Accounting system for start-ups
Do you really need an accounting software for your start-up?
The straight answer from a professional perspective is yes — that is, the perspective of a professional seller. Accounting software are usually sold in packages which are called “ERP” or enterprise resource planning system — this is one good way to tie-in a client for a hefty amount of investment for a “forecasted” need of such system.
While I do not plan to go lengthy at this point (which might cause rage amongst our ERP-vendor friends!), allow me to highlight a few circumstances when you might actually need one:
Inventory set-ups are complex
The key driver to employ an ERP system is when your start-up’s inventories are too complex to manage using simple spreadsheets or manual stock cards. There’s not much struggle when your start-up is doing simple retail, restaurant, fast-food, more so if your start-up is in a project-based business.
Many people sell these shiny software for a good reason, yes, they can be more efficient, they can provide fabulous graphs and charts, and they can be really costly for your start-up. Before you decide to go ERP, have a chat with a good accountant or even bookkeeper if you need one — just make sure they’re not selling the same (or you would just be more convinced to get one!).
Bookkeeping process is highly efficient
If you want to focus doing your business while monitoring your financials on the go, then probably a cloud-based ERP systems will do wonder for you. But hey, don’t expect magic. If you don’t update your financial records — such as scanning in your invoices, receipts and other documents — then don’t expect the system to magically generate an updated report.
Now, do you think that your business can cope up with your expectation? Think not just once, not twice, but a lot of times. In most circumstances, a start-up can only afford a cheap stake accountant or bookkeeper, more so, your records are most likely not to be readily up to date if you really want to focus on operating your business rather than sitting pretty scanning and taking picture of your receipts and invoices.
Just damn rich
And of course, you might not be the typical start-up bootstrapping on limited cash. So feel free, indulge and spend all those capital for the sake of beauty and pride.
There’s a lot of reasons why you don’t need an accounting system. There’s loads of free software available in the market if you really want to do cloud-based accounting for your start-up, but most of the time, good old Microsoft Excel can do its trick.
Just make sure you keep your records ready when you need to move on.
Take time before making any investment decision, at the end of the day, don’t you trust your accountant? Or is your accountant moving he’s business into sales?
Filbert Tsai is an accounting advisor based in the United Kingdom. Professionally, his sector specialisation is power and utilities and provides technical advice to companies and governments. Personally, he is an advocate of start-ups and small businesses, his Facebook page — Ask the Accounting Advisor — provides free business advice to budding entrepreneurs specifically those located in the Philippines.
