As a business owner, chances are you did a lot of research before launching your venture. Perhaps you performed in-depth market studies, scrutinized competitors, and analyzed demand and prospective audiences for your products or services. You probably already understand how the right data can drive decision-making. After all, as they say, knowledge is power. How can you maintain that data-focused mindset? Consider accounting software. Not only is it a valuable tool for tracking your financial picture, but it also provides robust reporting and analytics that can help you take your business to the next level.
Accounting software empowers your business with actionable insights to support your growth, increase efficiency, and help you overcome challenges and overpower your competitors. Plus, it’s easy to set up and use.
Let’s take a look at how accounting software reporting and analytics can be a part of your foundation for business success.
Track performance and facilitate planning
Accounting software compiles your data to deliver financial reports for virtually every part of your business. Access both big-picture views and granular metrics to analyze profitability, growth, cash flow, and other key performance indicators.
While reporting capabilities vary by system, the best accounting software will allow you to create the following reports and many others:
- Audit log
- Balance sheet, including balance sheet summary, details, and comparison
- Budget overview
- Budget vs. accruals
- Profit and Loss, including profit and loss comparison, by class, customer, and location, by month or quarter, and by percent of Total Income
- Statement of cash flows
- Realized and unrealized exchange gains and losses
- Income by customer summary
- Inventory valuation detail
- Sales by location, class, and customer type
- Open purchase orders
- Unpaid bills
- Accounts payable aging
- Sales tax liability
Examine your income and expenses over time to set up your next budget so you can hit those expected profit margins. Leverage accounting software’s Profit and Loss statements and Balance sheets to help create budgets for the next month, quarter, or year.
Just starting out? Accounting software makes it simple to create a new budget from scratch. Choose your desired time intervals, month, quarter, etc., then add:
- Expected income for each product or job stream
- Forecasted expenses, such as labor, inventory, insurance, legal, rent, utilities, and marketing costs
Once you set up your budget, you can review it regularly. Run reports such as budget overview and budget vs. actuals to see if you’re on track. Falling short? You can identify the issues and understand where you need to pivot. Are you overspending? Do you need more sales? Your budget can tell you what areas to target to reach your goals.
Project cash flow and financial health
Manually projecting cash flow can be time-consuming, but accounting software makes it easy. Simply link your cash balance and money in and money out data with your connected bank accounts to forecast your cash flow. Get a picture of your current and projected cash flow so you can:
- Plan ahead
- Make decisions about spending and sales
- Identify areas that need to be adjusted
- Compare expenses and income
- Estimate the impact of certain expenses
Of course, no accounting software is psychic. There will always be unforeseen events that may impact your financial health. However, the right accounting software solution will provide cash flow insights that can help you prepare for the future and better handle the ebb and flow of your business.
Access data the way you need it, when you need it
Rather than complicated spreadsheets, accounting software features user-friendly dashboards so you can see your key performance indicators (KPIs) easily. It allows you to create customized reports so you can view the information you need the way you want to see it.
You’ll have plenty of customizable options no matter which report you create. Set up reports that include your desired transaction dates, time periods, products, services, and more. Just a few of the reports you can run anytime you want are:
- Profit & Loss statements
- Balance sheets
- Sales of certain services by customer
Need to keep your team informed? For one less thing you have to worry about, schedule to share reports via email automatically to stakeholders.
Monitor expenses—including deductible ones
With all your responsibilities as a business owner, keeping track of your business spending can be difficult. Between meetings and managing employees, adding expenses to your records can fall by the wayside if you’re not careful.
But knowing where your money is going is vital for budgeting and forecasting. And let’s not forget tax time. You don’t want to lose sight of any expense that could be a business tax deduction.
Monitor your spending with an accounting software solution that includes a built-in receipt and expense tracker. Connect the software to your bank accounts, payment apps, and credit cards, and your expenses will be automatically imported and categorized. It will sync with your other reports, like your cash flow statement, so you can understand how much money you have and what invoices are still outstanding. When you need to do your taxes, you’ll have all the receipts and records you need for claiming those all-important deductions.
Track project profitability
Is your project making money? Draining money? Do you need to pivot? What you don’t know can impact your business. That’s why the best accounting software includes tools that track project profitability.
Get on-demand insights into every project’s profit margins, including the income you’re bringing in and what factors are contributing to your expenses, such as labor and material costs. This in-depth analysis can help you decide if you need to make adjustments and will help with future job costing and estimating. Accounting software may even include invoicing software to help you create, send, and manage your invoices so you can get paid faster.
With accounting software, you can take a deep dive into data without the need to be a data analytics expert. Its robust reporting and analytics unlock vital information you can put to immediate use. Evaluate performance, trends, costs, and opportunities and use these insights to shape your short and long-term decisions. Leverage the power in those charts and numbers to empower your small business.