision. Accounting, however, provides data that are aimed at helping the management make business decisions.

  1. One analyses the other

An accountant uses the information the bookkeeper has provided to analyze and make sense of the data, which he can then use to create a financial report.

  1. Preparing financial statements (or not)

One of the key parts of an accounting process is preparing a financial statement. This is missing in the bookkeeping process.

  1. What skillsets they require

To be a bookkeeper, one does not require any special skills or training. In general, if you are good at:

  • Organizing
  • Have a high attention to detail
  • Good data entry skills
  • And have a solid understanding of bookkeeping principles

You should have no problem being a bookkeeper.

An accountant, however, requires somewhat more advanced and specialized skills. These include:

  • IT and accounting software know-how
  • Strategic decision making
  • Problem solving skills
  • Analytical skills
  • Good business knowledge and understanding
  • Communication skills
  • And more

Conclusion

So there you have it! Hopefully this post has helped you understand the differences between bookkeeping and accounting and why it is important to have them both.

If you have any comments or questions, feel free to join the conversation below the article and if you’re interested in an easy-to-use purchase order software, try Purchase Order Plus for free.