Hard Facts about Financial Software

A Lesson Learned the Hard Way: The advantages of getting accounting software sooner than later.

Written Apr 10, 2008, read 488 times since then.

Article from www.jump.com: JumpUp is a free website and community from Intuit that helps new businesses get up and running successfully. Written by Betsy Dee, owner of a women’s apparel design/retail shop in San Francisco, CA.

In the first few months of my boutique’s operation, I thought it would be a good idea to handle my finances manually, so I could understand what, if anything, I would be automating with financial management software.

Puh-LEASE let me save you three months of agony and confusion and tell you that the sooner you get something like QuickBooks (and, in my case, QuickBooks Point-Of-Sale) software, the sooner you’ll have your sanity back. In fact, I would argue that you should get this stuff before you open the doors, while you still have time to figure it out and put it to work the right way.

Why? Because—especially when you’re not making money yet—you absolutely must know exactly where your money is coming from and where it is going, so you can position yourself to become profitable.

Sure, I had an idea of how I was doing (sort of) – but we small business owners are, by nature, optimists—so when my bank account wasn’t exactly showing a growth trend, I just figured I’d work a little harder and longer and all would be well. Turns out, the actual “what” I was doing was wrong. So doing more of it longer only made it more wrong.

With my accounting software, I discovered that my pricing was way off, my “star” salesperson actually wasn’t, my shrinkage was staggeringly higher than I’d thought, my inventory cycle was just plain dumb—and my telecommunications costs were a joke. (Sadly, that was only the tip of the iceberg.)

I can hear you: You’re saying you don’t need another job right now—and learning new software is work. But it’s work worth doing, and, aside from the benefits to your bottom line, it will save you innumerable hours:

All your critical information will be organized and accessible in seconds
Your records will be complete (and accurate--hello) so tax time will be a LOT easier
You’ll make better business decisions because you’ll have the facts
When it comes to getting funding of any type, your lending institution will want those facts. All of‘em

Heaven forbid you should ever be audited (yes, I was). With the right software, you'll be prepared for the scariest moment of your life.

The fact is, small business owners are almost always underprepard to manage the financial aspect of their businesses. This isn't because we don't care, or don't want to know. It's because we're busy. So if I had it all to do over again, I'd say

A Note to Biznik members from Intuit: If you are interested in starting to manage your finances using software, you can use a free version of our QuickBooks software, QuickBooks Simple Start. If you are farther along in your business and want to use QuickBooks Pro, we can provide you with a 20% off coupon for Biznik members. Just use the code P59634 on our websiteby 7/31/08.

Learn more about the author, Bridget OBrien.

Comment on this article

Posted by Keith Gormezano, Seattle, Washington | Apr 10, 2008

As a Certified QuickBooks ProAdvisor, I am going to offer a couple of points in rebuttal to this post promoting QuickBooks as the holy grail:

First, QuickBooks is not the only financial software available for people to use (I know several members who still use an Excel spreadsheet with my blessing as it works for them.)

Not every business needs a point of sales system although it is one of the best ways of tracking your inventory and sales unless your store is small enough that you can do a monthly review.

In my opinion, Peachtree may be a better choice for small businesses that have changing inventory or inventory whose base price fluctuates since QuickBooks uses an average cost method of valuing inventory rather than a LIFO or my preference, FIFO.

However, as I pointed out in another post, there are ways of getting around that limitation. And I do recommend that people stick with QuickBooks as it is easier to find support staff for the software.

Second, Simple Start only works on a PC. About 10% of Biznik members use a Mac.

Third, Microsoft offers a free download of their basic version of their Office Accounting software. Their version unlike Simple Start allows you to download your bank statements including PayPal and integrate them and supports multiple currencies.

Fourth, you can usually find Intuit products for less than what the company is selling on their web site at Costco ($150 vs 199.95 for Pro for the PC) and sometimes on special at Staples, Office Max, and other office type stores.

If you live in an area that doesn't have these stores and wants the 20% discount and is reading this after July 31, 2008 can use my affiliate link (yes, I get paid a fee if you buy and you have a right to know that.) And shouldn't you give your business to a small business like myself?

Finally, I currently am working with one of Intuit's partners so I can offer a free copy of QuickBooks Pro 2008 if you sign up for credit card processing. You would be under no obligation to work with me as I might be getting a referral fee from the partner. Send me a message through Biznik for more details.

Dr. QuickBooks: I make house calls to teach you.
Posted by Marty Grogan, Federal Way, Washington | Apr 10, 2008

A prospective client once told me that his nephew had studied BASIC programming in high school and was going to provide him with an accounting program. I do not know how that turned out.

