The Hollow Promise of Accounting Software
Let’s face it, we all want “this thing” to do “that terrible task” for us. You can fill in the blanks here. We want an exercise program that won’t make us sweat too much, but deliver a six-pack (the abs, not the drinkable kind). We are busy, right? We want to exercise for 15 minutes, not change our eating habits, and do it as frequently as our schedule will allow. When the results don’t pan out, we’re disappointed and defeated, and we blame the program that we didn’t understand or follow as instructed.
I feel as though business owners jump into accounting software with those same unreasonable expectations. I do have news for you, however…owning the latest version of a popular accounting package no more makes you an accountant than investing in my mutual fund each month by auto-debit makes me a financial planner. Just like a mutual fund is a tool to get me (hopefully) into a comfortable retirement one day, accounting software applications are a step in the right direction. It’s not the destination.
Here are 3 hollow promises we have come to expect and believe with accounting software:
“I know Quickbooks, so I’m good, right?”
OK, I hear this about once a week. Please define for me what it means when you say “I know Quickbooks.” Does that mean you can open the application and “write” checks? Does that mean you know how to reconcile your bank account? Just knowing the very basics isn’t often enough in any area, especially accounting. You’ve heard the “garbage in, garbage out” analogy, but it’s certainly true here. Just because you coded your husband’s IRA contribution to “Donations” doesn’t make it a donation.
“I have used Quicken my whole life for my household, so this won’t be a problem, right?”
I have never in my life used Quicken. I took one look at the reports that a client gave me sometime in the mid-90’s and decided I hated the application. That was probably a quick judgment, and I’m sure Quicken is just fine for tracking where you spend your weekly paycheck, but QuickBooks it ain’t. Just because you track your household budget in Quicken does not mean you can suddenly take over as your wife’s accountant for her new design business.
“But this is pretty much “Do It Yourself”, right? I mean, how hard could this be?”
Believe me, if we could all believe this, my life would be so easy. Sadly, just as unicorns don’t exist and Sammy Hagar will never return to Van Halen, it’s NOT that easy. In fact, doing the accounting correctly and accurately so that you can derive useful information about running your business is NOT easy. My daughter, at 4 years old, loved to type. Of course, it was random letters strung together over a page and a half, making absolutely no sense. That’s how I feel sometimes when I see a balance sheet with <$450,000> in Accounts Receivable. Yes, someone entered something into the application, but it was wrong from the word Go.
We believe that technology should be at the centerpiece of your accounting system, and there are some wonderful applications out there. But there is a difference in knowing how to record a check or a payment, and producing truly useful and business-impactful financial information.
That’s what we do for you, and if we do our job correctly, you’ll quickly see the difference in “knowing QuickBooks” and knowing accounting.
Originally published at www.godwincpa.com.