- What Is a Financial Dashboard? Do You Need One?
- Customer service
- Human resources
- Customers: Your dashboard could include customer-related data such as the total number, demographics and more that assist you in tailoring your approach.
- Revenue: This includes data related to your total income alongside your monthly expenses for future budgeting.
- Net profit: This measures your net profit by product, month and employee by deducting all expenses.
- Operating cash flow: This is the amount of money generated during your day-to-day business operations to ensure you have sufficient funding.
- Accounts receivable turnover: This determines how quickly you’re getting paid for goods or services you sell on credit, tracking any significant delays in payment.
- Debt-to-equity ratio: This measures business funding growth to ensure you’re not too dependent on credit.
- Working capital: This assesses what resources can be converted to cash for payments if needed.
- Gross profit margin: This indicates whether you’re managing your labour and production supplies.
- Operating profit margin: Your company’s income is deducted from overhead costs.
- Total asset turnover: This shows whether you’re using your assets effectively.
- Foreign Currency Transactions and Their Effect on Accounting
- Buying or selling goods, services, or property
- Collection of foreign receivables
- Collection of foreign payables
- Borrowing or lending money
- Foreign tax credits
“Dashboards are effective tools for ensuring shared financial comprehension and engagement among board members.” – Forbes
Tracking the financial health of any business, from small-scale start-ups to global corporations, is key to business survival. A financial dashboard is one of the most effective ways to achieve this. It illustrates key pieces of fiscal data in a graphical format, making it easily accessible to all stakeholders, regardless of their background.
Here we explain a financial dashboard, how they work, and why you need one.
What is a financial dashboard?
This is effectively a visual representation of your company’s finances, showing whether the company’s key performance indicators (KPIs) are being met. This data visualisation tool provides chief financial officers (CFOs) and various organisational stakeholders with financial details in a user-friendly format, such as a graph or chart. It’s also available in real-time. This means that any discrepancies are quickly identified and rectified.
The data is drawn from several departments, including:
What are examples of financial dashboards?
There are many ways that financial dashboards are used within an organisation to keep stakeholders constantly updated about their financial health. Here’s a look at some examples and how they’re providing insight for CFOs and more.
1. Sales and marketing financial dashboard
Sales and marketing leaders are constantly looking for ways to solve strategic challenges and formulate campaigns that will drive business growth. Through a financial dashboard, they’re able to see whether they’re on track with the next quarter’s revenue goals or not, as well as determine ways to improve performance. This is immediately evident through the KPIs on the constantly updated financial dashboard.
2. Profit and loss financial dashboard
In addition to individual departmental financial dashboards, you get an overview of your financial health with a profit and loss dashboard. This indicates whether your company is generating any revenue, allowing you to track metrics related to items like gross profit, and operating and net profit margins.
3. Customer health financial dashboard
The customer experience is key to any business’s financial health, which is why this financial dashboard is so insightful – particularly for subscription-based companies. Using this dashboard, CFOs are better able to communicate with individual teams about what challenges are facing the company, and which strategies are working.
4. Employee health financial dashboard
Just as you can’t run a business without customers, you can’t run a business without employees – and that’s where this financial dashboard comes in. Using KPIs, you can determine the revenue per employee, the costs related to hiring and training employees, and the company’s employee retention. This indicates areas where you could improve the workplace for all staff.
5. Business health financial dashboard
This provides you with a great overview of your business operations, what’s working and what’s not in financial terms. While this won’t provide you with the detail-focused insight that you get from departmental-level financial statements, it gives you a good understanding of the company’s general financial health.
What are the financial dashboard metrics?
There are many metrics that are used to assess the financial health of your organisation. Logically, these differ from company to company.
Here are some of the most notable metrics used for assessment.
What are the benefits of a financial dashboard?
Tracking your company’s financial health on a dashboard is incredibly beneficial for operations in a number of ways. By incorporating effective software that allows you to create financial dashboards, you will immediately enjoy a number of benefits.
Swift, automatic data import using software to create your financial dashboard removes the need to manually gather data. This means that you and your employees are saving time that is better spent on other business-related tasks.
Data used to create a financial dashboard is incredibly valuable, and you’ll need to share it easily with stakeholders on a regular basis. While you could go with emailing or constant meetings for data sharing, financial dashboards make this process much simpler and more effective. Everyone will have access to this valuable information in an easy-to-read format.
When you use software to create financial dashboards, you’re not relying on manual data collection. This not only saves time but also reduces the risk of human error. Just one simple input mistake can have a massive knock-on effect that will result in poor decision-making based on inaccurate data.
The shift to digital operations, the arrival of social media, and the growth of global businesses mean that there is a wealth of daily data coming in from many sources. With a financial dashboard, you’re able to consolidate all this important data in one place. This can minimise inaccuracies and give you a holistic vision of the business’s health. Easily review and share this information with all relevant stakeholders.
With a financial dashboard, you’re able to effectively track the performance of your company at any given time. You can also compare this to previous performance to ensure you’re growing and developing. All of this takes a matter of seconds!
Now that we know what a financial dashboard is and why we need it, why not get in touch? We are industry leaders who can get you started right away.
The digital age has allowed the world to transition to a much more global economy, and while this is great news for business, it does bring with it some administrative considerations. When dealing in foreign currency, there are legislations that have to be followed and accounting regulations that must be adhered to. Here’s a look at foreign currency transactions and how they impact accounting in your particular industry.
What’s a foreign currency transaction?
According to the US Securities and Exchange Commission: “A foreign currency exchange rate is a price that represents how much it costs to buy the currency of one country using the currency of another country. Currency traders buy and sell currencies through forex transactions based on how they expect currency exchange rates will fluctuate. When the value of one currency rises relative to another, traders will earn profits if they purchased the appreciating currency, or suffer losses if they sold the appreciating currency.”
If your company engages with an international company, you might enter into a transaction that is dominated by a foreign currency, rather than your functional currency. Your functional currency is essentially the primary currency used in your local economy. Some of the transactions that can be conducted include:
How does a foreign currency transaction impact accounting?
When it comes to foreign currency transactions between companies, you will need to remember three important concepts:
- The gain or loss is only recognised on the date the transaction is closed;
- Foreign currency is treated as property, rather than money with such transactions;
- While the goods will be recorded at the sale price, any gains or losses on this particular foreign currency transaction will only be recognised on the payment date.
In the real world, the value of one currency – relative to another – changes from day to day, so transactions must be recorded at the agreed-upon rate, while gains and losses are recorded on the date of the transaction. When you transact in a foreign currency, you need to record the functional currency according to that date for:
- Each asset
- Each liability
- The revenue
- The expense gain
- The loss
What about foreign currency and tax?
When it comes to determining the foreign tax credit on a transaction, the taxes are calculated using the average exchange rate for the taxable year. Any paid foreign taxes must be calculated at the exchange rate when payment is made. If there’s an accrual of foreign taxes, but the payment is made later in the tax year, then the foreign currency exchange rate may differ between when the taxes are paid and when the tax amount is calculated. However, if the taxes are paid within two years of being accrued, then foreign currency fluctuation between the accrual and paid rate is discounted.
What are the benefits of foreign currency transactions?
There are many reasons to engage to transact in the forex market, but it depends on your business operations and what will work for you. Some of the reasons companies find it beneficial in going this route are:
1. Easily facilitated
Most banks have the capability to wire funds in foreign currency, so these transactions are generally conducted quickly and easily. Your bank simply applies the current exchange rate to determine what you owe when sending money. For incoming funds, your customer pays in the local currency and the bank credits your account with the equivalent amount at home.
2. Better exchange rates
If you have a good relationship with your bank, you can enjoy preferential exchange rates. You might want to consider locking in certain exchange rates on a quarterly basis so that you’re not dealing with unanticipated fluctuations later on.
3. Pricing discounts
When importers pay for goods in a local currency, suppliers often offer a lower price on goods purchased. Those who remove the exchange rate risks when converting to local currency might benefit from a discount on the transaction.
What are some more benefits of multi-currency software?
Investing in multi-currency software for foreign exchange transactions is a smart move for your business. It not only minimises the time and hassle but also ensures you’re compliant with all accounting requirements. Some of the benefits include:
- Setting the rate: You can adjust the exchange rate as often as business or market changes dictate.
- Period rates: You can set up a range of exchange rates with expiry dates for retrospective transactions.
- Reporting features: You can compile reports in either the home or foreign currency.
- Cross-currency functionality: It doesn’t matter what currency you’re using on invoicing, the system can adjust to paying in another.
- Real-time operation: There is no need for manual entries, the system posts in real-time which means it automatically updates and reconciles.
- Revalue ledgers: You’re able to revalue your sales and purchase ledgers at any time.
Why choose Omni Accounts for foreign currency accounting?
If you’re looking to simplify the accounting process for your foreign currency transactions, then it’s worth investing in dedicated software that can assist with such multi-currency exchanges. One of the industry leaders is the Omni ERP Multi-Currency Module which allows for the management of businesses trading in multiple currencies.
Some of the functions you can enjoy with Omni Accounts Multi-Currency include:
- Creating customer, supplier and bank accounts in a foreign currency;
- Sending customer and supplier documents in a foreign currency;
- Managing currency fluctuations;
- Importing daily exchange rates;
- Handling VAT on imported goods;
Omni Accounts ERP can also create stock prices in different currencies with the nominal ledger values always retained in the home currency. Users can also print reports in the home currency or the foreign currency of the relevant accounts. Exchange rates can be set monthly, with a revaluation wizard available to revalue accounts at the latest exchange rate.
Find out more by getting in touch with Omni Accounts today.
Keeping a balanced and steady cash flow for your business can be tough. And it’s not made easier by the challenges facing the economy – inflation, political instability and a rising cost of living. When your customers are battling with one or all of these factors, it can quickly become your problem.
It makes sense, then, to stay on top of your incoming and outgoing monies with smart accounts receivable software which allows you to keep funds flowing smoothly.
But there’s far more to a healthy business than just numbers on a spreadsheet. Let’s take a closer look.
What are accounts receivable?
Accounts receivable – or AR for those in the know – is all the money that customers owe you for the products you’ve sold or services rendered. This becomes accounts receivable when you’ve invoiced them, but they’ve yet to pay. The total value of your accounts receivable is listed on the balance sheet as current assets, even if it’s work that you’ve done for clients on credit.
Incoming funds are the start of a healthy cash flow, right?
Keeping a healthy business with accounts receivable software – the benefits
This software certainly appears to be useful for streamlining your business functions, but there are some not-so-obvious benefits to consider too.
1. Cost savings
Getting paid the funds due to you gets more expensive as the admin costs escalate. At the end of the day, it comes down to money, and while you’ll have to pay for your accounts receivable software, you’ll be benefitting financially from the features and improved systems along the way.
If you could quantify some of these savings they would include:
- Decreased reliance on accounting staff
- Savings on salaries and overtime
- Less time spent on menial tasks and more time spent on strategy and customer service
- Lower collection costs due to fewer errors and faster turnaround times
- Reduction in the OTC cycle
- Reduced risk of costly security and compliance issues
Businesses that want to remain competitive need to keep a close eye on minimising inefficient processes and needless expenditure.
2. Faster payments
Faster systems mean faster, more accurate invoicing. It’s no secret that late invoices result in late payments, and also sets an unhealthy precedent with your customers which communicates that delays are not an issue. In a world where you have to shout the loudest to get paid first, this is not the impression that you want to leave with your customers.
Slogging away on outdated spreadsheets and manually entering client information is mind-numbing, time-consuming and often riddled with errors. Invoices can be inaccurate resulting in frustrated customers and delayed payments. Just a few of these issues – especially for smaller businesses – can tip the cash flow balance negatively and start an unfortunate snowball effect. Not only can this affect your income, but it can also impact your forecasting, budgeting, profit goals and business growth.
Did you know that it’s estimated that by sticking with a paper-based system you’re adding around 90 days per invoice? That’s a lot of time wasted! You want to decrease the gap between work done, invoice sent and payment received.
3. Better customer service
When you have people inputting data manually, there’s bound to be an error somewhere along the line. And, if you’re invoicing customers for the wrong amount, or for the wrong work carried out, then you’re going to end up with dissatisfied customers who might not return to you for a second time.