Financial software can reduce arduous effort to a few clicks. Accountants love Excel because they have been trained to use ledgers and it does the math conveniently. Excel might as well be an electronic ledger--It works well for that purpose.

Why start with little more than a blank sheet of paper when for a few dollars, you can leverage accounting experts who invest thousands of hours and millions of dollars to make your bookeeping life easy?
Posted by Laura Messerschmitt, San Carlos, California | Apr 10, 2008

Thanks, Keith! Great commentary. I interpreted the point of the article to be that keeping track of your finances is extremely important for newer businesses... not necessarily that QuickBooks is the answer for everyone. If you have a good handle on your finances, you can make better decisions, detect fraud earlier, manage your cash flow, etc.

The decision on how to manage finances will vary a lot based on the business. Luckily, there are a ton of different options out there.

One other option not mentioned above is online financial software. That option can be really great for owners who work from multiple locations. (Disclosure: My company has an online version of QuickBooks. But, there are a number of different options besides that one.)
Posted by Shaunne McNamee, Seattle, Washington | Apr 10, 2008

Thanks for the article, Bridget! I can TOTALLY relate.
Posted by Douglas Hawks, Redmond, Washington | Apr 11, 2008

I'd like to add to the discussion without hijacking the thread and say that I really appreciate Keith's candid insight on this thread. As someone just starting up it's helpful to have an objective voice. I had the opportunity today to meet with Keith and have him look over my Quickbooks details. He was able to point out and fix some things that I would have never seen or thought about and we were able to discuss some tax concepts and business structure ideas that will help me be positioned better in the long run. Ultimately, Keith provided me a service that I like to provide to my clients. That is, we give our clients peace of mind. I know I can sleep easier knowing that such a vital part of my business is running smoothly, be it the financial books or the IT systems that underly those books. Thanks Keith, your service is worth every hard-earned dime.
Posted by Madeline Bailey, Bellevue, Washington | Apr 11, 2008

I give this a "10". Vital information for anyone starting out in business and well written! Thanks for being willing to share "learning the hard way" so others don't have to.
Posted by Leslie Bower, BA, ABT, LMP, Seattle, Washington | Apr 11, 2008

Keith... wondering what is out there along the lines of Simple Start for Mac owners.
Posted by Keith Gormezano, Seattle, Washington | Apr 11, 2008

Leslie,

The only way to use Simple Start on a Mac would be to buy a copy of XP and then switch back and forth between Apple's Bootcamp to access it.

Another alternative would be to buy Fusion or Parallels and a copy of XP or Vista and be able to run both operating systems at the same time.

However, it would be less expensive and easier to simply buy QuickBooks for the Mac than to buy and install the above.

It's your choice.

KG

Dr. QuickBooks: I make house calls to teach you.
Posted by Bridget OBrien, Menlo Park, California | Apr 16, 2008

Glad several of you found this posting useful. Thanks for all your comments.
Posted by Dennis Thompson, Lynnwood, Washington | Apr 18, 2008
Hello,

I am an Advanced QuickBooks ProAdivisor and a Sleeter Group Certified QuickBooks Consultant.

I saw this thread and thought I would add my two cents.
1. QuickBooks or any other Accounting software will not necessarily make correct accounting decisions for you. In fact, the software can help you make more creative mistakes much more efficiently than you could ever do by yourself.
2. No one is ever going to care more about your business than you. Therefore it is in your best interest to learn basic accounting, don't totally rely on your Accountant. I know, I know, accounting is boring and makes your hair hurt, but you need to be able to recognize when your financial statements don't make any sense.
3. If you decide to get some help with your accounting, remember that the most expensive Bookkeepers/Accountants tend to charge the least per hour. The money you save upfront, you lose many times over with the way your taxes, bank reconciliations and financial statements can get screwed up.
4. Profit is an opinion, but cash or lack thereof is cold hard reality. Reconcile your bank account and remember that many cash outlays don't necessarily hit the Income Statement right away, for example purchase of fixed assets. There are many companies that go out of business that are profitable on paper but run out of cash.
I do QuickBooks Consulting and Taxes. I also have a lot of free information on my website about Income Taxes and some QuickBooks newsletters at www.dlthompsoncpa.com

Dennis Thompson, CPA
Posted by Laura Messerschmitt, San Carlos, California | Apr 18, 2008

Dennis, that is great advice! A good basic accounting CD is the "Learning Accounting Essentials" CD made by a company called Real World Training. You can buy it at www.quickbooks.com, under the training link.

Caveat: I work for QuickBooks... we don't make this CD, but we do sell it. However, I have used the CD myself and found it to be very useful. That's why I'm recommending it.