Just like bees need to collect pollen to make their honey, business owners need to understand their financials to run a successful business. Do you struggle to find the time to sit down and really analyse your numbers?
How important is it to know the financials?
How are you going to make important business decisions like whether to invest in that new equipment if you don’t know if you have the money available to do so? Is your business even profitable?
There are many apps out there that link into cloud accounting packages to allow you to gain a better insight into where your money is at (budgeting) and where it be going in the coming months (forecasting). Forecasting using spreadsheets with complicated formulas is a challenge. Maintaining these and keeping them up to date often proves even more difficult. Many third party apps allows business owners to keep an eye on their forecasts with real time data through the integration of their cloud accounting package such as Xero or QuickBooks Online.
Why should a business forecast?
You may think there is a simple explanation to this however; there are a few reasons why it is very important for businesses to forecast into the future:
1. Help predict the future and give everyone in the business a sense of direction of what they are wanting to achieve (goal congruence)
2. Keep your customers happy by providing them with what they want, when they want it e.g. fashion trends
3. Learn from the past to aid planning for the future as per the famous phrase “learn from your mistakes”
4. Keeps businesses looking ahead by encouraging them to think about the future and where the business is heading
5. Save on staffing costs by anticipating the level of labour a business requires for levels of demand e.g. at Christmas most businesses hire Christmas’s temps to deal with seasonal fluctuations in demand
6. Remain competitive by anticipating customer demand otherwise customers will fulfil needs elsewhere
7. Receive financing – when applying for a loan a bank will ask for a forecast into the future at what a business anticipates to generate in profits to ensure that they are able to meet the liability of the loan
8. Helps prepare e.g. for a drop in sales revenue and allows the business to create a plan ahead of this time to enable it to deal with the decrease effectively and efficiently
9. Reduce inventory costs by forecasting how much material is required e.g. savings in warehouse and transportation costs
10. Prepare for new business by forecasting demand in the future and when sales are imminent allowing a business to prepare e.g. by hiring more labour or ordering more materials to cope with the demand
Integration with a cloud accounting package
By integrating with a cloud accounting package such as Xero or QuickBooks, this provides up to date and real time information to be pulled thorough into the third party apps. A great example of real time information is bank feeds. These pull through transactions in the banking section directly from a business’s bank account which are then allocated via the bookkeeping process to income and expense accounts. The figures for these accounts are then pulled across into the third party app. Real time data is valuable when it comes to forecasting. Any changes in figures will transpose into the third party app and adjust accordingly meaning that your forecasts will also be accurate based on the most recent data.
So what are these third party apps?
As you may have realised if you have tried to find an app that works for your business in the past, there are quite a few to choose from. Depending on what type of business you run and what cloud accounting package you use can help you determine which app is best for you. Here a few that we have used in the past:
· Futrli
· Spotlight
· Fathom
· Float
· 9 Spokes
Need some help in choosing one or setting an app can be tricky and time consuming. Why not let us do this for you? Contact us today!
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