How Accounting Is (Finally) Catching Up to What Today’s Entrepreneurs Need

While the way we do business has radically changed, small business accounting hasn’t changed much. For today’s entrepreneurs, tackling tasks like bookkeeping and invoicing with traditional small business accounting software is at odds with how they naturally manage money.

For some time now, mobile apps have replaced what used to be necessities of everyday living: payments by mail, in-person bank deposits, and paper credit card statements. Sure, those options are still available for those accustomed to them. But as our culture continues to prioritize ease and convenience, it’s more likely to get someone to pay through Venmo than with a personal check.

The DIY Revolution

Earlier generations of small business entrepreneurs used to outsource bookkeeping as a standard practice. But today’s entrepreneurs believe that managing the books is one of their core responsibilities.

Taking control of these responsibilities can provide a deeper understanding of key financial metrics and business health. Unfortunately, traditional small business accounting software often requires trained accountants and bookkeepers—discouraging owners who want to handle finances themselves.

As a result, you will spend an uneven amount of time on administrative financial tasks rather than concentrating on what entrepreneurs do best: grow their businesses.

How Accounting Started

The Italian merchant Benedetto Cotrugli standardized what we now know as traditional accounting in 1458. He used paper journals and ledgers to track assets, receivables, inventories, liabilities, income, and expenses.

At the time, it was a big deal. Almost 600 years later, not so much.

The bookkeeping practices used today are still based on Cotrugli’s processes—but in a world of digital banking, the traditional nine steps simply don’t apply anymore.

The struggle to effectively balance books in a digital world has been a long time coming, but disruptors in the fintech industry are finally giving small business owners better software options that provide real-time financial information and cut the time spent on bookkeeping.

Choosing a Solution

With the accounting software market expanding, how can entrepreneurs see-through sleek marketing campaigns to find the tool that will actually work for them?

Regardless of the app, choosing one that’s intuitive and caters to a business’s unique needs will provide more value to its users than just choosing the one with the most bells and whistles and then dreading each login.

Here Is a Checklist to Consider When Evaluating a Tool:

A Quick Learning Curve

Look for solutions that don’t require pre-existing accounting expertise. The system should be easy to set up and use. A good solution will offer plain language explanations and provide valuable tips along the way.

Built-in Processes to Identify Discrepancies

Catching mistakes (or fraud) is done by comparing records with the records of vendors, banks, or credit card companies. In accounting speak, this is called “reconciliation.” Look for a cloud-based solution that syncs with bank and credit card accounts to eliminate manual work and reduce errors.

At-a-glance Financial Analysis

No matter the app selected, it should be easy to view cash balances, total sales, and expense totals by category with minimal taps.

An Easy-to-use Mobile App

A mobile-friendly bookkeeping process should include the ability to view reports, access documents, create/send invoices, and view transactions anywhere from a phone. This is because, in today’s world, businesses owners are often on the go.

Secure Cloud Storage

There are many options for going paperless. But not all are safe for financial documents, which should be encrypted to keep sensitive information secure. A well-rounded accounting app will provide encrypted, searchable cloud storage for receipts, bank statements, invoices, and bills that makes the in-app process of tax prep and checking for errors easy.

A Straightforward Customer Invoicing Experience

The invoicing and payment process for both business owners and customers should strengthen the relationship by being accessible and clear. Offering credit/debit card and bank transfer payment options improve the experience for all parties. What’s more, doing so can help speed up cash flow for the business providing the product or service.

Efficient and effective workflows: The best solutions keep it simple when it comes to bookkeeping technology. Powerful apps that keep business finances moving should fit naturally into an owner’s workflow—not the other way around.

Modernized Bookkeeping

The expectations that entrepreneurs have for a modernized bookkeeping experience aren’t unreasonable. The explosion of remote work, the gig economy, and the overall demand for increased flexibility across workspaces call for more mobility and easier access to financial data.

Contributor

Garrett Baird is President & CEO of The Neat Company. His company offers cloud-based solutions that hundreds of thousands rely upon to bring financial order to their small businesses. Neat is helping businesses track, manage, and centralize their financial data to be prepared for tax time. It also helps them stay informed about the health of their business.

Smart Hustle Resources:

Introducing Technology to Your Bookkeeping Process

5 Bookkeeping Basics for Entrepreneurs

7 Bookkeeping Mistakes Small Businesses Must Avoid

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