Accounts receivable systems that can automate some of the more repetitive tasks allow for a reduced margin of error, improved accuracy and swifter turnaround times. This means a better customer experience which leads to customer loyalty. (Plus it gives your competitors less opportunity to poach your customers.)
Why spend your time on internal system battles? Rather focus this time on enriching your customer experience and creating loyal business fans.
4. Improve Employee Retention
Your finance and customer care team are critical to your business – no matter the size. And it is likely that any employee will stick with your company for a longer time if they enjoy their job. However, as you manage more accounts, it becomes increasingly difficult to manage everything manually. It’s impossible for your team to produce the kind of results you want if they’re overworked and stressed out because you aren’t providing them with the necessary tools.
Logically, you will need less staff if you have a good accounts receivable system, and anyone you hire will have a much better working experience. There’s no doubt that your business will benefit from their long-term loyalty.
5. Standardise processes
Another great benefit of using accounts receivable software is that it unifies all the data sources and eliminates confusion. Everyone is working off the same information, leading to increased invoicing accuracy. Need to access any information related to your accounts receivables? This can be done with a simple search rather than having to sift through endless paperwork.
This standardisation of the accounts receivable process makes for a much more transparent and efficient process. And it undoubtedly adds to improved employee satisfaction.
Any new software will come with its challenges, which is why it’s important that your vendor provides you with the necessary support to keep operating at all times. Ask if they’re able to provide free, unlimited, 24-hour support so that you’re enjoying all the benefits of this automated software.
If you’re not convinced, just check online reviews and you’ll quickly have your answer about customer support. Start enjoying the many advantages of accounts receivable software today by getting in touch with industry leaders, Omni Accounts, today!
Do you work at a multi-national organisation? Are you involved in the import and export industry, or rely on foreign labour? Then you likely have to keep an eye on changes in the currency exchange rates.
This can be a difficult balancing act because there are so many factors that come into play – a war between Russia and Ukraine has an impact on European currencies which affects consumer goods prices down the line.
Here’s a look at the foreign exchange rates, their impact, and how this affects international business.
What affects the currency exchange rate?
Economists have their work cut out for them! There really are so many factors that impact the currency exchange rate on a daily basis. Here’s a look at some of the biggest influencers.
- Inflation: This is the purchasing power of one currency compared with another – so where it costs a single unit of currency to buy a loaf of bread in one country, that same loaf could cost several hundred units of currency. Those countries with a lower inflation rate generally have stronger currencies.
- Public debt: Many developing countries have to borrow money to finance their economic growth. Unfortunately, where the debt is growing faster than the economy, the currency devalues.
- Political instability: As we’ve witnessed with the Russian war on Ukraine, instability events within the country devalue the local currency.
- Interest rates: Central bankers have to adjust the country’s interest rates as a way to balance the inflation and attract foreign capital. Higher interest rates increase the value of a country’s currency.
- Balance of trade: This is the difference between a country’s exports and imports, with countries that export more than they import perceived to have better economic health and better currency exchange rates.
- Investor confidence: Traders will consider factors like election outcomes, unemployment figures and other economic news for investment options. These views, however, are often short-lived and not necessarily based on fact.
How does the currency exchange rate impact business?
The fluctuating currency exchange rate impacts us all in some way or another. Most businesses will either benefit from or lose out on sudden changes. Here’s a look at some of the ways it impacts international business and the risks involved.
If you work with foreign suppliers then an adjustment to the currency exchange rate could mean you save money if it shifts in your favour, or lose out because you’re paying more for the same goods or services. You will need to consider this well in advance as it can determine whether you order goods upfront or decide to buy as you go.
Changes in currency exchange rates also make it incredibly difficult for international businesses to perform accurate sales forecasting. Where sales might be going really well in an international branch, the amount coming in can shift drastically if the exchange rate suddenly turns against you.
Finance directors have an incredibly tough time when working out the value of assets or liabilities as they have to factor in fluctuating exchange rates. This is impactful for businesses when it comes to tax regulations as well as loans taken out in foreign currencies.
We’re all acutely aware of the rising fuel prices against the backdrop of global political instability, but this doesn’t just impact individual households but also businesses. The fluctuating exchange rate could mean a depreciation of the local currency and a rise in transportation costs and, therefore, sold goods.
Mergers and acquisitions
The value of businesses themselves is also very much tied to the currency exchange rate. This means that a business located in a country with a stronger currency is more likely to consider mergers and acquisitions with companies located in regions with a weaker currency.
Travel and tourism
The current currency exchange rate has a massive influence on the travel and tourism industries. Where the currency depreciates, the area becomes a more attractive tourism offering as visitors will be able to get more for their money. This shows that there are actually indirect benefits of a weaker currency.
How do you manage changes in currency exchange rates?
There are several ways you can attempt to mitigate the risk presented by ever-fluctuating currency exchange. Here are some of the preferred options.
This is where you enter into an agreement with other parties that protect your business from any fluctuations in the exchange rate. This means that items such as imported or exported materials or products remain at a fixed rate. (No matter whether the exchange rate goes up or down.)
Buy in bulk
If your business has the means, it might be worth buying goods in bulk. (When they’re available at a reasonable rate.) When you go with a need-to-buy option, you’re taking the risk of an unfavourable exchange rate down the line.
Transact in your currency
Is your company in a strong competitive position? Then you might be able to negotiate for transactions in a currency of your choice. This allows you to pass the risk of currency exchange on to the supplier.
The advances in financial technology (FinTech) have made international transactions much safer and swifter which means that aren’t delays in payments. For a small upfront fee, you can pay money overseas on the day so you don’t have to worry about currency exchange rate fluctuations.
Big multinational companies even build foreign exchange fluctuations into contract clauses. This means that their revenue can be recouped when the exchange rate deviates from the agreed amount. This, once again, passes the risk onto the supplier.
It’s also important to adopt enterprise resource planning (ERP) software that allows for the management of trade in multiple currencies. The ERP software manages daily activities – accounting, procurement, compliance, project management and supply chain operations – so it’s important that it’s able to operate across currencies, and make the necessary adjustments when the foreign exchange rate fluctuates.
If you need help with these elements in your business, please feel free to contact the Omni team for assistance.
It’s official, you’re a business owner! You know because you have more paperwork than you know what to do with. Let’s face it, if you enjoyed admin, you wouldn’t be where you are today. So how can you conquer the time-sapping, desk-burying pile of invoices and receipts? With small business accounting software of course!
Choosing accounting software is extremely necessary, especially if you run your own show. To make the process a little easier, we’ve summed up some things you should know into three useful points. You’ll also get a super quick rundown on some of the popular accounting packages out there.
Benefitting From Accounting Software for Your Small Business
When it comes to running a business, efficiency is key. The right software will help you cut down the time you spend on daily accounting tasks. Since the main point of any company is to turn a profit, keeping a close eye on the financial health of your business is crucial.
When you automate more of the tedious tasks, fewer administrative mistakes slip through the cracks because there’s less room for human error. (Inventory control errors are a big one.)
Additionally, all your financial tasks can be conducted on the same platform. If your business is small, you may not have the budget for an accountant, but the right software means you can handle your own accounting tasks while your business grows.
Here are a few ways that small business owners can use accounting software:
- Recording payments
- Tracking expenses
- Customer invoicing
- Reconciling transactions
- Gain a better understanding of their profitability
- Prepare for tax season
Basically, accounting software saves time, makes your business more efficient, and saves you money in the long run. Plus, it gives you a good perspective on how your business is doing financially.
Perhaps you’re wondering how you should go about choosing the right accounting software solution. The three important factors you’ll want to consider are integrations, the needs of your business, and added features.
1. Small Business Needs
First and foremost, you’ll need to take a serious look at your business as a whole. Be mindful of how it runs, its limitations and possible growth potential. You’ll also need to think about the industry you operate in and the number of employees you have.
Here are a few questions you’d do well to answer:
- How often do you receive payments?
- Do you process online payments?
- Can you do the bookkeeping on your own?
- Do you have employees?
- Is your business retail or service-based?
The idea is to be realistic about the extent of your accounting requirements. Additionally, consider how much support you will need in setting up and learning your new software. Several software platforms come with basic training to help you get started.
2. Accounting Software Features
There are a few features included in small business accounting software packages that you’ll want to look out for. The suggestions below will help you plan what you need.
Customisations and Future Growth
Think about the features that are immediately relevant as well as those that will be helpful later on.
If you run a small business, your accounting needs might not be all that extensive. You could work away quite happily with only the basic functions and not give a second thought to customisations. However, when your business grows, your accounting needs will change.
As your company expands, in time you’ll find yourself needing an enterprise resource planning (ERP) system. While that might be something to tackle down the line, it’s a good idea to think of where you’d like to take your business and align yourself with the right software providers early on.
You’ll want an option that scales with your business growth.
Cloud-based accounting means you can access your information from anywhere. As we learnt from the COVID-19 pandemic, being able to work remotely involves more than just freedom. When unforeseen events occur, your business doesn’t have to shut down if employees can’t get themselves to your place of business.
Add-Ons and Maximum Value
Some add-ons aren’t completely necessary, but they make a difference when you know how to use them. For example, they can make reporting easier and your workload smaller.
To determine if the software has any useful add-ons, it’s always a good idea to read the finer details. Learning how to use the full functionality of your accounting solution will help you maximise its value.
Of course, being able to afford your accounting software is going to be a significant deciding factor. Free accounting software does exist. However, it’s not worth skipping a paid-for accounting solution if it has features pertinent to your business.
While you need to be reasonable, accounting is no frivolous expense. So if you think your business needs something more than the absolute basics, don’t hold back. In the long run, accounting software is an investment in the growth of your enterprise.
3. Accounting Software Integrations
You’ll want your accounting software to integrate well with other business solutions. In other words, your accounting package must link up with the software you’re already using, such as your payroll system. It makes life much easier when your accounting solution can automatically populate information.
Integrations are especially important if you use a POS (point of sale) device. Make sure those two are aligned. After all, the one receives your income and the other records it. If you end up having to manually capture your POS entries, that pretty much defeats the purpose of automatic reporting.
In short, make sure your accounting software will be compatible with other aspects of your business.
Speedy Software Review
If you’re looking for a good small business accounting software in South Africa, there are a couple of popular options to look at. We’ve put a speedy review together for you to get an idea.
QuickBooks has a strong reputation and is considered the best option for small business accounting software. It’s easy to find their training and support resources if you need them. Plus, there are customisations available on the different plans that you can match to your business needs.
Sage is great because it integrates well with Microsoft and it has some very useful customisations. It has the hybrid option of hard-drive-based software that can also share data with the cloud.
If you’re self-employed with a really small operation, Xero is the way to go. Its platform is simple and straightforward to use. Additionally, it integrates well with payroll software as well as Stripe and GoCardless for online payments.
If you’re a one-man band such as a creative freelancer, Wave is a really good solution. It’s perfect if you only send out basic invoices and don’t need payroll. And, its reporting saves you all the time you don’t have when tax season comes around. More importantly, it’s free to use.
Data Capture for Days
If data capture isn’t your thing, that’s okay! Getting your accounting software right means you can spend more time making money and less time worrying about invoicing. With not too much effort you can even run a super organised operation.
You want to keep track of your expenses and know how much your profits are. Small business accounting software will help you manage your turnover. It will also save you a lot of time and hassle.
The best thing is, you’re the boss so you get to make the decision! If you’re interested in a great all-in-one accounting solution, chat with Omni Accounts today!
Omni Accounts: Accounting Courses Online
Whether you’re a start-up business operating as a one-man show, an aspiring accountant with a love for numbers, or even an established corporate enterprise with a large staff, conference facilities and several coffee makers, having a good grounding in accounting is incredibly valuable. In fact, it’s imperative.
Because no matter your industry, your goal is profit, and monitoring transactions is key to that end goal. Fortunately, there are great accounting courses online catering to all levels and requirements.
Can accounting be self-taught?
Accounting basics can certainly be self-taught, but only with the correct support. A great way to learn accounting is through online courses. If you compare the various online accounting courses and find one that provides solid support with great reviews, then you’re off to a great start.
Can I study accounting online?
Absolutely! Financial accounting courses are available online, but they vary in quality and accessibility. However, if you’re going through a reputable online accounting course then there are many benefits to enjoy.
- Flexibility: As the past few years have indicated, distance working and learning is completely possible in the modern, digital age, and online courses, no matter your accounting level, are a welcome trend. This form of online studying is also hugely beneficial if you’re having to balance family life, work-life or other obligations.
