Today, far beyond just giving you financial information, your accounting software serves as a productivity tool that can allow you to do more with less staff. It can actually make the operations side of your business more efficient and make it easier to sell to and support customers.
Growth is one of those “good news, bad news” things. The good news is that you’re making more money. The bad news is your organization has to grow or become more efficient to handle the additional workload. Let’s look at a couple of examples of how small business owners can use accounting software to become more efficient:
Electronic Data Interchange
The problem: I recently worked with a client in the office supply business. They had become very successful with large accounts that placed orders online or by telephone. They averaged more than 19,000 item orders each month and purchased thousands of items each month from just one of their suppliers. The owner confided in me that they would have to hire two or three more accountants just to validate the invoices against their purchase orders. Their choice was to trust the vendor’s bills rather than hire more staff.
The solution: The better solution was purchasing an add-on to their accounting application that would automatically match an electronic vendor bill to purchase orders in the accounting system. This process uses electronic data interchange. EDI has been around for years but has been so expensive that only large organizations could afford it. Now it’s available to small businesses at prices that fit their budgets.
With EDI, information is transmitted electronically in a structured format, based on the use of message standards, which ensures that all participants use a common language. For instance, if you were to receive a vendor bill via EDI, the EDI software would take the data, put it into a “readable format,” and then import it into your existing accounting software. Your accounting software now has both the vendor bill data and the purchase authorization data with which to perform an automated matching process. The computer tells you which bills are correct and ready to pay and gives you the tools to manage bills that need correction or adjustment.
Timekeeping isn’t just for payroll anymore. Modern accounting systems use timekeeping to pay employees and subcontractors, to invoice customers, and to calculate the labor cost for jobs. The timekeeping is the front end; the rest is automated.
The problem: Let’s look at how this works for a contractor. The contractor has multiple jobs going on and has to move employees between one or more jobs each day. If they have employees turn in timesheets at the end of each week, they might be sitting on the back of their truck on Fridays trying to recall exactly where they were and what they were doing on Tuesday. The only thing that’s certain is that they worked at least eight hours.
In addition, the contractor doesn’t have the up-to-the-minute information that would allow them to most profitably schedule staff to job sites and functions. They often can’t anticipate and avoid overtime pay, which can quickly turn a profitable job into a money-loser.
The solution: I saw a demonstration of an accounting add-on that allows onsite supervisors and even individual employees to use their Internet-enabled mobile phones to sign on to a job site and record their assigned task. As a task is completed the employee signs off of that task and on to another task or job site.
The time log is automatically recorded in accounting so managers can get timely job cost information and accounting is ready to process payroll with little or no additional work. If a certain task were to be billed to a customer at an hourly rate, the time logged to the project or task is ready to invoice at the push of a button.
You may ask about an employee’s failure to log in and out of a job site/task. The software notifies managers when an employee has left a job site without logging out so they can correct the error that day. Also remember that when a supervisor is on the site, they can log employees on and off of jobs or tasks.
But wait . . . there’s more! (I love that phrase.)
The application uses the GPS features in many new mobile phones to track employee locations. At any given moment, the owner or a manager can log in to a Web-based site to see a map indicating where each employee is. If a particular service is required at another job site, the manager can quickly locate the closest employee with that expertise and reassign them to the other site.
You can even set a perimeter distance from a job site so that a manager receives a message if an employee leaves a job site. This might seem a little too much like big brother, but think how it allows you to assure an easy fix when an employee forgets to log on to or off of a job. Since you have a history of where they were at any given time, you can reconstruct and properly record their time.
The cost of this service that interfaces with the accounting software is $20 per month for a job supervisor and $8 per month for an employee, plus the cost of a compatible mobile phone if necessary. The month-to-month service adjusts to the number of employees working that month.