QuickBooks is the most popular accounting software amongst small businesses. Many QuickBooks users understand the basics of the program and some of the benefits. However, there are many benefits of QuickBooks that you might have missed. The general QuickBooks user understands how to use the basic commands of QuickBooks to carry out the day to day transactions. In general QuickBooks takes care of the accounting behind the scenes. While you can get by in QuickBooks without much accounting knowledge it is important to understand the basics of accounting and what entries each QuickBooks command makes. QuickBooks can benefit your business other than just a way to track your day to day activities; here are a few benefits of QuickBooks you might have missed.
More Than Just Taxes
A good bookkeeping system can do more than file taxes. Many small business owners look at QuickBooks as a means to filing their taxes and nothing more. The fact is if your bookkeeping system is set up properly and updated regularly there is a lot of useful information in it. Your bookkeeping should be a tool that you can use to business decisions. You should be analyzing your small business financial reporting to look for areas to improve, but also opportunities. You can also monitor which of your employees are performing well and those that need to step it up. Lastly, you can identify any theft or fraud that may be going on behind your back.
Cash Flow Tool
One of the major benefits I think many users overlook is QuickBooks as a cash flow tool. By keeping your books updated regularly and learning to sort the bank by cleared status you can really get a handle on cash flow. If you are performing daily reconciliations in QuickBooks then you are really controlling your cash flow. Simple processes like printing checks will also go a long way toward managing your business cash flow. Getting a handle on your accounts receivable will promote a healthy cash flow for your business. Just by monitoring your AR and sending out reminders about overdue balances should boost your cash flow significantly.
Identify The Strong And Weak
You can use QuickBooks to identify strengths and weaknesses. The obvious things you can analyze are your financial statements to look for areas where you thrive and those that you need to make improvements in. However, have you thought about analyzing your employees? Are some performing better than others? You may want to dive into your QuickBooks file to see which employees actually deserve recognition and a possible wage increase or bonus. Don't let your customers off of the hook either. Are some customers always paying on time or in advance? Are you spending too much time on some clients and they are becoming less profitable than others? Sometimes you need to consider firing a bad client and focusing on those customers that are easy to work with and more profitable.
Real Time Financials
Another benefit of QuickBooks I feel many users overlook is the ability to access real time financial information. I like to focus on what is happening now in our business financially; not what has already happened. If you are only looking at financial reports once a month, once a quarter or (gasp!) once a year you may be getting your information too late. Even small fluctuations or events can have major effects on a small business. So it is important to regularly analyze your financial reports in real time and make adjustments. Of course, in order to create a real time financial environment you need to regularly update your bookkeeping system. The most critical step of keeping an updated bookkeeping system is reconciling the books. Having books that are reconciled is the only way you can be sure that you are looking at accurate financial reports. You need to reconcile all of your accounts not just your bank accounts. It is important to reconcile your bank accounts, credit cards, loans, lines of credit and payroll liabilities as much as possible.
QuickBooks can help to keep your business bookkeeping investor ready. Many small businesses don't even think about investors until they are forced to do so. In the start-up phase of a business it can be difficult to find the time to keep your books updated or the value in doing so. However, when it comes time to raise money or apply for a loan I guarantee nobody is giving you a penny without looking at the financial health of your business. We have acquired many new clients because they were applying for a loan but couldn't supply the financial reports that the bank was requesting. If you intend to raise investor money or seek a business loan you are going to need accurate financial reports. This goes back to the importance of keeping an updated bookkeeping system that is reconciled. Your bank or investors will ask for current financial reports and also current bank statements so they can verify the information you are providing is accurate. Don't wait until you need your bookkeeping system to update it; stay ahead and keep your bookkeeping investor ready.
If you set up your bookkeeping system properly QuickBooks can benefit you in ways you might not have even thought of. Make sure you are getting the most out of QuickBooks and your bookkeeping.
How do you use QuickBooks to benefit your business?