As we get cracking into each new year, I often get asked the same question with regard to the tools that I would recommend in order to minimise data entry errors and to streamlne performance.
Whether you do your own books or you have a bookkeeper manage things for you on the ground level, the next five tools will change the way you manage your buisness this year.
In an era where everything is mostly done online, there is no need for mountains of paper anymore. While paper records have certainly served their purpose up until now, the internet means that businesses can reach more potential customers than ever before. However, this greater reach and convenience for customers comes with its own challenges and requires businesses to become agile in their approach to the way they conduct their businesses and poise them for future success.
One of the trickiest things to get right, is the backbone of your business. For service based businesses, not having a solid backend can create all sorts of problems for your business’ longevity and result in various bottlenecks that ultimately cost you and your business time, productivity and money.
Here are five tools that your service business should implement, today, that will change the way you manage your service business in 2020:
Great accounting software
Having a great accounting package to manage your day to day bookkeeping and annual accounts is essential to your business success. Of course cost is an important consideration, however, your accounting package needs to be easy to use and have the ability to grow with you (and downsize) when it is required.
To ensure accurate reporting, your package should enable easy acess to your advisors and be able to handle real time reporting and compliance obligations, such as STP, BAS and IAS reporting. For service businesses who are making use of the cloud to handle their client management, cloud accounting software is a great and affordable choice.
VV uses and recommends XERO to the majority our clients as a powerfully simple cloud option that ticks all of the right boxes, however there are many suitable options in this space, depending on your business needs. When considering your options, it is a great idea to chat to an advisor about your specific requirements.
Digital filing
Archive boxes, mountains of paperwork, a mess of computer files all over your desktop… sound familiar?
Cloud storage solutions are plentiful, however as much as I use Gsuite products daily, including the Google Drive, audit-proof storage should work smarter and not harder.
Solutions like Hubdoc function not just as a way of storing your data, but it can also push that data into your accounting system to reduce your daily data entry and keep all documents and receipts together, resulting in less cluter and stress when locating older documents. An added bonus is that your advisors can also have access to your digital filing which also results in less time wasted trying to chase answers to follow up questions or requests for information.
From March 2020, Hubdoc will become part and parcel of your Xero subscription, and if it is not already implemented in your business, now is the time to start looking into this option.
Time / Project tracking software
For service based businesses, time is defintely money and tracking that time is essential to making good decisions about your business model and pricing.
When it comes to time tracking, you should track your time spent with each of your customers, regardless of your pricing schedule. Doing so will allow you to see if that model is effective or whether it is hurting your bottom line. Many of the options out there will allow you to track your time passively (if you are using a fixed fee service model) or by the hour and then convert this data into an invoice to be sent to your client.
Two great options in this space are Harvest and Xero Projects. Harvest is free, provided that you only have 2 active customers at a time. It features a stopwatch feature and can push data through to certain accounting packages. It does have limitations, but is a great option for those that are solo and starting out. Projects is part of Xero and if you are using Xero as your accounting package, the integration is seamless. It isn’t free, however the fee per month is nominal and you have no limitation on how many interactions, tasks, projects and customers you can track at a time. Whether it is fixed fee or by the hour, you will be able to appropriately apportion your time and your staff time and additional expenses to each client and customer. Like Harvest, Projects does have some limitations, and I would not recommend either for trades and services type businesses.
Easy payment services to improve cashflow
We live in a fast paced era, and making sure that you are paid for your services should be no different.
It is estimated that every time you sit down to complie an invoice to your client, this costs your business approximately $40. When you give generous payment terms on top of this, you must be prepared to be without that income for at least double the time that you gave your client to pay. Not to mention the added expense to your business that is incurred if you have to chase your client to ensure that your invoice is paid.
Xero uses automatic invoice reminders to help streamline the intial reminders and collections aspect, however there is a way that you can avoid that entirely by implementing easy and convenient ways for your customers to pay.
Depending on your model, you may choose to bill your clients upfront or post service, and you may opt to implement direct debit, pay by card or the ability to pay on the spot. Many options will integrate nicely with your accounting package, further reducing the hours that you or your advisor needs to put in and ultimately saving you money on the bottom line.
Options to consider are: GoCardless, Integrapay and Square. If you are currently accepting payments by EFT only, you are limiting the cashflow of your business and should discuss with your advisor how you can positively change the way cash flows in and out of your business.
Great advisors
It is important to remember that a successful business is not made that way without the help of others. There are two advisors that each and every business should have in their corner to cheerlead and assist them to make the best decisions possible: An Accountant and A Bookkeeper.
Broadly speaking, your accountant is responsible for using your financial data to give you solid forward planning advice, while your bookkeeper is responsible for ensuring that your day to day transactions and data are recorded, and your ATO compliance is managed.
To Recap, implement these five tools into your bookkeeping to ace your books in 2020:
Great Accounting Software
Digital Filing
Time/Project Tracking Software
Payment Services
Great Advisors
If you have these five things installed into the beackend of your service business, you will find that keeping on top of your bookwork, cash flow, time data and decisions will be significantly easier.