- Learn at your pace: Mindful education allows you to learn without the added pressure of a deadline! Many accounting training courses don’t have set completion dates, allowing you to pursue them in your own time and at your own pace. While you don’t want to keep putting off your studying, it’s often beneficial to not have a deadline looming overhead.
- Cost-effective option: If your budget is tight, then basic online accounting training is often more favourable. For students, there’s no cost related to housing and travel, with most online options comparatively cheaper.
- More options: There is a much wider variety of course options online than can be found in a brick-and-mortar institution. There are no limitations in terms of access to intellect and support, so whatever accounting course you’re looking for, you can find it.
What are the best online accounting courses?
There are endless options available to you, from foundational free online accounting courses, a bookkeeping course, or advanced courses offering an accounting certificate. Before making your choice, go through these questions first.
- Is the accountancy course self-paced or scheduled?
As mentioned above, some people prefer to study at their own pace without the deadline of a final exam. Others prefer a more scheduled approach to study. Whichever one you choose to go with, it’s important to set time aside in your daily schedule to hone your accounting skills.
- Is there peer interaction?
If you’re completing a short course in accounting, then the need for peer interaction and study sessions is less likely. However, for more advanced accounting courses, check for forum discussions, tutor sessions and live classes.
- Is it accredited or certified?
Whether you’re looking for accreditation or a certification completely depends on your career plan. If you’re doing a basic accounting course for your own skill development, then you might not require any certification. However, most fee-charging financial accounting courses will endow you with some form of accreditation at the end of the course.
- What is the cost?
You can opt for free courses but these do come with limitations in terms of grading and certifications. For South Africans, the exchange rate is not always favourable for international online learning, which means local courses are often a better option.
- What do the reviews say?
As with any product or service, you must check what the reviews say before investing. A simple Google search or check on the company’s website should give you a bit more information on what you want to know.
And the best online South African training courses?
Omni Accounts offers training courses that empower customers to manage their own Omni Accounts software. The courses are designed to suit everyone from basic users through to end users looking to specialise in accounting software.
How much does an accounting course cost?
To give you an idea of the cost of such training courses, here’s an overview of Omni Accounts offerings:
- Introduction to Omni Accounts course
Description: The introduction to Omni Accounts is one of the most popular courses and gives a great overview of Omni Accounts for new users.
Time: 4 hours
Cost: R299 pp
- Customers and Suppliers Course
Description: The Customers and Suppliers Course is a full day online course that covers the Omni Accounts Debtors and Creditors modules in detail.
Time: 7 hours
Cost: R1 000 pp
- Inventory (Stock) Control Course
Description: The Inventory Control Course is an online course that covers in detail the Omni Accounts Stock (Inventory) module.
Time: 4 hours
Cost: R500 pp
- Nominal (General) Ledger and Banking Course
Description: The Nominal Ledger and Banking Course online course covers in detail the Omni Accounts Nominal Ledger and Banking modules.
Time: 4 hours
Cost: R500 pp
- One-on-One Training
Description: Sometimes there is a need for training to suit your specific requirements. Book a one-on-one training session with Omni Accounts support consultants.
Cost: Price on request
Is accounting still a good career?
Yes! Higher education is always beneficial. Once you’ve trained in accounting, there are also several career paths to pursue, from a staff accountant through to management accounting – the opportunities are endless. Starting with an online training course through Omni Accounts is a great way to get into the accounting field, and there are many advantages to pursuing this highly-regarded profession.
- Financial security
- Access to many job options
- Opportunities for growth
- Opportunities for international travel
- Entrepreneurial opportunities
The great thing about the Omni Accounts courses is that you will gain superior accounting software training which will better place you to work in any industry. There’s no need to waste any more time, simply click on the course you’re keen to do and get it done! They’re also on hand to provide valuable one-on-one support so you’re 100% clear on what you’re doing from the start. For any more advice, get in touch with Omni Accounts today!
Artificial Intelligence and the Future of Accountancy: What Do You Think?
When most of us consider artificial intelligence (AI as those in the know say), we tend to think of futuristic robots, self-driving cars, virtual entertainment systems and other sophisticated computer-centric industries beyond our daily realm.
But the truth is that AI is impacting every sector of society, and the accounting industry is no different. Finally! Accounting is getting more cutting-edge. It’s what we’ve all been waiting for. So, here is a look at the evolution of AI and what this means for the future of accountancy.
What is Artificial Intelligence (AI)?
This is a field of computer science that enables problem-solving in machines and consists of sub-sets of machine learning and deep learning. Basically, AI is a science devoted to making machines think and act like humans.
A History of AI
The ‘father of computer science’, AKA Alan Turing, first questioned whether or not machines can actually think in his paper ‘Computing Machinery and Intelligence. He then put forward the now-famous ‘Turing Test’ where a human interrogator was tasked with distinguishing between computer and human text responses. There have been a number of subsequent studies in AI, as well as technological advancements, that question whether computer systems differentiate on the basis of rationality or acting.
Understanding some of the terminology related to AI will help you better understand its role in accountancy as we read on.
- Weak AI: Also referred to as Narrow AI or Artificial Narrow Intelligence, this is AI is anything but weak! It’s trained to perform specific tasks and is used in Apple’s Siri, Amazon’s Alexa and self-driving vehicles.
- Strong AI: This consists of Artificial General Intelligence (AGI) and Artificial Super Intelligence (ASI) but is largely theoretical at present.
- Artificial General Intelligence: This is theoretical AI where a machine is equally as intelligent as a human, with the ability to problem-solve, learn and make plans.
- Artificial Super Intelligence: This is where AI eventually surpasses the ability of the human brain.
- Machine Learning: This is a subset of AI where computers are able to think and act with less human intervention while using structures modelled on the human brain.
- Deep learning: This is a subset of machine learning where a machine can analyse images, videos and unstructured data which machines can’t easily do.
What Are AI Applications?
Before we delve into the specifics of AI for accounting, here’s a look at the current AI applications. Then we’ll get into how these can enhance the future of accounting.
- Computer vision: This is where AI technology analyses digital images, videos and other visual elements to derive information. This is being used in social media photo tagging, radiology imaging and self-driving cars.
- Speech recognition: This is a natural language processing (NLP) application that processes human speech into a written format as seen in speech-to-text and Siri.
- Recommendation engines: AI algorithms can check past consumption behaviour data to uncover trends for sales’ strategies.
- Customer service: These are online chatbots that assist you with online questions, shopping and other retail- or service-related information.
What Are the Benefits of AI for Accountancy?
So, now that we have a fairly solid grounding in AI applications, we can narrow it down to the area of accounting. Here are the many advantages you can expect when implementing leading software:
1. Increased productivity
AI can assist accountants in improving efficiency and productivity by drastically reducing the time it takes to perform manual tasks required for every client. This automation will also decrease the risk of error and improve the quality of work. In a field like accounting where even one error can have a major impact, this is great news!
2. Attracting new clients
The new generation of clients has grown up with technology so they’re much more likely to work with an accounting firm that adopts the latest in AI. Data insights will assist accounting firms in better understanding their younger clientele and developing ways to attract their business.
By combining AI with other technologies – such as robotic process automation (RPA) – accounting firms are able to automate everyday manual tasks such as purchasing, invoicing, purchase orders, accounts payable and receivable. This means more time can be directed on high-value, strategic tasks that increase the abovementioned productivity. Machine learning tools can also read through lengthy contracts and documents which assists auditors by reducing administrative time.
4. Real-time updates
Using AI, accountants can gain real-time updates on financial information through natural language processing. This valuable insight into current trends and proficiencies can then be used for enhanced decision making so that companies are more proactive.
5. Legal compliance
Accounting firms need to adhere to stringent local, national and international regulations which are constantly changing while working for different companies with complex internal and external requirements. Fortunately, AI-enabled systems have machine learning capabilities to sift through extensive data and maintain compliance with necessary regulations.
6. Minimise error
Through AI implementation in accounting operations, businesses are able to minimise the risk of human error. When it comes to accounting, even a minor error can snowball into a real problem later on, which makes AI hugely impactful.
7. Fee reductions
Because AI is able to provide accountants with much faster, more valuable data insights, there is a significant reduction in time spent per client. This means that firms can take on more clients at a lower cost, saving them money.
8. Better security
The ability of AI to sift through vast quantities of data at one time means that any discrepancies or security concerns are quickly identified and flagged. With cybersecurity a major concern heading into 2022, and the incredibly sensitive data dealt with by accounting firms, AI appears to be a valuable solution for secure data storage and protection.
9. More opportunities
The introduction of AI for private and public accounting firms means more in terms of career opportunities. This is because accountants can focus on higher-level duties suited to humans rather than machines. This paves the way for more innovation in the accounting sector.
10. AI gets smarter
At the risk of entering the sci-fi realm of robot overlords, AI continues to get smarter and learn from errors through feedback loops. This makes the system that much more effective over time which improves accounting operations.
What to Consider When Implementing AI in Accounting
Whatever way we look at it, the pandemic has precipitated the fourth industrial revolution and accounting firms need to embrace this new reality. Here are three tips for making this change.
Tip #1: Learning about AI
Accountants need to be fully briefed on the role of AI and how it can be best implemented into day-to-day operations. There is not enough understanding about how AI is becoming immersed in almost every sector, and a lot of reluctance to adopt AI technology. With a proper briefing and informative display, accounting firms will certainly get on board.
Tip #2: Incorporating human skills
It’s important to note that AI technology is not about replacing humans, but rather complementing the skills but removing the timeous, repetitive tasks and freeing up time for more value-adding projects. Accountants can now focus on non-automation tasks including communication, relationship-building and identifying areas of opportunity.
Tip #3: Getting a head start
AI is coming, one way or another, and delaying its implementation just means the firm is going to lag behind when the time does eventually come to adopt this innovative technology. The best move now is to start researching AI software to find the right fit.
Leading software supplier, Omni Accounts is undoubtedly your best starting point. They have a team of industry experts ready to assist you with sourcing the best solution for your accounting needs, implementing it and providing the necessary ongoing support that ensures you maintain a competitive edge.
Accounting packages for small businesses in South Africa: What do you need?
Unless you have a genuine passion for accounting (and these people do exist!), it can often be one of the most time-consuming and odious parts of running any small business.
But, where there’s technology, there’s a user-friendly solution! By installing business accounting software, you’re able to eradicate all that manual, number-dominated labour and instead invest your time in building your dream business.
First, you need to know which is the best software for your small business needs. And we’re here to lay it all out for you!
Small business accounting features
Let’s start with the basics, for those of us who don’t list accounting as a hobby. Here are a few of the features you can look out for in the various accounting software options.
- Inventory management: This monitors all the ordering, use and storage of your inventory.
- Accounts payable and receivable: This tracks all the money owed to your suppliers and all the money coming in from customers respectively.
- Bank reconciliation: This picks up and resolves any discrepancies between the balance sheet and bank statement.
- Budgeting and forecasting: With this, you can check your expected revenue, costs, cash flow and trends – this allows you to make really informed business decisions.
- Ledger: All your business transactions are recorded as well as assets, liabilities, income and expenses.
- Tax management: This feature manages all of your taxes.
- Billing and invoicing: A very handy feature that bills suppliers and invoices clients.
- Financial reporting: This outlines business finances including financial statements.
- Expense tracking: Keep a record of your receipts, invoices and other expenses.
What is the best small business accounting software?
There really are an inordinate number of accounting software options for small South African businesses, which can make the decision quite difficult. To simplify things somewhat, we’ve chosen six of the best and broken them down so you know what you’re getting and how they compare.
What started as simple invoicing software in Toronto, Canada has grown into feature-laden online accounting software – with great invoicing options. When subscribing, you can benefit from a 10% discount for annual payments, or a 60% discount per month for six months across all four Freshbooks plans – Lite, Plus, Premium and Select. Drawing on its origins, Freshbooks provides you with customised invoicing solutions for a more professional look and fee. It also allows you to send proposals and invoices, request deposits, collect client retainers and track projects.
