Is it Time to Upgrade?

Accounting software is a great tool for your business. It helps you keep track of invoices, let’s you see where are your money is going and even allows you to access your information basically anytime, anywhere.

But if your accounting software is out of date, it actually might be doing more harm than good for your business. Here are some signs that it might be time to look into an updated system.

  • Are you still communicating with vendors and customers through email or even *gasp* snail mail? If so, it may be time to look for a system that provides an easier way to communicate.
  • If your desk is covered in papers and you have paper invoices and timecards coming out your ears, it’s time to stop endangering the tree population and look into a system that can do this electronically.
  • It might be time to look into some new software if your system doesn’t allow you to look at your information anytime, anywhere. This includes your cell phone – many systems allow you to have all of your information at the swipe of a finger.
  • Is your chart of accounts endless? Or, maybe you need to create a whole new set of accounts each time you add another profit or cost center (grants, jobs, products lines, etc.). Either way, both are major signs that it’s time to upgrade and update.
  • Your account system should do what you need it to, without you having to perform extra steps and work arounds. If your system is doing the exact opposite of its intended purpose, it’s time for something new.
  • If your vendor has completely stopped (or won’t be for much longer) supporting your software, you’ll need to upgrade. Although this sounds pretty obvious, we see this problem quite often!
  • It’s time to upgrade to a new system if you’re still using spreadsheets to track date and compute calculations. (Hint: accounting software does this for you!)
  • Here’s a big one. Do you enter manual journal entries – maybe you’ve even compiled them in your spreadsheets? Are you operating in several systems that don’t sync together? Time to get on board with a new, updated system!
  • Consider how much time you are devoting to closing the books each month. If you’re manually creating reports and manually completing the consolidation process, you’re wasting your time. An updated system can help you save your time to dedicate to other parts of your business.

If any of these common warning signs sound like something you are experiencing, now is probably a good time to start looking for new, updated accounting software. Although the transition won’t be easy, the benefits to your business will be worth it!

Setting up for Success: Part 1

You’ve decided to start a new business – how exciting! There are many important things to consider when getting everything set up, such as your human resources policies (your employees matter!) and software and solutions (you want everything organized and running smoothly). Another important component you need to consider is your accounting – after all, these numbers lay the foundation for your business and essentially tell your story.

Accounting is an important part of your business, and getting it right the first time is crucial. So where do you even begin?

First, it’s important to understand your business and industry. This understanding can help you answer some important questions for designing your accounting system. Some of the questions that may come up include:

  • “What basis of accounting should I be using?”
  • “What information should I be tracking in order to make informed decisions?”
  • “I know what I want to track, but how do I track it?”

Let’s start with the first question: selecting your basis of accounting. Your basis of accounting is essentially a framework used to record your transactions. There are a few different types to choose from, with the following being the most common.

  • U.S. GAAP (United States Generally Accepted Accounting Principles) – Try saying that one ten times fast. This is an accrual based framework in which revenues and expenses are recorded when they are earned and incurred, respectively. This is the most commonly recommended type.
  • Cash Basis – In this framework, revenues and expenses are recorded when cash is received or paid, respectively. Cash basis presents two different methods of accounting: pure and modified. The difference comes in that under modified cash bases, some transactions follow U.S. GAAP. Check out this blog to learn more about cash versus accrual methods.
  • Income Tax Basis – This is a framework in which revenue and expense recording depends on tax regulations. This helps eliminate the need for converting from one basis of accounting to another for tax return purposes.
  • Regulatory – In this framework, a regulatory agency prescribes the best method.

Now that we’ve looked at the different basis types available, it’s time to determine what information you should be tracking. The key here is to capture all of your business transactions in the simplest, and most efficient, way possible. This includes both cash and noncash transactions.

Depending on your specific business or industry, you might need to consider tracking your transactions in greater detail. Here are some areas to consider tracking:

  • Should you be tracking direct and indirect costs related to construction or manufacturing contracts so you can see the profitability?
  • What sales tax jurisdictions do you need to track for sales tax reporting?
  • Do you need to track certain items for tax return purposes?
  • If you do business in multiple states, should you be tracking transactions by state for tax purposes?
  • Do you have different departments or divisions that you need to track in order to view profitability?

Once you decide what information you should be tracking, you can select an accounting solution, and start designing your accounting system.

