Account management is crucial in order for a business to be financially healthy. With financial reporting, payroll, customer invoicing and many more tasks to perform, accountancy software can save valuable resources for a company. It’s also necessary for a company to produce accurate data, especially if it wants to remain compliant with legislation like Real Time Information.
However, it isn’t always necessary to choose between a professional accounting service and installing your own systems, as you can successfully combine the two. There are three pieces of accountancy software that all companies require: accounts receivable, accounts payable and payroll.
Payroll
Since the introduction of Real Time Information by HMRC, it is virtually impossible to run a manual payroll system. A firm has to submit data to HMRC using an electronic system each time it runs a payroll. As auto-enrolment has also been introduced for all businesses, payroll has become much more complex, but software can help with this. Payroll software deals with all the information and may be able to complete some of the RTI forms automatically and submit them to HMRC. An automated process is much more likely to produce accurate information, which of course is crucial if you want to avoid a fine.
Accounts payable
Accounts payable is the money a company needs to pay out on a regular basis, like suppliers. The only expense a company has that isn’t included as accounts payable is the payroll. The validity of financial statements is dependent on the accuracy of accounts payable, providing an accurate summary of the company’s finances.
Accounts payable also has an impact on the credit rating of a company, which can in turn impact on suppliers. Using accountancy software improves the accuracy and makes it easier to have real time information for your company.
Accounts receivable
Lastly, accounts receivable is money due to be paid to the company, sales and debts. Although it is crucial to make plenty of sales, you have to manage the collection of money owed carefully to avoid cash flow problems.
Automating accounts receivable will make it easier to collect outstanding payments in a timely manner. You can set the payment terms to suit your business, from 30 to 90 days, and can encourage prompt payment with incentives. However, if you don’t ask for payment or chase late payments, you will likely find the company experiences financial difficulty.
If you would like to discuss your options for accountancy software, please call us to arrange an informal discussion.