Pros of Freshbooks
- User-friendly interface
- Third-party app integration
- Customised invoicing features
Cons of Freshbooks
- Limitations on the mobile app
- No payroll services
- No inventory management
This is another Toronto-based online accounting software suited to small businesses. Although there are two payment options for Wave depending on the features needed. This is a set monthly amount with additional charges per employee or contractor. Fortunately, the software package comes with free foundational features suited to small businesses such as income and expense tracking, financial reporting, invoicing, and scanning receipts. It’s really great for service-based businesses and freelancers.
Pros of Wave
- Free foundational features
- Unlimited number of users
- Great mobile app
- Can run multiple businesses off one account
Cons of Wave
- Has limited third-party app integrations
- Higher credit card fees
- No inventory management
This is a South African-based company that offers online accounting for your entrepreneurial needs. This software package, which comes at a monthly fee, includes great features such as quoting, invoicing and payroll.
Pros of SMEasy
- There’s a free 30-day trial
- Cost is only R150 per month including VAT
- Free month’s subscription if you pay for a whole year
- Unlimited number of users
- Great customer support
Cons of SMEasy
- No add-ons
- No third-party applications
- No tracking inventory
This is user-friendly, cloud-based accounting software offers three plans depending on what you need – Start, Standard and Standard PLUS Payroll. The initial plan is great for sole traders, micro-businesses and freelancers; the Standard package for two-to-five users; and the Standard PLUS for bigger organisations.
Pros of Sage
- High-level of security
- Used across a variety of platforms
- Change, cancel or upgrade your plan anytime
- 30-day free trial
- Unlimited companies and users
Cons of Sage
- They only offer annual packages
This is a New Zealand-founded accounting software company that has rapidly expanded since it started in 2006. They offer three monthly subscription options; Early, Growing and Established, with a 30-day free trial and 50% off two months initial promotion. The Early option is limited to micro-businesses such as consultants while Growing and Established are for corporate operations.
Pros of Xero
- Available on a mobile app
- Third-party applications
- Inventory management
Cons of Xero
- There’s limited reporting
- There’s limited customer service
6. Intuit Quickbooks
This is a very popular accounting software option for small businesses, bookkeepers and tax professionals. Accessible via the cloud, web browser or mobile app, Intuit Quickbooks provides you with a 30-day free trial in four plans; Simple Start, Essentials, Plus and Advanced. Your monthly subscription can be upgraded as your business grows, with lots of great customisation options available. Obviously, the higher you go in the plan options, the more features you will have access to.
Pros of Intuit Quickbooks
- It has a mobile app
- It’s cloud-based
- It integrates with third-party applications
- It’s fully scalable
Cons of Intuit Quickbooks
- An increased number of users needs an upgrade
What are the benefits of computerised accounting software for small businesses?
You have quite a good grounding in the various accounting software options available, but you’re still reading which means you’re not yet convinced this is for you. We’re going to convert you with the many benefits listed below…
– Lower costs
Because the accounting programmes are tiered depending on business size and requirements, you’re bound to get one that is most suited to your budget. Make sure you check in about training costs which can be in addition to your monthly subscription, but this is a once-off. When you’ve got your system up and running, you’ll also start benefiting from cost savings relative to the amount of time you cannot contribute to business operations.
– Improved accuracy
Now that you have sophisticated accounting software, you don’t have to manually update spreadsheets every time you make a change. Your reports will all be automatically updated without any manual input, making them that much more accurate. No room for human error!
– Time savings
Obviously, there will be time dedicated to learning the new computer software and training time but this is a once-off concern. Once you’ve got a feel for the online system, you’re able to minimise the manual input time which will add up to hours every week. This is time better spent working on improving business productivity and achieving your goals.
– Valuable insight
Even if you’ve been running your business for a while, you might not be benefitting from the necessary insight to set your business apart. With a sophisticated accounting package, you are now able to track all the transactions across departments and projects to see where money is being spent and whether it’s worthwhile or not.
– Instant reports
Monthly reports, which usually take ages to prepare, can now be instantly collated by your accounting software. They will come with built-in report platforms which are automatically updated with your latest information. You can also customise reports by filtering or adding more data.
– Simplify payroll
For smaller businesses, accounting software is actually able to handle the payroll system, including automating employee payments, insurance contributions and medical aid.
– Collate all your data
You have a multitude of financial data across various platforms and to go through this manually is incredibly time-consuming and often inaccurate. Your accounting software is able to collate all this information onto one platform for a more complete financial record.
– Simplify tax filing
With all your information in one easy-to-find location, your tax filing becomes that much easier come the start of tax season. Some higher-priced packages could even offer you sales tax and payroll tax features.
– Improved accuracy
If you’re in the manufacturing industry, this type of business cloud accounting software has basic inventory management tools to automatically update your inventory system. This is a great way to get accurate information on stock levels without the risk of human error.
– Improve organisation
One of the best benefits of small business accounting software is the improvement you’ll enjoy to the overall organisation. If a client wants to dispute a payment, you can easily find the information and determine whether the amount was paid or not, without sifting through mountains of paperwork. Everything is systematic and efficient.
What should you consider when choosing business accounting packages?
You’ve got a pretty good idea of what features and benefits come with accounting software, now you just have to assess your personal business needs and decide which will be the best fit. Some of the factors you might want to consider include:
- Usability: This is something you’re going to be using on a daily basis, so make sure it’s simple enough to use.
- Accessibility: Your cloud accounting software should be available from any device at any time of day.
- Security: You must ensure your data is being kept safe and secure.
- Cost: The software will reduce running costs but you need to ensure you can afford the subscription.
If you’re still at a bit of a loss, no problem! Contact Omni Accounts to discuss your various options available. Omni enables businesses of all sizes to easily and seamlessly configure and upgrade the software using a combination of Bundles & Switches.
Collect the Right Customer Account Information to Understand Your Market
We all want to retain our customers by offering the best possible service and win new ones by providing the same experience. That’s a given.
Undoubtedly, the best way to do this is by understanding what your customer needs, and the market that you work in.
But how do you know what customers want? A great way to do this is by gathering data through your accounts department, using your customer account information. This can take you a long way in the right direction to understanding what is wanted, where and when and how much.
If this sounds like information that you can use, keep reading. We will give you some tips and tricks to stay at the top of your market while offering the best possible service.
Understanding Your Customers
Understanding your current customers, as well as any potential customers, is essential if you want to remain competitive. And this is not as complicated as you may think – you already have all the tools at your disposal. You just need to use them.
If you are using accounting software systems for customer management, you are already halfway there. These valuable insights will help you to analyse your data for trends and get a good look at the big picture.
If you don’t ask any questions, you will never have any answers. But what are the right questions to ask to gather the data that you require? They are simple really
- Who are your customers?
- What do they want to buy or use?
- When do they want it?
- Where do they buy most often?
- How do they make payment?
- What price are they willing to pay?
By asking these simple questions, you will be able to gather a wealth of data that can help you to improve your business, and point you in the right position.
While they are a helpful way to capture data, DIY surveys on your customers will often give you a biased view of what your customers need. Your most loyal and active customer will participate, and you may miss out on the details and feedback of your less positive or active customers.
If you want to go the survey route, the best way to do this is to use a third-party research option or CRM to reach all customers by using their account information, not just your current ones. This will give you a much more rounded database to work from.
Identify Consumer Segments
Once you start to gather information, you will be able to identify certain consumer segments that share similar characteristics. Having this information available will allow you to streamline your target markets. Ensuring customers are in the right segments is easy enough if you group your customer account numbers, and make sure you keep up with regular customer account maintenance.
While there are various segments within segments, in very basic terms, the top four segments are
- Demographics is based on age, gender, marital status, income, occupation etc.
- Psychographic is based around personal values, interests, and attitudes as well as personality traits
- Geographic is based around where customers live
- Behavioural is based on how people spend money, their actions or lack of actions
Each of these segments requires specific items and services, and because of this, your best option is to offer a tailormade marketing strategy to each. An important thing to remember however is that while these segments may have similar interests or requirements, they are still individuals.
You run the risk of excluding some of them if you are too specific with your marketing and communication. There are hundreds of ways that you could divide your customers up into segments. However, not all of these will be useful to your marketing strategies, so you will need to sort carefully through your data.
Know Your Buyers Motivation
Knowing why a consumer does something is particularly important information to have. Gathering this information through a customer account can help you to understand what is needed, as well as noticing if there are any gaps in the market, or areas that you can explore.
Asking the question of what your customer is trying to get done will give you vital information as to their motivation for buying a product or using a service. This type of market-related research gives you as a business a better understanding of your customer’s needs, and how you can meet them.
Which customers are willing to spend the money on top products, whereas others will opt for those that are good enough and spend their money elsewhere? If you can find the areas that you are not meeting a customer’s criteria or the reason that they are going elsewhere for products and services, then you will be able to find the areas to improve and draw them back.
This is the kind of information that works to guide companies into product development business growth. It will benefit your marketing strategies, which in turn will all help boost the bottom line.
Know Your Competition
While it is good to be familiar with your customers, it is also important to know and understand your competition. By studying the strengths and weaknesses of those in the industry you can be the first to discover gaps in the market. The most vital things to know about your competitors are:
- Which are your biggest competitors in the industry and what is their market share?
- Know their products or services, and which are the most popular choices
- Which of them is growing and for what reason?
- Know the strengths and weaknesses of your competitors
- Develop strategies that you can use to build advantages
It is also a good idea to look at those who are indirect competitors to your industry. There is great market potential here if you can convince their customers that doing things your way is better than using their products or services.
An easy example of this is if you are an airline, for example then your indirect competitors will be buses and trains. Your goal should be to convince people that flying is the most desirable possible option for various reasons. If you can offer your product in the same ballpark when it comes to cost and convenience, then you have a winning strategy.
Customer Account Information
Knowing what your customers want and need is a key component in being able to offer them the best possible service and products. If you can be always one step ahead of the game, isn’t it worth investing a bit of time and money into some products that can take your customer account information and turn it into usable data?
By asking the right questions, knowing your competition, and using all the information and account details to your advantage, your business will be a force to be reckoned with in no time at all. What have you got to lose?
If you have questions about customer accounts and the variety of packages that we offer, contact us today and we will be happy to answer any questions you may have.
Everything you Need to Know about Corporate Accounting
Accountants are accountants are accountants, right? Wrong! Within the field of accounting, there are two main divisions: corporate accounting and public accounting. Also known as bookkeeping, accounting involves the collection, analysis, classification, verification, interpretation, and finally the presentation of financial information. There are different types of accountants. Corporate accountants tend to manage the accounts and finances of one financial entity or business, making sure they comply with the various regulations and laws, while also monitoring key financial KPI’s (Key Performance Indicator) such as profit and cash flow. Public accountants sell accounting services such as auditing to other companies and perform services for many different firms. Today we will be exploring the world of corporate accounting.
Corporate accounting deals with processes such as the preparation of cash flow statements, financial records, company balance sheets, and more. A corporate accountant employed in industry (i.e. not by a large accounting firm) is typically focused on making sure the financial and operational activities of a company are correctly recorded, controlled & monitored and that management has the information necessary to make the best business decisions. Below we will discuss the main functions of corporate accounting within a business.
The Creation and Upkeep of Company Accounting System
Corporate accountants are tasked with creating, managing, and maintaining the corporate accounting system of a company. Today, this is likely to be via a software program, that may even span the entire firm, such as an ERP system (Enterprise Resource Planning) like Omni Accounts & ERP. The accounting department creates separate accounts to handle business elements such as assets, income, liabilities, and expenses. Having done so, they assign each account with general-ledger codes and set the overall system to record specific transactions into the matching accounts automatically. If the business has a more advanced ERP system, corporate accounting also involves the regular creation of a variety of reports that are used by management to assess the state of the company’s assets, liabilities, and cash flow. These reports are made using real-time data and information. These financial statements for the company are also produced for the purpose of auditing by regulatory bodies (and public accountants!).
Managing Accounts Receivable
The sector of corporate accounting also handles accounts receivables. This is the area of financial administration that deals with, and records, money coming into a company, typically from customers. This area of the business will also monitor which customer accounts are due for payment, and monitor the ageing on the accounts. They are also often responsible for collections and also managing default accounts (late payment). Sometimes they will work with a specialist agency to work on extremely late defaulted payments. This area of the business also feeds back to the management team about cashflow forecasts in terms of the timing of cash entering the business.
