Cloud Accounting Software has Revolutionised SME Organisations
Cloud Accounting software, such as Xero, has revolutionised the way that organisations manage, plan and understand their businesses. One of the key differences between Cloud Accounting and traditional Server or desktop based accounting is that businesses can now easily socialise their business data to their chosen business professional, such as accountant or business advisor. This adds great value to many millions of organisations. One of the drawbacks of all accounting systems, is that they are historical looking. They are great at giving you a snapshot as to where you are today or yesterday, but when poor financial planning or strategic management are cited as key reasons that organisations under perform, or worse, looking backwards only has limited use.
The other key problem that comes to the fore is that unless you truly understand how to analyse your accounts, how useful are they on a day to day basis for most business owners, Not For Profit Managers and tech startups? Here’s 5 things that your accounting software can’t easily tell you.
1) The overall health of your business
What’s more, don’t be Jazoodled by the data, we have clear explanations next to each measure – just click the (?) question mark
2) Historic trends in underlying cost structures
It’s all very well knowing your gross and net margins at this point in time, but what about historic trends? Are your margins rising or falling. Not only that, are your relative margins healthy or changing?
Jazoodle digs deep into your underlying structures instantly and gives you helpful traffic lights to warn of current or impending problems as seen below
Do you have the time or the skills to understand your income statement, Balance Sheet and Cashflow statement and how they relate to each other? If like many others, probably not, then the only other way of understanding your overall health is either a) build or have a professional build, a complex spreadsheet that you need to update manually say monthly. What time and cost does this put on your business? Or b) meet with your business advisory professional / accountant and have them decipher this. Again, costly in both monetary and time terms. Jazoodle updates your health dashboard in seconds giving you an overall position plus traffic lights indicating underlying elements within your revenue, cost, liquidity, and how efficiently your assets are working for you.
3) Projected year end cash positions
Moving to the modelling screen in Jazoodle, and then the balance sheet – simply look at the cash balance forecast in your business
Is cash forecast to be looking precarious..? What else can you do to change this position? What happens also if revenues reduce in the coming year..? How will that affect year end cash positions. Jazoodle allows you to assess different scenarios and allow you to make business decisions a little more scientifically than currently – and instantly model different scenarios. What you need to know but your existing accounting system can’t tell you is if business conditions change, how resilient is my business to that change.
4) The likely value of your business
How often do you wonder if your business is moving in the right direction and when the time comes to think about selling, you will receive a fair price for your business. Jazoodle’s ultimate pack at only $40 per month gives you an always updated as well as forecast business valuation. Most business advisors recommend that you prepare to sell your business at least two years in advance, with Jazoodle, you can always see what a likely fair price is going to be for your business, therefore no nasty surprises!
5) What Will Next Year Look Like If....
This is one of Jazoodle’s greatest strengths. Every day, businesses have to struggle with decisions as to whether it is the right time to invest, employ more staff, reduce debt, take on debt etc etc. Even seemingly impossible questions such as how would I cope if the economy went into recession, or a big new competitor opened up locally? Isn’t it better to be aware of the potential best and worst cases and the impact on your business investment?
Your base forecast model is always updated whenever you update Xero, and forecast year end made, along with updated value, and updated health. You therefore have the power to make changes to your business in advance, and rectify any areas that need rectifying.
As we have said, cloud accounting systems, such as Xero, are revolutionary for small and medium organisations. Jazoodle helps overcome one of the problems with all accounting systems, that of looking forward, not backwards. Grab our free ebook which gives you other tips and tricks as well as exercises using our demo data.