Stay tuned for the second part of this blog, where we go in depth about how you track your information. Although we’ve shared similar posts about these topics in the past, we think a refresh and reminder is important. If you need help in the meantime, just ask!

Successful Solution Selection

It can be overwhelming picking out a new, or even your first, business solution system. After all, this software can help you maintain your financials, customers and even your own internal resources. Picking out this solution is no easy task – and certainly not one to take lightly.

So where do you even begin?

It all begins when you realize your current system isn’t working (if you already have one), or when you realize some form of business software might help you better run your business (think better data, more efficiencies, etc) if you don’t already have one in place.

You then need to be a psychic and look to the future to see where your business will go and what software will get you there. Okay, not really, but you do need to think about your business needs looking forward. You will want to think about what growth you hope to see for your company, and what you will need from your software to get you there.

Once you understand what exactly you want from your solution, you can start evaluating different options. Of course, there are many options available, but have no fear – a consultant can help you find the right fit for your business (let us know if you need help).

To help you get started (because we’re nice like that), here are five tips for successful solution selection.

  1. Be sure to involve leaders from each division of your company in the process. These people are often the most impacted by the outcomes of your decision, so you want to make sure they have a say. By involving them, you can likely discover specific needs and desires that may have otherwise gone unnoticed. By including a broad range of leaders from your business, you can help ensure you’re choosing a solution that everyone can benefit from.
  2. Identify all the wants and needs for your new business tool, and then take the time to determine which are the most important to the success of your business. In a perfect world, there would be one solution that would cover absolutely everything on your list. However, reality disagrees. By creating a list, you know where you can compromise on some aspects and still get the best solution for your business.
  3. Ask around to find out what other business colleagues are using in their businesses. This can help you get valuable reviews on which products seem to be doing better than others, and can help you determine which ones will be a better fit in your industry. Learning from others can help you implement a trustworthy solution.
  4. After you’ve shopped around based on your wants and needs, consider contacting companies to set up product demonstrations. Seeing the tool in action gives you a real-time view of how this product would work within your business. When requesting demos, don’t be afraid to let the company know some specifics of what you want to see. After all, this is the success of your business we’re talking about, and you want the best solution possible.
  5. During these demos, make note of how the system performs on components that are important to your business’s success. After experiencing all the demos, you can go over your notes and see which systems performed well on these parameters, and which systems flopped.

Choosing a solution for your business can be a daunting task, especially with all the options available on the market. By following these five tips and reaching out to a consultant, you can comfortably make a decision on the best solution to fit your business.

A version of this blog first appeared on Eide Bailly’s technology consulting blog.

Getting Your Business Back on Track

There are a lot of considerations that go into running a small business, especially one in the process of growing and improving, but it’s not always easy. In fact, often times it might feel like your business just won’t cooperate and you might feel like you’re losing control.

How do you get back on track and help your business live up to its potential? Here are six areas you as a business owner can focus on:

  • Sales – Sales figures can help you determine revenue and inventory purchases, so keeping accurate records is important. To do this, implement detailed policies and procedures for all types of sales, whether it be cash, checks, credit cards or online sales. Consider using an invoicing system when shipping goods and having proof of delivery when goods are shipped. Also be sure to check your invoices against sales and payments to ensure everything matches up correctly.
  • Accounts Receivable – We’ve mentioned this a lot: keeping up on accounts receivable is important. Income from your operations is what keeps your business going, so making sure you collect, and on time at that, is very important. To keep up on AR, establish collection policies in writing, and make sure to follow through on implementing these policies. Here are some ideas:
    • Establish a solid system for billing, such as numerical or batch processing
    • Have a timely review process for all accounts
    • Keep your accounts receivable separate from cash
    • Have security measures in place for communicating
  • Accounts Payable – Just like it’s good when your business receives cash, other businesses need to be paid as well. Keeping up on payments can help your business establish a trustworthy reputation which can ultimately lead to more success and growth. Unfortunately, AP is an area that many businesses struggle with. To stay out of hot water in this area, consider setting up procedures for cross checking payments, always check pricing options from competitors and vendors and be sure that billing amounts are being entered correctly.
  • Cash – Businesses that accept cash (especially a lot of cash) are at a high risk of loss due to theft or other discrepancies and errors. Keep your cash in control by having employees balance cash at the end of their shifts, have controls in place to ensure employees can’t pocket the cash without entering the transaction, check and reconcile bank balances regularly, keep all cash payment methods secure and pay attention to your business’s cash flows.
  • Human Resources and Payroll – Technology has made it easier for hackers, scammers and even bad-egg employees to commit fraud or other harm to your business. To keep your people (and your business) safe, consider the following:
    • Require password updates regularly- for you and your employees, and make sure to keep all passwords safe and not written down.
    • When it comes to payroll, review the details (do you know all those employees?) and checks/direct deposits to make sure pay is being disbursed properly.
    • Pay attention to any differences between payroll expenses and monthly budgets – this could be a red flag that someone or something has gotten access to your books.
  • Physical Assets – The physical assets your business owns, such as machinery or laptops, are of great value to your business – you don’t want anything happening to them. When it comes to laptops and other electronics, make sure they are safeguarded or locked up. This makes it difficult for someone to steal the physical piece itself, along with the information stored on it. Cyber security problems are on the rise (seriously, check this out), so keeping these assets on lock down can help prevent data breaches and other cyber-crimes. Record asset purchases and monitor use and depreciation on them to stay up to date on their value. Also consider setting a usage policy so assets aren’t falling into the wrong hands or being mishandled.