Managing Accounts Payable
Corporate accountants also deal with receiving and processing the invoices that come into the company for payment. The department then proceeds to make payments to contractors or suppliers according to the indicated means of compensation, as well as in agreement with the payment terms negotiated with the supplier. Examples of these include bank transfers, checks, and credit card payments. The payments can be of 2 main sorts: fixed and variable costs. Fixed costs and invoices generally relate to costs incurred every month regularly such as rent and utility bills. Variable costs would include things like raw materials, finished goods or one-off professional services.
Processing Employee Payroll
The calculation of staff salaries falls into the scope of corporate accounting, although some firms do outsource this payroll task. Corporate accountants calculate wages for staff according to various work periods. This can be weekly, bi-weekly or monthly. They also calculate any benefits, perks or other sundry items (such as expense refunds) that are due to the staff member, as well as calculate the taxation that needs to be deducted and submitted to the tax authority. Staff typically receive payroll direct deposits into their bank accounts on the agreed date.
Corporate accounting is highly necessary for any business. Not only does it ensure that money comes in and out of the business as and when it is due, but by recording the transactions, corporate accountants help to ensure that management is aware of the true state of their business’s liquidity and profitability. Corporate accountants also have a great responsibility to ensure that businesses stay compliant with local financial regulations. With such a great responsibility it is little wonder that software packages such as Omni Accounts are invaluable to this sector.
Benefits of Computerised Accounting Software versus a Manual Accounting System
Keeping track of a business’s finances and accounting transactions is an extremely important task. It is a task, however, that can be quite arduous and time-consuming. The introduction of computerised accounting software that automates and digitalises many of the accounting functions has proved revolutionary to this business function. Below we will discuss the specific benefits that can be achieved when migrating from a manual accounting process to an automated computerised accounting software program.
Manual accounting processes use paper systems (or perhaps rudimentary spreadsheet systems) and ledgers to record and process all their accounting transactions. The very basis of the accounting equation dictates that any transaction that is entered must be entered in at least 2 different accounts, if not more. The double entry system in accounts means additional work for a manual system where any transaction must be entered more than once in multiple places in the manual system. In the case of a computerised or automated accounting program, this entry is only needed once, as the correct corresponding ledgers and accounts are adjusted and updated automatically. Invoices, receipts, and other accounting documentation can also be stored digitally, saving time on manual filing exercises as well as the time when searching for specific information again.
An automated accounting software program goes a long way in mitigating human error. Because of the reduction of manual processes, there is a much smaller window of opportunity for human error to creep in. While the old saying goes ‘garbage in – garbage out’- and automated accounting programs are not immune to this should there be a data input error- the sheer number of times information is entered into a manual system, interpreted manually and manipulated manually means that the opportunity for human error is just so much greater in a manual accounting system. Be it incorrect figures, badly written text, or calculation errors, there is a much greater chance of inaccuracy in a manual versus an automated accounting software program.
Greater Visibility and Control
Accounting or bookkeeping by its very nature involves a lot of capturing and storing of documents. From invoices, receipts, bank statements, and delivery notes- these all need to be captured, filed, and stored. In a manual system, this can be unwieldy and prone to error. When working on an automated accounting software system, it is much easier to pull up transactions, the associated documents, and any actions pending against them. It is also much easier run instant reports showing all transactions that have actions outstanding or due to them- this, in turn, gives far greater visibility into the state of the accounts at any one point in time and also gives business managers and financial managers much greater control over their accounts.
Manual accounting systems are much more vulnerable to security breaches. Often information kept and generated in such systems is sensitive (e.g. profit statements, payroll figures, or key customer information). Accounting software programs allow for specific user security levels so that sensitive information or reports can only be accessed with the appropriate seniority levels.
Faster, More Accurate, and Flexible Reporting
When reporting enters the equation, Accounting Software really shows its advantages over a manual accounting process. In the case of manual systems, not only do you have to capture all the data manually, but you also have to run and calculate the reports manually. Setting up any new kind of report is laborious and time-consuming – not to mention the additional room for error. Accounting software systems, and especially systems like Omni Accounts with its Report Writer function, make reports available at almost the touch of a button. Ageing reports, trial balances, income statements, accounts receivable, revenue by customer…the list goes on. All these reports are available in real-time, always updated with the latest information in the system. In the case of flexible report writing, you can arrange reports as you wish and can manipulate your data as you wish to show you the information you need. Such flexibility is simply not possible in a manual system.
As is required by law, companies need to have their annual financials audited annually. In a manual accounting process, simply finding a simple transaction can be a drawn-out process. In an accounting software program, it is far easier for auditors to find the information they need. This is helpful as it minimised inconvenience to you as the client- indeed the auditors may be able to spend very little time on-site which will minimise the impact on the daily operations of your business. Also the faster the auditor is able to move through your case, the less money it will cost you in audit fees.
There is very little benefit in staying in a manual accounting process. One barrier to entry may be start-up costs, but these costs will soon be offset by the multiple benefits of moving to an automated accounting software program. Manual processes can become somewhat of a dead-end, as they grow more and more cumbersome as a business develops. A computerised system, such as Omni Accounts can grow together with your business.
What to expect from the future of accounting in South Africa
Rapid changes in technology mean traditional professions will need drastic evolution to remain relevant or become obsolete. The future of accounting in South Africa will involve adaptation while retaining core aspects.
Accountants in demand
While Information Technology (IT)-related positions are some of the most desperately needed placements within South Africa, accounting is a strong second. According to the South African Institute of Chartered Accountants (SAICA), South Africa is in need of some 22 000 qualified accountants countrywide, with a particular need for specialised accountants, including Chartered Accountants. The biggest barriers are education-related, with many potential candidates failing to pass the exams.
Types of accounting jobs
There are many different types of jobs that fall under the accounting banner. These include:
- Auditor: this person will analyse a company’s financial statements to ensure accuracy and compliance with legislation. Financial statements reviewed include those related to business assets, bank balances and ledgers.
- Budget analyst: clients need assistance in creating and implementing a business budget. An analyst will have a clear understanding of the business environment to make decisions based on current and potential earnings.
- Forensic accountant: these are accountants who investigate the biggest financial discrepancies such as fraud and industrial espionage.
- Staff accountant: this individual works for any organisation preparing taxes, reports, and financial statements. Other duties could include bookkeeping, budget evaluation, and general accounts.
- Tax accountant: these accountants will keep updated on national legislation and regulations related to tax.
Changes in the future of accounting
The socio-economic, environmental, and technological advances being made globally are resulting in massive changes across every industry. New jobs are being created while more established roles are quickly being replaced. Here’s a look at what changes are set to take place in the accounting profession within South Africa over the next few years.
Achieving gender equality in accounting
In many respects, South Africa is fast addressing the gender gap. Our current cabinet is only one of 11 worldwide with an equal representation of men and women. However, as is evidenced by our horrendous femicide rates, there is still a lot that needs to be done in terms of female empowerment. In accounting, it’s anticipated that the profession – still undeniably dominated by men, particularly in leadership roles – will begin to bridge the gap as more women rise in ranks. As with Iceland, a country that made it illegal for men to earn more than women for the same role, South Africa will seek to address issues of equal pay, opportunity, and treatment.
Enhanced technological capabilities in accounting
There will be an increasing adoption of smart technologies such as dedicated accounting software which will provide superior accounting services and push the trend of outsourcing accounting services. The increased use of social media and communicative technology will improve collaboration, engagement, and disclosure with stakeholders and other affected parties.
Use of Artificial Intelligence (AI) in accounting
The aforementioned adoption of superior technologies – including AI, blockchain, and the Internet of Things (IoT) – will disrupt classical accounting. Rather than focusing on manual transactions, number crunching, and report compilation, accountants will be free to focus on business enhancement initiatives, risk management, and the development of sustainable business models.
More regulations for accounting
The advancement of technologies within accounting will also call for more regulations to ensure data protection. With regards to AI, accounting firms will want to understand the impact of data on AI decision-making, ethical behaviour, and the quality of financial assumptions. Accounting standards’ regulators will need to ensure standards are maintained when looking at human- and machine-integrated accounting.
Increased globalisation of accounting
Globalisation encourages the free flow of money between markets, transferring skills and outsourcing while also seeking to resolve threats related to local regulations. Despite Brexit and the US’ isolation-focused policies, globalisation will continue with accountants seeking ways to work inter-continentally.
Development of new accounting curricula
The aforementioned globalisation, technological advancements, evolving tax regulations, and associated adaptations to the accounting profession demands a change in the education of both incoming and existing accountants in line with future digital technologies. At present, few universities are developing transformative curricula to meet these demands but this will change. Accounting firms are actually seeking to partner with universities and colleges to bridge the gap between learnt knowledge and practical knowledge in the workplace. Accountants can expect courses focusing on digital technology, integrated report, and carbon emission accounting, among others.
More need for advanced education requirements
Beyond the skills development in terms of the changing accounting profession, there is going to be a need for more advanced skills in terms of accounting to meet growing demand. Where AI is able to perform the more manual accounting tasks, there will be a push for accountants to pursue master’s degrees while working.
Need to specialise in accounting
Connected with further education training is the need for accountants to specialise in niche accounting markets, rather than the general overview of accounting skills. The advancement of technology means that accounting firms of all sizes have access to the same tools which is leading to a rise in these niche markets. Some examples of specialised markets include carbon emission accounting and healthcare accounting, among others.
The basics in accounting will remain
While change is inevitable within the accounting profession, and technology will assist greatly, computers are not perfect and humans will still be required to perform basic accounting to ensure everything is run correctly. There will still be anomalies and discrepancies that individual accountants will have to analyse and correct, as well as going through business processes with company leaders to overcome any challenges.
Where traditional accounting was once perceived as people surrounded by stacks of paper-filled filing cabinets, sitting with calculators in basements trying to balance amounts, this is no more. The increase in digital technologies, accounting software, AI and other related advancements will see the duties of the accountant change, while the core function of the accountant remains the same. Accountants will just need to make better use of interpersonal and analytical skills to work with automated technology.
What is the difference between ERP (Enterprise Resource Planning) and Accounting Software?
While Accounting Software has almost always been considered a necessity, ERP (or Enterprise Resource Planning) is increasingly taking over that baton- indeed many use the term interchangeably. But Accounting Software and ERP systems are not the same things, although one may be absorbed by the other. Below we discuss the main differences between accounting software and ERP.
Traditionally, accounting software has been used to, as the name suggests, manage a company’s accounts, ‘books’ or simply how money moves and is spent and earned. Accounting software deals with the financial aspect of a company’s operations by recording business transactions. Accounts payable, accounts receivable, payroll, general ledger, sales orders, purchase orders are all modules contained in accounting software to produce basic financial reports like income statements and balance sheets. Accounting software provides an assessment of a company’s current financial health and determines profit, loss, and assets status.
Enterprise Resource Planning Software (ERP)
An ERP software is a total business management software solution, in which accounting software is just one aspect, although a significant one. ERP is software that is developed for company-wide management, providing reliable information for all departments. ERP controls and tracks all aspects of your business activities in a single system and helps provide management with an overall ‘big picture’ view of their business at any point in time- while also assisting in forecasting future trends. ERP incorporates accounting functions, demand, and supply forecasting modules, logistics, dispatch, stock control, warehouse management, project management, and even human resources management in one large interconnected system.
Accounting Software is just one piece of a big ERP system
If ERP is a Lego model, then Accounting Software is one important block. Accounting Software will generally only get involved from the Point of Purchase or Sales invoice. An ERP system can track a customer even before they become a customer! An ERP lead management module, as well as a CRM module (Customer Relationship Management), can track the sales process and track back which salesperson or marketing event was responsible for the sale. An ERP system can track beyond the sales transaction to repairs, customer relationship management, and future purchases.
ERP systems are used by the entire organisation
Where an accounting software system is used almost exclusively by financial managers, accountants, and bookkeepers- an ERP system is one that is used across an entire organization. ERP systems can be used by sales teams to ensure sufficient stock for a deal that is about to be concluded. Demand managers can access sales forecasts in order to plan manufacturing or stock replenishment. As soon as a sales invoice is raised by the accounting module, the supply chain team, warehousing team, dispatch team, and management have instant visibility on the transaction and can plan accordingly- without manual notification. Similarly, the ERP system feeds back into the accounting software module in terms of stock on hand and assets. This helps in terms of inventory holding costs and asset management from an accounting perspective.
