When is a good time to computerise my accounting records

If you ask me, I will say, computerise your accounting records as soon as you start your business.

As business owner myself, I am aware that starting a new business is stressful - and it stretches ones' resources - time and money. There is a tendency to put buying a computerised accounting system the last priority.

However, having implemented MYOB Accounting software for more than 300 businesses at different stages of the business life cycle, I have enough evidence to conclude that companies which implement a system right at the start of the business have less stress on the resources than otherwise thought.

Yes, its true there is less invoices and expenses to account for in the beginning, and there is the uncertainty of when the first sale will come. But you started your business not to fail, so the customers will come. And when the customers come, there will be an avalanche, and then you might find there is a bottleneck in invoicing, collection and inventory recording. And the delay in getting the information (for example, amounts owing) will cause an un-necessarily strain in the resources.

One new convert to the MYOB computerised accounting system tells me that his staff takes 6 days to prepare the customer statements for 100 customers. This client delivers perishable stocks to the hotel industry on a daily basis (or at worst once a week). The handwritten delivery note serves as an invoice. The staff enters the details of invoice (invoice number and amount) onto an excel worksheet for every of the 100-odd customers. The spreadsheet is updated whenever the customer makes a payment. The entire process of preparing a customer statement the manual way takes some 6 days (including overtime hours clocked in). On top of that, they are not able to tell how much stock in total have been sold, and at what profit margins.

The other disadvantage of waiting too long before you invest in a computerised software is that you lose valuable historical sales data. This client is only able to spare the staff and time to enter transactions for the new year 2008 onwards. For the past year 2007, they will have to farm it out to an outsourced bookkeeping services to prepare the final accounts. This incurs some more costs, which could be avoided had they invested in the computer program since the beginning.

If you are starting a new business, do set aside some funds for the accounting system. The accounting system is a necessary tool in your business, far greater than any renovation that you intend to put up for the new office. Prioritise your needs and wants.