While there are many areas of your business that deserve your time and attention, these are some areas that can help you keep control over the growth and direction of your business. Your trusted business advisors can help you set goals and policies to ensure that everything is running smoothly in your business. If you need help, just ask!

 

 

 

By the Lights on the Dashboard

Your vehicle’s dashboard can provide you with important information such as speed, distance traveled, engine status, etc. However, without the proper amount of light and information, you would not be able to see, process and understand the information provided by your dashboard.

The same could be said for your business’s dashboard. This dashboard tells you what’s happening in your business, and brings your attention to any warning lights or indicators that might pop up. Business dashboards can be in print form or electronic (which is usually the way to go), and your team of accountants can help you set it up (yeah, we’re nice like that). As long as you have a dashboard that tells you vital information about your business, the format isn’t too big of an issue.

It’s also important to keep in mind dashboards are not one-size-fits-all. In fact, another business’s dashboard might look similar to or even fancier than yours – but it simply won’t help you run your business. The key to having a useful dashboard isn’t the amount of information it provides, but rather the accuracy and relevancy of the information. Having a dashboard that specifically fits your business can allow you to make smarter, quicker decisions.

So what should your dashboard contain?

Your business’s dashboard should contain key performance indicators (KPIs), ratios, metrics, and other pertinent information that can help you make smart business decisions. In a nutshell, your dashboard should be able to quickly provide you with insight into your business.

The metrics your dashboard displays are not randomly chosen; rather, they are specifically selected to give you a better understanding of your business. The metrics you choose to monitor on your dashboard should be able to help you decide if your business is performing the mission and vision set for it. To choose which metrics to measure, it can be helpful to create a strategic map. Similar to a regular map, this map can help you see where your business is, where you want your business to go and what it will take to get there.

Business dashboards are typically broken down into four areas: client, internal processes, financials and learning and growing. Each area should contain at least three, but no more than four, metrics. If you select the correct three to four metrics (no worries, your accountants and advisors can help with this), you should have enough information to make effective management decisions. If you have more than four, you increase the risk of having too much information to sort through – you want things to be as straightforward as possible.

After all, the goal of having a dashboard is to make decision making quicker and easier. However, it’s important to remember even though having a dashboard gives you a quick look at key metrics, it shouldn’t replace your regular financial reviews and planning.

A dashboard can be a helpful tool to keep your business on track and aiming for success. Using it on a regular basis can help you monitor your business and make important decisions without having to take excessive amounts of time out of your already busy schedule.

Seem like a lot of work? We can help you set up a dashboard to keep your business on track. Seriously, just ask.

 

How to Manage Change in Your Organization

Change is inevitable, and that’s a fact. Making changes in your business allows you to stay up-to-date on trends, keep up with the competition and remain a force to be reckoned with in your industry. In order for change to be successful, you need to make sure your people are on board. Often, this can be quite a challenge. What if your employees react negatively or don’t adopt a new form of technology the way you had hoped?

A concept called change management can help get your employees on board and be accepting of new changes in your business. Change management can provide a framework to help leaders engage the entire organization and give them a sense of why the changes are being made, as well as how and who it will impact.