The choice is based on a business’s needs
Before deciding if your company needs an accounting system or an ERP system you first must first decide what your company’s requirements are. Is the size and scale of the business such that all that is required is automation and control of the accounting process? In which case, a sole accounting software solution will fill the gap. Or does the business have more advanced needs and control requirements such as manufacturing, advanced stock control, and customer relations- in which case an ERP system is more appropriate? A small business may also feel that growth is anticipated and so may feel that a scalable program is best for them- something that starts out with more basic accounting functionality but that can be scaled to include ERP functionality as and when required.
The lines between ERP and Accounting software are becoming increasingly more blurred. Functionality that used to be seen as an ERP luxury is now being seen as a basic business necessity. Accounting Software is a core module in any ERP system, but an ERP system is not limited to assisting your business simply in the field of financial accounting and record keeping.
What are the key differences between accounting and bookkeeping?
While bookkeeping and accounting both fall under the accounting umbrella, the biggest differentiator is bookkeeping doesn’t involve the analysis of financial data.
Accountants form an integral part of any business by ensuring all fiduciary responsibilities are adhered to. Basically, an accountant will analyse all financial transactions evident in statements and business reports, ensuring that they meet all necessary accounting standards and principles. Using financial analysis, accountants are able to provide a full report on the financial performance of any business, empowering business owners to make informed financial decisions.
An accountant will have many day-to-day activities to meet all financial needs but there are four main accounting duties in any organisation:
- Financial analysis and consultation
The company’s financial data will be assessed and advice shared on the correct measures to be taken to ensure financial stability and growth.
- Data management
The accountant is responsible for the storage and management of all financial data, constantly researching new techniques and products for effective data storage, then updating where necessary. An accountant has the final say on which accounting system will be used within a business.
- Compiling financial reports
All necessary SARS-related business reports and statements will be compiled by the business’s accountant.
- SARS regulatory compliance
There are constantly new tax regulations and tax procedures that need to be followed to ensure a business is SARS compliant. An accountant is responsible for maintaining communications with SARS, and ensuring the business is up-to-date with all tax requirements.
How to qualify to be an accountant
Becoming an accountant requires more than just having a good idea of how everything works. To qualify as an accountant, the minimum requirement is attaining a Bachelor’s Degree in accounting or a related field, but there are many more levels beyond this. In South Africa, an accountant will ideally have completed a Bachelor of Commerce followed by a three year learnership at a SAIPA-accredited training centre. This is followed by a SAIPA Professional Evaluation exam which is a four-hour competency exam.
Becoming a Chartered Accountant (CA) requires further qualifications and these positions are generally found in the commerce, industrial or non-profit sectors. A CA will undergo more training than an accountant including an academic post-graduate programme followed by at least three years under a mentorship. The work’s focus is generally the provision of accurate records of all financial transactions for an individual or business.
Bookkeeping doesn’t require the same level of qualification as an accountant; however, bookkeepers are still responsible for the financial aspects of a business such as monitoring the chronological order of all financial transactions, as well as summarising financial data in reports. Fortunately, there are a number of software options available to assist with bookkeeping these days.
Depending on the particular company or industry, a bookkeeper’s duties will vary, but there are certain elements that could be associated with the job description. These include:
- Maintaining best bookkeeping practices and ensuring compliance with the company and SARS
- Maintaining records and all backup data
- Training staff on all bookkeeping activities
- Developing credit and debit accounts
- Assigning expense categories
- Entering income and expense information into bookkeeping software
- Payments in the form of cash
- Handling of banking activities such as new deposits
- Recommending and managing accounting software, bookkeeping policies, and procedures
- Checking the accuracy of information
- Balancing accounts
- Flagging financial discrepancies and assisting with company auditsProviding assistance to the accountant for duties such as payroll
How to qualify as a bookkeeper
Unlike an accountant, a bookkeeper will not need a tertiary education, rather a matric or equivalent will suffice for a job in bookkeeping. However, the best way to succeed as a bookkeeper is by completing a course, of which there are many available. For entry-level bookkeeping positions, there is often no previous experience needed, although knowledge of standard bookkeeping practices and bookkeeping software will be necessary. Certain organisations might be looking for candidates with either experience or a relevant Bachelor’s Degree.
What are some of the similarities between bookkeeping and accounting?
To the untrained eye, bookkeeping and accounting appear to be the same profession – or extremely similar at the very least. And while this is not completely correct, there are some overlaps between accounting and bookkeeping. Both job descriptions:
- Work with financial data
- Require at least a basic knowledge of accounting
- Classify and generate reports using financial transactions
What are some of the differences between bookkeeping and accounting?
- One of the main differences between bookkeeping and accounting is that accounting involves the analysis and interpretation of financial data while bookkeeping does not.
- Bookkeeping includes financial record-keeping, which is the basis of accounting, while pure accounting includes the use of these financial records for report preparation and financial analysis.
- A basic understanding of accounting is the qualification for a position in bookkeeping while tertiary education and a higher level of expertise are needed for accounting.
Advantages of bookkeeping for a business
There are many ways that bookkeeping can assist a business. These include:
- Sars Compliance
Businesses can be assured that they’re meeting all legal obligations by recording and tracking the income and expenses, as well as paying the correct tax amounts on time.
- Business Accountability
Through the process of bookkeeping, businesses are able to keep on top of all transactions as well as pick up any transgressions swiftly. This ensures complete business transparency.
- Internal Control
With modern bookkeeping software, business owners are able to pick up on fraudulent activity within the company themselves rather than relying on a lower-level employee.
- Improved Investment Opportunities
Bookkeeping allows for improved transparency which makes securing investment from other organisations much more likely.
- Informed Decision-making
Through bookkeeping, business owners have access to hard data on the business’s financial position. This allows business owners to make informed decisions for enhanced business growth.
Although there is a distinction between bookkeeping and accounting, smaller organisations might require bookkeepers to perform accounting duties and vice versa. With the support of high-quality bookkeeping and accounting software, the job duties can be administered with much more ease and efficiency.
What Should I Look For In An Accounting System?
The basics of accounting systems, at the very least, should cover the main aspects of a business. These basic aspects are:
- Tracking income. Which covers invoicing and managing money received.
- Tracking expenses. Which covers buying products for resale and paying overheads such as wages and rent.
- Providing reports showing the profitability of the business.
Most accounting systems should cover these basic aspects. It is however vital that you define your needs before you start to look for one. There are many bookkeeping software solutions out there and if you don’t define your most important requirements before you start your search, you will end up feeling overwhelmed and confused.
The type of business you have will greatly determine your accounting requirements. A plumber has very different needs from a retail shop. The next factor to consider is the size of your business. If you have many employees and perhaps have some branches in different locations, you will be looking for accounting software that can handle these volumes and requirements. Whereas if you have a couple of employees and a small shop your needs will be quite different.
It’s also helpful to look at your current frustrations and problem areas within your system of accounting as well as what currently works well. These will help you define your ‘must have’ features.
What are the Basic Features of an Accounting System?
There are some basic features that are a requirement for accounting software no matter what type or size of the business.
Fully integrated single entry system
This means you enter information into the system only once and all necessary accounts and records are updated by this source entry.
The software and the database should be stable and robust. Having a bookkeeping software that is unstable and prone to errors or a database that often is prone to corruption will compromise your data, cost you money, and cause endless frustration.
Easy to use software
You should not need to be a fully qualified accountant to use the software. The processes should be easy and user-friendly.
The system must be able to save you time and make your business accounting processes run more efficiently.
Comprehensive audit trails
It is important that each function and transaction is tracked and that you can find the originating source entry easily. This means that any capturing errors can be easily traced and corrected. It also makes life easy for your accountant or auditor.
Easy month and year-end procedures
Month Ends and Year Ends should be quick and simple and there must be the ability to backdate transactions.
Reports should be easy to extract and be flexible so that you can extract information quickly and in the format you require. Extracting statutory reports easily is essential.
Ability to export data
Options to export data to spreadsheets are extremely useful.
Compliance with basic accounting principles
Good accounting support
Especially in the initial phase and also on an ongoing basis you will need to be able to access support from the vendor. This should be available via email, telephone, and remote login. It has been said that buying an accounting system is much like getting married. You need to be wise and due diligence in your choice of partner.
Once you have checked the essentials, then depending on your type of business and the number of people that will be using the accounting software, there are further considerations.
A business is never static, it either expands or contracts. It is vital that the system is able to grow with your business. So, ensure that the system will be able to handle the requirements of your business as it grows. The ability to add-on functionality to the system should be readily available and not be a major exercise involving migrating data and retraining staff. The add-on functionality should be fully integrated, essentially providing an ability to grow the system into a full ERP (Enterprise Resource Planning) system.
Ensure the system can handle the number of staff that will be using it currently as well as the likely increase in staff as the business expands. These should be concurrent users, which means the number of people using the system at any one time.
For a business that has multiple staff members using the system, it is important to ensure that the ability to control what functionality and information the various users have access to. Some information in accounting is sensitive and confidential and it is important to ensure that you have control over this.
In today’s world of globalization, it may be useful to have accounting software that can handle working in different currencies.
With the ever-increasing use of the Internet, very few businesses can now do without a website. Many software solutions provide the ability to integrate into a website. It may also be useful to integrate into third-party software solutions, depending on the type of business.
Try and talk to some other businesses who are using the accounting product. It is even better if you can find similar types and sizes of businesses to yours. Websites and advertising material only show the good stuff. Talking to existing users of the product can be extremely useful.
These are just some of the key points to look at when looking for an accounting software solution which often gets overlooked in the search to find a solution which fulfils your requirements.
It is important to take these factors into consideration and not to just think of the immediate short-term requirements, but to look for a product that will grow with your business.
It should not be a process you rush into as the process of migrating to a different accounting package is time-consuming and costly.
The advantages of using accounting software in your business
Accounting software assists businesses in effectively monitoring the flow of finances. In South Africa, many companies are using accounting software to minimise administration and ensure SARS compliance.
What is accounting software?
Essentially, accounting software allows business owners and accounting professionals to easily and efficiently process all transactions and manage accounts. The flow of all accounts is recorded, which allows for quick internal and external review as well as the auditing of accounts. In South Africa, accounting software is often used for small to medium-sized businesses, with large corporations generally relying on their own internal accounting software.
What are the types of accounting software?
Every company is different, and that means varying accounting requirements. No matter your business type, however, there is a form of accounting software that will meet your unique business needs. Some examples of accounting software types include:
- Payroll management systems
For a business needing a handle on account payables and receivables, then this accounting software is the best fit. It performs tasks such as salary calculations and payments, deductions, and generating payslips.
- Enterprise resource planning (ERP) systems
A very valuable accounting software, ERP solutions combine all systems used for product planning, material purchasing, inventory management and control, distribution, accounting, marketing, finance, and human resources.
- Billing and invoicing systems
All daily accounting tasks such as outstanding payment notifications can be performed by this system.
- Time and expense management systems
By speeding up the billing and expense approvals, this system ensures quicker payment collections while detailing how time and resources are used.
What are the features of accounting software?
Accounting software in South Africa differs greatly, which means that the features included will also differ. There are, however, some core features such as:
- Accounts receivable
- Accounts payable
- General ledger
- Billing and invoicing
- Inventory or stock
- Purchase order
- Sales order
In addition to these key features, accounting software options could also include some added extras such as:
- Debt collection
- Electronic payment processing
- Purchase requisition
- Automatic data backup
- Budgeting and forecasting
- Check printing
- Comment capabilities
- Cost predictions
- Customisable reports
- External application integration
- Fund accounting
- Inventory management
- Password protection
- Payroll management
What are the benefits of accounting software?
If you are considering investing in accounting software for your business, but are still unsure whether it’s the best way to spend your hard-earned money, then here is an outline of the substantial benefits.
1. Saving on time
By replacing manual calculations and record-keeping, you are able to save on valuable working hours that could be far better spent on achieving long-term business goals. If the bookkeeping tasks are handled in-house, you are now freeing up an employee to perform other business-enhancing activities.
2. Decrease errors
The reality is that human error is one of the biggest issues when it comes to in-house accounting – something that is mitigated when you implement accounting software. Mistakes in calculation and typing will be removed as this will be organised by the software. Many programmes will be able to automatically make calculations as data is entered into the system, transfer funds, and adjust assets. Any miscalculations are quickly identified and corrected.
