Why Every Business Needs an Accounting software

Most business owners don't give importance to getting an accounting  software to manage their business.  Or they get the software without any training, hoping against hope that they can learn to operate the software by themselves or by their staff.

This is a story of a business entity which got into serious bank problems after 8 months into their new businsss. Their business is a service-based, and is profitable.  They have managed to raise orders of almost Rm 1.3 million within 8 months.

So, what is their problem?

Lack of, or no record-keeping.

The owner does not keep proper records of the cheques he issued.  He calls the bank (or log in to the e-banking portal) for the balance, and then based on the bank balance he will issue the next cheque.  .

His bank balance was found to be insufficient in August when the payee of one cheque that was issued in June decided to clear the cheque in August.  The owner assumed that evey cheque he issues is banked and cleared immediately, so he overlooked that one cheque he issued in Jun

Domino theory kicked in. Two other cheques were returned by the bank in succession, thus triggering the Central Bank to block his current account.  The bank recalled all this cheque books, and he could not operate his current account.  And according to Central bank rulings, he will not be able to open any current account for the next 6 months!

How can you prevent similar thing from happening to your business?

Invest in a simple and easy to use accounting software (like MYOB Accounting) and learn to reconcile your bank accounts on a monthly basis.

With an accounting system, all cheques issued will be recorded, and you will be able to see the running balance of your bank book.  You will see that you don't have much funds in the bank, and you need to call the customers to pay up before you go for a shopping spree!

Running a business is not just being able to manufacture the products and selling it;  it is also about sourcing for materials, hiring staff, marketing your products or services,  keeping deadlines for submission of audited accounts and tax returns,  and keeping track of the details like records of expenses and incomes.

You cannot neglect all the different aspects of running a business.

It is easy to lose track of the details of income and expenses, and before you know it, you can be in trouble.  In business, profit is not king.  Cash is king.

What you manage to collect from your customers will keep you in business.  Profit is just on paper, unless you've collected all that is owing to you. 

One lesson we can take from here is : If you don't have the skills to run a business, you should acquire the skills by getting a mentor, hire a business coach, attend a business school, or leverage on a partner who has skills that you don't have.