Are you Utilizing your Accounting Package to its Potential?
Making better informed business decisions with confidence.
Some business owners regard their accounting package as something that will satisfy their accountants, bookkeepers and the tax office.
Other business owners are daunted by their accounting package and are scared to enter transactions for fear of messing things up.
And others have delegated the accounting function to their spouse who is not formally qualified or certified to do the accounting function but has learned to use the package through trial and error.
Does this sound like you? If so, you’re probably not using the accounting package to its full potential.
Imagine paying for a luxury all-inclusive cruise, but then boarding with a case full of crackers and cheese and sitting in your cabin at meal-times, nibbling at your stash while the other passengers enjoy the culinary delights on the cruise, which are all-inclusive anyway. This sounds ludicrous, yet some businesses use their accounting packages in exactly this way.
Surely you would want to use what is already at your disposal?
The more you describe the information you have (give it additional attributes), the better you are able to use it for management and strategic purposes. What do we mean by describing the information? Glad you asked!
Suppose you bought a fire-red turbo-charged convertible Ferrari with gull-wing doors and a top-notch sound system (a real head-turner of a car), with 22 inch low-profile performance tyres, bi-xenon headlights and had the car tuned so that it reached 100 km/h in three seconds. Okay, mentally I am there now. Now suppose someone asked you what car you drove, would you reply ‘a red one’? Chances are you would give the person a full description of your rapidly-depreciating eye-candy asset to justify the expense.
The main reason to use the advanced and additional data capture is to better describe the data. Some of the details of a transaction could be:
- Cost Centre allocation (Categories in MYOB)
- Job Allocation
- Sales Referral source (news ad, internet, trade show, referral, upgrade, customer service, etc.)
- Sales Agent (if you have multiple sales people, who is productive and who is not?)
- Memo Fields (when something out of the ordinary occurs, you will be grateful for this later)
- What type of Customer/Supplier (identifiers or logical grouping)
These are just some of the information attributes that are available in most accounting packages and the level to which you use this information determines how deep or shallow your data is.
Remember, garbage in equals garbage out.
Once you have closed off a financial year and performed a rollover in the accounting system, it is usually not possible to go back and edit the transaction to enter these kinds of details, so a disciplined approach when capturing the data will raise the quality and usefulness of the data when it comes to management and reporting. If you wanted to compare the sales of one cost centre against another quarter by quarter and to see which sales referral/lead source was most/least effective per cost centre, you would have to ensure that this data was captured in the first place.
Too much data is nowhere near as frustrating as too little, but the investment of time and energy in capturing it, will enable you to make better informed business decisions with confidence, based on evidence instead of guesses or gut feel.