3. Cost savings
While many companies might hesitate to implement accounting software because of the initial or monthly costs involved, it’s important to note that these costs will be absorbed by the long-term savings. The afore-mentioned time savings translates directly into increased work hours, and there is no need to pay an extra salary for accounting duties. In addition, minimising error and ensuring tax compliance means no penalties at a later stage.
4. Management of finances
With manual accounting, most work is done at the end of the financial year when businesses prepare tax records. However, with accounting software, there is ongoing financial updating which means you are able to have a more accurate overview of the business finances at any given time. This allows you to resolve any minor issues before they escalate, or identify areas where you can improve business operations. By tracking your payables and receivables, you are able to assess your future cash flow and amend where necessary.
5. Secured Database
Accounting software is password protected and, depending on the type, could come with additional security measures to prevent confidential information from being leaked or numbers tampered with. Because your financial data is being stored digitally, you are able to protect it from outside elements such as natural disasters.
6. Synchronisation of information
Most businesses anticipate growth and, alongside this expansion, comes an increase in the amount of administration needed for daily operations. Using accounting software, you are able to synchronise your respective files across a variety of platforms, making access to information much simpler. Certain accounting software types are able to provide real-time status updates as well.
7. Ongoing tax compliance
Keeping up-to-date with all the SARS requirements can take hundreds of hours – time which could be better spent on improving business operations. Without tax compliance, however, your business is likely to incur unwanted penalties. By using accounting software with tax features, you are ensuring all South African tax regulations are adhered to without any of the hassles.
8. Track inventory
If your business manages inventory then software accounting will track the inventory as product orders are processed. This means you are always able to monitor how much product inventory you have with orders made when the product gets too low.
What to ask your accounting software suppliers
Before committing to any South African accounting software options, here are a few questions you should ask first:
- What are the costs of updates?
- How often must the software update?
- Does the software run online or offline?
- Can I access the accounting software from a mobile device?
- Is there a trial period?
- Do you offer any training?
- How long does the software setup take?
- What security options are available?
- What data backup options are there?
- What features are included in the software?
- Are there different pricing options?
- Could you outline what support services you offer?
- Do you have any client recommendations I could review?
If you are the owner of a small or medium-sized business, then investing in accounting software will positively impact your day-to-day and long-term business operations. It’s worth consulting with local industry experts to ensure you are choosing the right software for your particular business model.
General Accounting Part 2
There are a number of terms used in Accounting, which are often not fully understood. Below are some short explanations of basic terms used in Income Statement and Balance Sheet reports.
This report is also referred to as a ‘Statement of Comprehensive Income’ or a ‘Profit and Loss Report’. An Income Statement report is always extracted for a specific period in a financial year and often reflects the year to date values as well. Comparison figures against budgets or previous financial years may also be included.
Revenue or Income
This refers to the income a business derives from selling products and services and also by renting assets. Income such as interest on investments will not form part of the main revenue value, but will be reported as ‘Extraordinary Income’ and will not be used to calculate Gross Profit.
Cost of Sales
This is the direct cost of making sales of products (stock). It is also referred to as Cost of Goods Sold (COSG). The formula for calculating the Cost of Sales is ‘Opening Stock’ plus ‘Purchases’ less ‘Closing Stock’.
Stock (Inventory) is often revalued due to valuation methods such as FIFO (First In First Out) or Average Cost and also, in some cases, by adding in certain costs such as labour to the stock value. All of these adjustments to the value of the stock will impact the Cost of Sales. So it is important to remember that the Cost of Sales is often not just the purchase price of the stock.
To give a simple example. A stock item is purchased for R500.00. This purchase will not be reflected in the Income Statement but will increase the stock value under Current Assets in the Balance Sheet. When the stock is sold for R800.00, the stock value under Current Assets is reduced by R500.00 and posted into Cost of Sales. This the sale of R800.00 less Cost of Sale of R500.00 gives a Gross Profit of R300.00.
Should the stock be revalued to R525.00 due to an Average costing being used, then the Cost of Sale value will be R525.00 and the Gross Profit R275.00
This value is calculated by subtracting the Cost of Sales from Revenue (sales). It is also called Gross Margin. This revenue can be derived from both stock and services, depending on the type of business. Gross Profit represents the value at which the item was sold (excluding VAT) less the Cost of Sale of the item. The Cost of Sale consists of direct costs incurred in the selling and production of the item. Gross Profit shows the efficiency of the business in making sales. Gross Profit Margin is the ratio of Gross Profit to Revenue. It is a percentage showing how much Gross Profit exceeds the Cost of Sales.
These are costs that are incurred by the business that are not directly associated with the products or services which make up the revenue. Some examples are advertising, accounting fees, rental, electricity, bank charges, stationery, etc.
This value is calculated by subtracting the Expenses from the Gross Profit figure and adding any other income. This figure shows the actual profit or loss made by the business. Net Profit Margin is the ratio of Net Profit to Revenue. It is a key ratio of profitability.
This report is also referred to as a Statement of Financial Position. A Balance Sheet report is always extracted for a specific point in time and not just for a specific period. The Balance Sheet is one of the core financial reports. Comparison figures against budgets or a previous financial year may also be included. The Balance Sheet has two sections and the totals of each section must be equal to each other. Hence the name Balance Sheet. The sections are one of these formats.
- Equity = Assets – Liability
- Assets = Liability + Equity
Assets are divided into two sections.
- Fixed or Non-Current Assets.
These are assets that are not expected to be used or sold within the financial year. These assets will usually have depreciation values against them. Some examples of Fixed Assets are:
o Machinery & Equipment
- Current Assets.
These are assets that fluctuate over the financial year. Some examples are
o Stock (inventory) Holding
o Bank Accounts
o Monies owed by Debtors
Liabilities are divided into two sections:
- Non-Current (Long Term) Liabilities.
These are liabilities that that will not be paid within a financial year. Some examples are
o Long Term Loans to the business
- Current Liabilities.
These are liabilities that fluctuate within a financial year. Some examples are
o Monies due to Creditors (Suppliers)
o VAT, PAYE liabilities
o Bank Overdraft Account
Equity is the value that the shareholders of a business owner as opposed to what has been borrowed. It is also known as Net Worth. The formula for calculating Equity is Total Assets less Total Liabilities. Equity is comprised of:
- Share Capital
- Retained Income
- Shareholder Loans
Below are some common ratios that are used to measure profitability and the health of a business.
- Debt-To-Equity Ratio
This ratio shows the proportion of Equity and Debt (Liabilities) to finance the Assets of the business.
The formula is Total Liabilities / Equity
- Current Ratio
This ratio indicates the ability of the business to pay back its Current Liabilities. It is also known as the cash asset ratio, cash ratio, and liquidity ratio.
The formula is Current Assets / Current Liabilities
- Quick Ratio
The quick ratio is an indication of the shorty term liquidity of a business. It is also known as the acid test ratio or the quick assets ratio. A higher ratio is positive.
The formula is Current Assets (Stock) / Current Liabilities•
- Return on Equity (ROE) Ratio
The return on equity is the Revenue returned as a percentage of Equity. It indicates how profitable a business is using the money invested by its shareholders. The return on equity ratio is also referred to as the return on net worth.
The formula is Net Income / Shareholder’s Equity
- Net Profit Margin
This percentage shows how well a business uses its Revenue to make a profit. A higher net profit margin indicates that the business is containing its costs well.
The formula is Net Profit / Net Sales
Bad terminology is the enemy of good thinking. – Warren Buffett
HMRC – Making Tax Digital
This is an initiative by HM Revenue & Customs in the United Kingdom to make it easier for businesses to submit their tax returns.
VAT Registered businesses whose turnover is over the tax threshold will be required to submit their VAT returns digitally from 1st April 2019. This will have to be done by using Maxing Tax Digital (MTD) compatible software.
Omni Accounts is listed by HMRC as being compatible with MTD for VAT.
At this stage, the project is still in its initial testing and the Omni Accounts Support Team, as well as the HMRC’s SDST (software developer support team), are available to be on stand-by for a business doing its first submission.
Other components of Making Tax Digital (MTD) such as income tax, are expected to be only implanted by April 2020 at the earliest.
Making Tax Digital
It is recommended that you visit the HMRC website to obtain all the information on the MTD project.
The advantage of MTD will be an easier way of submitting VAT returns, especially for smaller businesses.
If you already use the Omni Accounts Vat Return function then, after the initial setup, the submission process is seamlessly built into preparing your VAT Return in Omni Accounts.
Please note that only Omni Accounts Business Pro, Enterprise or Premium bundles include this functionality.
Contact Omni Support if you wish to learn more.
There are three general rules of accounting
General Rule One
All transactions must be recorded.
General Rule Two
The Double Entry method must be used to record transactions.
General Rule Three
Every transaction is recorded in General Ledger, also known as the Nominal Ledger.
The Double Entry System
As per Rule Two, accounting operates on the Double-Entry system. This means that every entry to an account requires a corresponding and opposite entry to a different account. The double entry has two equal and corresponding sides known as debit and credit. In the old hand-written ledgers books the left-hand side is debit and the right-hand side is credit.
The Accounting Equation
The Accounting Equation is expressed as Assets = Liability + Equity or alternatively Equity = Assets – Liability and is the foundation of the double-entry system.
The equation shows that what the company owns (its assets) is purchased by either what it owes (its liabilities) or by what its owners invest (its shareholders’ equity or capital).
Transactions are captured into General or Nominal Ledger Accounts. These accounts fall into one of the following types:-
- Assets. The items of value owned by a business, such as cash, equipment, money owed to the business and also intangible items such as goodwill, copyright, patents etc.
- Liabilities. The obligations of the business, such as money owed to suppliers, bank overdrafts, taxes due, wages and salaries due etc.
- Equity (Capital). This is the value of the business owners’ investment in the company. It also includes any accumulated reserves (usually profit) earned by the company.
- Revenue or Income. The value of money coming into the company.
- Expenses. The costs incurred by the company.
How to work out if an account should be debited or credited
Under the Double-Entry system, remembering which accounts must be debited or credited and when can be a challenge. According to Wikipedia, there are two methods to help remember which accounts have to be debited or credited and when. These are the Traditional Approach and the Accounting Equation Approach.
Accounting Equation Approach
- Assets. Debit increases the asset and credit decreases the asset.
- Equity (Capital). Credit increases the equity and debit decreases the equity.
- Liabilities. Credit increases the liability and debit decreases the liability.
- Revenue (Income). Credit increases the revenue and debit decreases the revenue.
- Expenses (losses). Debit increases the expense and credit decreases the expense.
Accounts are divided into three types:-
- Real accounts are accounts relating to assets and liabilities including the capital account of the owners.
- Personal accounts are accounts relating to persons or organisations with whom the business has transactions and will mainly consist of accounts of debtors and creditors.
- Nominal accounts are revenue, expenses, gains, and losses.
Transactions are then captured according to the account type
- Real account: Debit what comes in and credit what goes out.
- Personal account: Debit the receiver and credit the giver.
- Nominal account: Debit all expenses & losses and credit all incomes & gain.
The Accounting Cycle
When a transaction occurs, a document is created. The documents can be produced internally, such as sales invoices or originate externally, such as supplier invoices or utility bills. Both types of documents are referred to as ‘source documents’. Some types of transactions do not always have a traditional document, but normally this only applies to internal transactions such as depreciation etc.
Source documents are captured into a Journal or a Ledger and both the debit and corresponding credit sides of the transaction must be captured. The Journal is often referred to as a Subsidiary Journal or Ledger. Examples of Subsidiary Ledgers are:
- Sales Ledger. This will contains transactions from any sales related transactions, such as sales invoices, credit notes etc.
- Cash Book. This will contain transactions related to any movement of cash such as money received from customers and money paid to suppliers. Bank Statements are a source document as are receipts and deposit slips. Petty cash will also be captured into a Cash Book.
- Purchase Ledger. This contains all transactions relating to suppliers such as invoices from suppliers, electricity bills, rent etc.
All of these subsidiary ledgers or journals feed into the main General or Nominal Ledger. This General (Nominal) Ledger is made up of accounts as described above (Assets, Liability, Income etc.) and the transactions are all posted to accounts using the Double Entry method.
Journals may also be posted directly into General Ledger and this would consist of transactions such as monthly depreciation, some payroll-related transactions etc.