Here are five change management concepts to follow when implementing a big change in your business – whether it be new technology, reorganizing your teams or something else.

  1. Communication is key – Change can create some uneasy feelings, uncertainty and even resistance. The last thing you want to do is ignore these issues. The best idea is to acknowledge and address them as soon as they come up. This can lead to higher levels of support, more employee acceptance and more buy-in. People who feel uninformed or neglected throughout change are going to be less open to adopting what’s new, so communicating with everyone throughout the process ensures no one will feel left out.
  2. Support from the top – Getting executives and senior level management to support change can almost ensure a successful change initiative. When leadership is on board, it shows all others that if the executives support the change, it is likely worthwhile. In order to get this effect, leadership needs to embrace the change to unify and motivate the rest of the organization. If you have a leadership team who doesn’t support the initiative, it is likely destined to crash and burn.
  3. Dedicate a go-to person – To make matters a little simpler, consider dedicating one person to drive progress and lead the communication across the entire organization. This one person will act as a touchpoint for feedback, questions and concerns, and will be able to communicate them with key stakeholders. They could also deliver updates and progress reports to the organizations to keep everyone up-to-date. How do you choose this person? Consider the type of change you are initiating. If it involves technology, look to your IT people and see who would be the best fit. If it involves management of daily work life, consider and HR professional to be this person.
  4. Offer loads of training – If you’re initiating any kind of change that involves a disruption of how things are usually done, people will need to learn the new way of doing things. Offering technical and process training can help employees understand the aspects and impacts of the new technology, system, etc. This can help them understand how their everyday work will change and what to do to adapt. This can help keep your team engaged in the change adoption and can continue to foster communication and involvement throughout the process.
  5. Measure success – For any type of change to be successful, it needs to be adopted and accepted by those impacted by it. To know if a change initiative is successful, you need to measure the impacts of it. Have a plan to measure key data before, during and after the change to see how well it was received by the organization. This will help you identify what is working well, what might need to be improved and whether the change is still a good idea for your organization.

Change is hard – there’s no doubt about it. However, by practicing some of these ideas, you can implement a smooth change initiative that will have a successful and positive impact on your business.

A version of this blog first appeared on Eide Bailly’s Technology Consulting Blog.

 

Is Your CFO Ready for the Future?

It’s no secret: the business environment is constantly changing, and will continue to change in the future. These changes can impact everyone in your business, from staff up to the CEO. In our numbers world, we hear a lot about future ready CFOs. Is your CFO (in-house or outsourced) future ready? Here are some considerations to help you measure your CFO’s readiness.

  • Is your CFO proactive? – Rather than sitting back and waiting for the next big change, is your CFO prepared and excited for what is coming? Being proactive is key to being ready for the future. For example, cloud accounting has opened numerous doors of opportunities related to efficiencies, access to information in real time, etc. Has your CFO already taken the initiative to explore these opportunities? Anticipation is another key to being ready for the future. Is your CFO staying current with the trends in your industry or what your competition is up to? Staying ahead of the curve can give you a competitive advantage that can’t be touched.
  • Is your CFO tech savvy? – Being tech savvy is a great skill to have in today’s world. Your CFO should be trying to leverage technology that best suits your business (both financially and operationally). Technology is always changing, and you want to make sure your business stays up-to-date with these changes. Staying up-to-date can help ensure your business runs efficiently and you get the best information you can to make decisions confidently.
  • Does your CFO know his/her stuff? – Does your CFO seek to learn outside of the numbers? It’s important to see the business as a whole. A study by EY and CPA Australia found the top tasks of CFOs in the future will focus around strategic planning, advisory and risk management – not just the numbers. There are many benefits that can come from knowing all the parts of your business, such as a better understanding of how different departments work, or being able to identify higher level problems. After all, your finances work with every part of your business in some form, so knowing what role they play can give you an upper edge.
  • Is your CFO accepting? – Change is hard but it’s also inevitable. Change comes with a mixed bag of emotions, and it’s important that your CFO is willing and able to embrace the change. Your CFO must be able to accept positive, necessary change to grow and build a better future for the business.

There’s no doubt about it: the future is going to change the way businesses operate. Making sure you have a future ready CFO on your side will help you create a competitive advantage that will be hard to beat.