For those who missed this news, April’2013 was declared by President Barrack Obama as the National Financial Capability month, encouraging individuals and businesses alike to improve their understanding of all aspects of financial management that impact them.
In an extremely well timed survey Sage Software, a leading provider of software solutions for businesses, has recently concluded a survey among more than 700 small American businesses, 54% of which were users of its accounting software. The March 2013 survey throws up some interesting comparisons between businesses that were using the Sage account software and those which were not using any accounting software.
Concern on financial management knowledge
While both users and non-users expressed confidence in being able to manage financial aspects of their business, more businesses that had not implemented any accounting software felt that they needed greater knowledge in managing accounts receivable, accounts payable as well as invoicing. On the other hand, accounting software users felt they needed more knowledge on other aspects of their business such as payroll and inventory management.
Higher time spent on accounting tasks
The starkest difference in the responses between the two groups was when they were asked to evaluate the time spent on accounting activities. Majority of businesses that were non-users expressed the need to spend lower time managing all aspects of their accounting which included payroll, inventory management, invoicing and accounts receivables and payables. In contrast, only a small percentage of users of accounting software felt that they needed to reduce time spent managing their accounting activities. Clearly, users are able to focus on other aspects of their business, while non-users seem to be left handling core accounting issues.
Higher time spent on taxes
This is the other major category of difference between the two groups. Non-users were found to be spending much more time trying to do their taxes compared to the group which were users. As per Connie Certusi, executive vice president and general manager at Sage Small Business Solutions, “The tax system over the past 13 years has seen an astonishing 4,400 legislative changes”. The growing complexity of the tax system also translated to concerns on compliance, with 29% of non-users expressing concern about income tax compliance of their business versus only 17 % of Sage users.
Clearly, by implementing an accounting software businesses save productive time which, can be used to manage other aspects of business. Computerized accounting also reduces the risk businesses face due to changing taxation rules since most of these are incorporated in the program upgrades issued by companies such as Sage ( it has just released the Sage 50 Accounting 2014 product line).
At Smallbiztechnology.com we have often reviewed topics, such as cloud based accounting apps, tax deductibles for business and prepaid cards for managing expenses, that can help growing businesses be better equipped to manage financial aspects of their company. If you would like more information on any particular aspect of financial management of your business then do let us know and we will dig out the most relevant information.