All the various accounts in General Ledger are often referred to as the Chart of Accounts. This list of all General Ledger accounts together with their totals is referred to as a Trial Balance report. This Trial Balance must balance, in that the total of all the credits must equal the total of all the debits. If it does not balance then the error must be found and corrected before any of the Financial Statements are produced.
The main financial statements or reports are:
- Statement of Income and Retained Earnings (Income Statement)
- Statement of Financial Position (Balance Sheet)
These reports are all derived from the Trial Balance.
Statement of Income and Retained Earnings
This report shows the income versus the expenses of the business for the accounting period and often includes the totals for the financial year. The general format of the report is:-
Gross Revenue (income)
– Cost of Sales
= Gross Profit
– Operating Expenses
+ Extraordinary income
= Nett Profit (Income)
Statement of Financial Position
This report lists all the business’s assets and liabilities and equity. It shows the long term viability of the business. It is also basically a representation of the accounting equation.
There are two common formats for a Balance Sheet. They each follow one of these versions of the Accounting Equation.
The Equity = Assets – Liability format is as follows:
+ Current Assets
– Current Labilities
– Long Term Liabilities
= Assets Less Liabilities
Nett Income Year to date
+ Retained Income (Accumulated Reserves)
+ Share Capital
The Assets = Liability + Equity format is as follows:
+ Current Assets
+ Long Term Liabilities
+ Nett Income Year to date
+ Retained Income (Accumulated Reserves)
+ Share Capital
= Liabilities plus Equity
The report must balance. In other words, the value of Assets less Liabilities must equal the value of Equity or the value of assets must equal the value of Liabilities and Equity depending on which format is used.
What is Bookkeeping?
Bookkeeping is the recording of all financial transactions in a business. The information is captured into accounts, called Nominal or General Ledger accounts, which can then be used to manage the business’s financial transactions. The information should normally be captured in chronological order and can be captured in different forms. Old fashioned ledger books may be used or perhaps spreadsheets, but many businesses now use a software package.
What is the difference between Bookkeeping & Accounting?
Bookkeeping is the capturing of all the financial transactions and Accounting is the analysis and interpretation of the captured data and overall financial management. A bookkeeper will gather and enter all the financial transactions into various accounts. This data can then be used to produce financial statements and reports such as an Income Statement and Balance Sheet. This can be done by either an accountant or a bookkeeper. The accountant will then analyse these reports in order to manage the finances of the business. Accounting incorporates and relies on the bookkeeping functions and the two terms are often used synonymously.
What is the Double-Entry system?
Every transaction that is entered into the set of accounts has equal and opposite effects in at least two different accounts. The same amount will be debited to one account and credited to another account. This means that all the debits in the accounts must equal all the credits, which provides a method of ensuring accuracy and eliminating errors. It maintains the accounting equation of Assets = Liabilities + Capital. The type of each account defines whether its balance should normally be a debit or a credit. An example of this is that a change in an Asset (a debit) will result in a corresponding change of the same amount in a Liability (a credit).
The Importance of Bookkeeping
Accurate bookkeeping is critical to all types and sizes of businesses. It keeps track of all the income and expenses of the business showing profitably. It also keeps track of money owed by the business creditors (suppliers) and likewise, money owed to the business by debtors (customers). It is vital to keep track of bank accounts and statutory obligations such as VAT. For any kind of business, all of this information needs to be as up to date as possible, so that the business can be managed to the best advantage and informed decisions can be made. The more up to date the information is, the quicker problems or opportunities can be identified and acted upon.
Bookkeeping also allows the business to fulfil any legal accounting requirements, as well as being able to produce reports when applying for any kind of finance or loan.
Having accurate bookkeeping records means that the performance of the business can be monitored and also allows for forward planning, setting of budgets, and sales targets by analysing the historical data.
What are the functions of Bookkeeping?
The main types of transactions that would be captured by a bookkeeper are:-
• Sales Invoices and Credit Notes
• Supplier Invoices and Credit Notes
• Payments from customers
• Payments to suppliers
• Salary and wage payments
• Loan payments
• Sundry Expense payments.
Bookkeeping and Accounting Software
With the advent of accessible and affordable technology, the manual multiple and handwritten bookkeeping ledgers are mostly a thing of the past. As mentioned, a small business may use Excel spreadsheets but this is open to errors and duplications. A Bookkeeping or Accounting software package will allow the easy capturing of all the business financial transactions and will usually post all the double-entry transactions automatically without much user intervention. Most software packages will easily produce most of the financial statements required as well as providing forecasting and budgeting. So the bookkeeping and a big portion of the accounting functions are handled by the software. This has resulted in the traditional differences between bookkeepers and accountants becoming blurred. A bookkeeper will often produce the financial statements and then give to an accountant to check and advise. On the other hand, an accountant may handle the bookkeeping functions himself.
Omni Accounts handles all the bookkeeping and accounting requirement for a business, be it small or large. It is a fully integrated package, meaning information is entered once into the system and all the relevant accounts are seamlessly updated. All the financial reports are easily extracted with full audit trails and historical data always available. A powerful report writer allows the design of reports to suit a large variety of businesses of different sizes.
How to prepare for a VAT Audit
I don’t know of anyone or any business owners, who don’t experience anxiety, trepidation, fear or all of the above when faced with a VAT audit. Such emotional reactions are understandable because one is invariably wary of “what SARS will find”.
In most cases however the audit inspector from SARS is looking for overall compliance, and in most cases where a SARS inspector uncovers minor incorrect claims, both in respect of input and output VAT, these are simply pointed out to the business undergoing the inspection with the relevant corrective instructions with a pay-in or a refund to follow. Sometimes interest and penalties might also apply. But beware of blatant omissions in order to lower the amount to be submitted. If such a practice is uncovered, SARS will “throw the book at” the offending business.
Do’s and Don’ts
Perhaps before commenting on how to prepare for an actual VAT audit, I will touch on the “DOs & DON’Ts” on an on-going basis, so that one is relatively well prepared for a SARS audit in the event that your business is selected for a SARS VAT audit.
INPUT and OUTPUT VAT
First of all, it is important that the person responsible for posting transactions and preparing the VAT submissions is familiar with the VAT rates and aspects of INPUT and OUTPUT VAT that attract VAT. For example, you cannot claim VAT on “entertainment” expenses, but you can claim VAT on “stationary” purchased for business consumption. And if in doubt, you should seek guidance from your external accounting officer or even directly from SARS.
The next step is to get organised. Know where to find whatever source (original) document you might be required to produce during a VAT audit. So, your document filing must be properly organised and the relevant source documents filed in logical (ascending) order. Make sure that your source (original) documents contain all the relevant information on them as specified by SARS. For example, all your supplier invoices must have your registered trade name on them as well as your VAT number etc. and ensure that the VAT amount is clearly indicated on all invoices, both on customer and supplier invoices. It is often not good enough indicating to the SARS inspector that the relevant invoice was processed correctly. The inspector will want to have sight of the source (original) documents in many cases.
If you are using a computerised accounting software package, which, apart from calculating Input and Output VAT correctly during the normal day to day processing, it should also enable you to produce accurate reports which allow you to complete the relevant VAT (201) form. It should also, be capable of printing detailed reports supporting the various totals required for completion of the VAT (201) form. Your computerised accounting package should also have a “lockdown” facility that locks down and links the relevant transactions that made up the VAT (201) return with historical retrieval so that you can effectively “re-produce” a VAT return with its relevant supporting audit trails. This is important because you would in all probability be required to supply such relevant reports during a VAT audit, and they need to match the VAT (201) returns that have been submitted. Remember, VAT audits can often cover several months, even years, so easy access to accurate historical data is important, because as mentioned, a VAT audit may involve an audit going several years back, so your accounting software package should also have “unlimited” history. In addition, the VAT returns should at all times agree to your VAT control account.
If therefore, you have adopted the correct disciplines such as a logical filing system for all the relevant source (original) documents and you have a computerised accounting system that has the kind of functionality mentioned above, then you ought to be ready for a VAT audit more or less anytime. It is important to note that you will never really know what the VAT inspector is going to want to see and/or reconcile to, and no two VAT audits will be the same.
So the best way to “prepare for a VAT audit” is to ensure that you have all the documentation at hand all the time. Treat each day as is it if is a VAT audit day!!
Omni Accounts offers all the functionality mentioned in this article and more.
What is a Financial Year End?
A financial year, also known as a fiscal year, is the period used by governments for accounting and budget purposes. It is not the same concept as a calendar year which is the one-year period that begins on 1st January and ends on 31st December, based on the commonly used Gregorian calendar. A financial year is often different from the calendar year, with a twelve-month period running from 1st March to 28th (or 29th) February being very common in South Africa. Some companies run a financial year from 1st July to 30th June, which is inherited from the British system. Other companies run their financial year to align with the calendar year.
What is important about a Financial Year?
From a statuary point of view, it forms the period over which a company is taxed. It also is a method of measuring the profitability over a set period and thus provides the ability to compare to previous financial years. This does not mean that measuring progress month on month should be neglected, because if a business is not monitored monthly, then there is a very strong chance that the financial year’s results will be a surprise, and not necessarily a pleasant one.
There are three more major reasons why your financial year, and therefore year-end results, should be accurately represented. The first is your tax liabilities. Your final tax liabilities are based on the final outcome of your financial year’s trading and profit. The second reason is that many lending institutes (banks) require copies of your latest and/or recent Annual Financial Statements (AFS) since the general health of the business has a bearing on the lenders’ risks and exposures. And the third reason is to ensure, according to your latest annual financial statements, that the business is indeed solvent, and if not, then the business could be deemed to be trading recklessly, with the possibility of serious legal consequences. These consequences are outside of the scope of this article, but suffice it to say that every business owner should be very mindful of the possible consequences of trading when in an insolvent state.
What is involved in a Financial Year-end?
The Annual Financial Statements (AFS) reports need to be prepared and extracted and, depending on the type of business, these may then need to be audited or checked by an accountant. Often the accountants assist in preparing the AFS of a business. In order to make sure that the figures in the AFS reports are correct there are certain accounting procedures that need to be undertaken. These are mostly reconciliations and certain year-end adjustments.
Some of these reconciliations involve balancing subsidiary ledgers to Balance Sheet control accounts, such as:
- Customers (Debtors)
- Suppliers (Creditors)
- Bank Accounts
- Stock on hand
- Fixed Assets and their accumulated depreciation
- Shareholders loan accounts
Often after the information has been audited or checked by an accountant, there may be more adjusting entries which will then need to be passed.
At the start of a new financial year, the Income & Expenses accounts will have a zero balance and the Balance Sheet account will all contain the carried forward figure (which includes the accumulated profits or losses) from the previous financial year. Most accounting software packages will handle this automatically as part of their Year End procedure.
All of these reconciliations and preparation of the AFS reports unfortunately take time and usually cannot be concluded before the next trading day, being the first day of the new financial year. In fact, preparing the AFS reports often take several weeks and even months, and, as mentioned, usually require input from the appointed external financial officer.
How can an ERP Accounting Software Solution Help?
Having an Enterprise Resource Planning (ERP) Accounting software system will mean that information from all the different areas of the business are captured on a real-time basis during the course of the financial year and because the system is fully integrated, all the information will automatically update all the necessary accounts so that the bulk of the information is already there for the AFS reports to be extracted. Additionally, making sure that most reconciliations are done on a regular basis during the financial year means that the final reconciliations are fairly painless. There may be some year-end adjustments, such as bad debt write-offs and loan account adjustments but most of the information should already be in the system.
Most accounting software solutions will provide the ability to process in the new financial year while allowing for work to be done on the previous year in order to finalise the AFS reports. The ability to process in a previous year should also be restricted to certain users, for example, the bookkeeper or accountant. Once the year-end process is complete and all adjusting entries have been processed, it is important to be able to ‘lockdown’ the previous financial year. The AFS reports, as drawn up by the auditors or accountants will have hard copies submitted to various statutory bodies (SARS) and lending institutes (Banks). It is important to lock down the prior year in question at this point in order to ensure that the accounting system continues to reflect the same balances (closing and opening) as agreed upon. Failing to do so could result in a mismatch going forward, necessitating unnecessary and costly audit investigations.
Omni Accounts ERP Software offers the ability to process in different financial periods, which is controlled by user permissions. Financial years can be locked down, and changing the dates of the financial year of the business is easily achieved.