All Round Package Adds Value To Business

  • Sumo

Thousands of new businesses are established in the United Kingdom every year and once trading a business requires some form of accounting records to help management keep track of performance and budgets but also to help fulfil any statutory obligations such as filing accounts with Companies House or providing records that form part of a tax return. It is very difficult, once a business has reached a certain critical mass, to produce records that are consistent and free from error without the use of accounting software. Quickbooks is a popular package for small and medium sized businesses because it provides an effective infrastructure at a competitive price.

Training Essential To Derive Maximum Benefit

The price of any accounting software package covers all aspects of the product. Many users of accounting software use only a small percentage of the overall capability of the system they have purchased. When individuals make a purchase of a vehicle, computer or television they tend to research the product carefully and ensure that it meets their requirements. The decision to purchase accounting software is often made out of necessity but little thought is given to the capability of the system that is purchased. Most off the shelf packages do similar things but it is the way in which systems are packaged that makes them stand out. Any system must be used correctly so that users can derive the full benefit of their software.

Basic Framework

Every accounting software package has the same basic framework because accountancy is a discipline that has recognised standards and requirements. Every business will have a requirement to create a profit and loss account or an income statement to measure the performance of the business. A balance sheet will also be required to provide evidence of the value of assets and liabilities at a certain point in time, the two documents are linked and the accounting software usually builds these profiles from two core ledgers, sales and purchase.

Core Ledgers

Quickbooks works on the principle that the Sales Ledger is a record of all transactions that relate to sales of a business. The Sales Ledger or Accounts Receivable function should enable easy set-up of customers and a coding system that enables users to allocate those sales to departments or revenue centres . Income may be recorded in a way that can be used to monitor performance of sales representatives and the data recorded may form the basis of a reward system so accuracy is key. The Purchase Ledger or Accounts Payable ledger records all transactions relating to expenses of the company and is usually a record of all invoices received by a company from its suppliers. There are certain transactions that go through a business that do not involve the receipt or issue of an invoice. Salaries are a good example of this and they are often recorded by accounting systems as journals in a General Ledger or as a transaction from a bank statement. Certain versions of Quickbooks enable users to upload bank statements and then reconcile using the bank reconciliation module. This can provide users with accurately reconciled bank balances, a cornerstone of strong accounting records.

Peripheral Benefits

Individuals using Quickbooks solely as a means of recording transactions are missing out on the wider benefits the system can bring. It can be used to fulfil VAT obligations and as it is linked the raw data behind the accounts it is an efficient way of creating a fully supported VAT return. Some users may have requirements linked to the Construction Industry Scheme and the monthly reporting cycle that is part of that scheme. It is important for users to consider Quickbooks as more than a solution to a statutory problem, the filing of accounts. If it is used effectively Quickbooks can be an effective management tool which creates huge efficiencies within a business. 

Expert Knowledge Not Required

Users do not have to be Chartered Accountants  with specialist accountancy knowledge to be able to work with Quickbooks effectively. The training available for free helps the non specialist understand how to construct a set of accounts by applying basic principles to the data with which they are working. If a user understands the business they are working in they will be able to create a chart of accounts and code income and expenses accordingly. Using the reporting function it is possible to drill down into the raw data to provide data in an appropriate format. Training will also help deal with anomalies such as how to create a refund or credit note, deal with non standard VAT rates such as five per cent on electricity, or create suppliers who offer credit on differing terms such as thirty and sixty days. Every business is exposed to a unique data set but Quickbooks offers users the chance to standardise the approach to reporting whilst allowing enough flexibility to cope with any business structure or environment. Quickbooks is used by many non accountants and once familiar with its workings users often find their time is released to concentrate on other business responsibilites such as controlling stock levels or looking for the best savings account . Any system is only as good as its operators so it is essential that anyone using Quickbooks is allocated some time for training. It will be time well spent because only a little knowledge applied to the system can create huge process efficiencies within any business. Quickbooks is an essential tool for small and medium sized businesses and an investment in the development of its users will add value to a business by creating a finance function that can produce a detailed analysis of the business and empower its executives to make the decisions that will aid future development.

Written by: Jennifer Brown