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The Role of Technology in Reinventing a New Era for Accountants

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Summary of Research Carried out by IMA, ACCA and the Accountancy futures academy (Nov 2013)

The accounting profession is in the midst of a technology revolution, with cloud computing, mobile devices, social media, Big Data and Payment tools making the most impact.  Our discussion for this morning will be centered on five out of the ten game changers identified in a survey carried out by ACCA and IMA.

The report on the survey is titled DIGITAL DARWINISM: THRIVING IN THE FACE OF TECHNOLOGY CHANGE

 According to Charles Darwin’s On the Origin of Species, it is not the strongest of the species that survives, nor the most intelligent, but the one that is most adaptable to change.

 As trusted advisers to business, accountants and finance professionals are expected to lead, not follow. The profession has historically been quick to identify and then exploit the potential of emerging technologies: from the earliest known records of commerce, to the earliest commercial computer systems. Accountants’ enthusiastic use of the first programmable computer and widespread adoption of the spreadsheet helped to turn accountancy into the profession it is today. Embracing emerging technologies will turn it into the profession it aspires to be tomorrow.

Whiles discussing these trends, we must all be mindful of the fact that the cost of connectivity will continue to go down due to better platforms like 4G as against 3G and also the release of frequency being used by analog TV and Radio.

ACKNOWLEDGEMENTS

I will like to acknowledge the research team IMA, ACCA and the Accountancy futures academy for carrying out this research.  I will also like to acknowledge Chris Gentle (Partner and head of research Deloitte) for writing the foreword to the research.

According to Chris Gentle  “ As we head deeper into the 21st century, it is already clear that developments in digital technologies are going to affect the world even more radically over the next 20 years than in the last 20 years.

Technology has already made business global. We can collaborate and share information as quickly and easily with business contacts on the other side of the world as with colleagues at the other side of the building.

As new digital technologies emerge and converge they will reshape lifestyles and business activities, how economies develop, and how countries are governed, in revolutionary ways. The future will not be like the past and we will all need to adapt. Accountants and finance professionals must be open to the changes created by cloud computing, mobile devices, payment gateways and social platforms, and face up to the demands of cybercrime and enhanced compliance request.

Research Findings

Eight-seven percent of the accountants surveyed said that their companies could be doing more to leverage technology, but fewer than 15% said they were very confident in the ability of their companies to understand and manage emerging technologies.

The survey found that most companies do not have a written plan for emerging technologies. Only 4% of small companies (fewer than 200 employees) have such plans, compared with 35% of midsize companies (201–500 employees) and 46% of large companies (500 or more employees).

Companies are far from adopting, or preparing to adopt, new technologies. For example, 90% of large firms either already have implemented or will implement social media and smartphones within three years. Also quickly becoming part of the technology foundation for large companies are cloud and software as a service (84%) and tablets (74%).

Smartphones top the list for midsize companies (71%) and small companies (62%), with the cloud ranking second for both (67% for midsize companies and 46% for small companies).

Cloud and mobile

Cloud computing and the use of smartphones and tablets are tightly intertwined.  The survey identified the following as potential benefits from cloud computing:

  • The ability to work anytime, anywhere;
  • The ability to serve clients in any location;
  • Improved security and backup procedures;
  • Improved collaboration with clients and supplier.

 

Mobile devices, of course, are ideal for connecting to cloud-based services when out of the office, a scenario becoming increasingly common in the accounting profession. More than 80% of accountants reported that they do at least some work outside the office, with the number of hours worked ranging from an average of 5.8 for accountants at midsize companies to 8.6 for accountants at large companies (accountants at small companies averaged 6.5 hours out of the office).

The most-cited reason for working out of the office was client/supplier visits, both local and out of town. Also popular was doing work from a home office. The use of mobile devices with the cloud creates opportunities for accountants to provide faster and more efficient client service.

In addition to improved client service, the top reasons for adopting mobile devices include increased productivity and improved work/life benefits.

Eighty-five percent of accountant’s at large companies reported using a smartphone, a note book , or both, compared with 71% at midsize and 50% at small. A plurality of accountants use smartphones but not notebooks , and the survey participants were much more likely to use both a smartphone and notebook  than just a notebook. Accountants at large companies use the most mobile apps, an average of 5.4 each, compared with 4.3 at midsize and 2.3 at small.

 

Social media

Accountant’s in large companies spend nearly 7 hours a week, on average, using social media for personal activity and 5.6 hours for professional purposes. At midsize firms, the averages were 3.8 hours and 2.9 hours, respectively, compared with 3.3 and 1.8 at small firms.

LinkedIn ranked as the most popular social media tool for professional use. Following is a ranking of the most popular social media services for individual accountants:

  • LinkedIn (68% among large firms, 74% among midsize firms, 70% among small firms);
  • Facebook (64%, 50%, 61%);
  • Twitter (42%, 21%, 9%);
  • Professional online communities (28%, 19%, 16%); and
  • Blogs (23%, 10%, 12%).

At the company level, Facebook is the most popular social media tool among midsize firms and tied with LinkedIn for the top spot among large firms. LinkedIn is the preferred social media choice of small firms, but only slightly ahead of having a firm presence in professional online communities.

The professional benefits of social media cited most often by survey participants include:

  • Knowledge sharing;
  • Interacting with other professionals in accounting;
  • Generating new business;
  • Finding new clients; and
  • Interacting with other professionals who can support the business.

Big Data

Data analysis skills appear to be a huge potential growth area for accountants, 67% of whom in the survey said that they expect Big Data to impact the accounting profession.

Why is Big Data such a big deal? One reason, the study reported, is the astronomical increase in the amount of information being produced, a growth fueled in part by social media.

“There’s no question that social media is contributing to the demand for better data analytics,” the study reported. “Facebook has more than 1 billion users and Twitter can easily exceed more than 400 million tweets in a given day. That’s a lot of data, but only a limited amount is relevant.

“The biggest challenge companies have today is how to mine all that data to better and more profitably serve their customers,” the report said. This challenge can create opportunities for accountants. The role of data scientist is a natural fit for the accounting profession  and plays right into one of their strongest skills.

Payment Systems

Traditional notions and concepts of money and currency are fading. The use of cash is diminishing, cheques are being phased out and use of debit cards, pre-paid cards and the myriad of alternative electronic payment platforms is increasing. Banks increasingly provide their services online; statutory payments are increasingly made electronically; payment options using mobile phones are proliferating; there are many ways to make and accept payments for goods and services and to access start-up and working capital finance and trade finance instruments.

Virtual currency

There are virtual ‘digital currencies’ such as Bitcoin, Linden Dollars and Ripple in today’s marketplace. A virtual currency has a value in real-world currency and/or can be used to buy goods and services. The Linden Dollar is the unit of trade in the virtual world , where players can use it to buy and sell goods. In addition, Linden Dollars are a centralized virtual currency with a central repository, and it can be converted to and from real-world currencies.

Skills needed for next decade

Rank Skill Standard Score
1 Knowledge of data extraction tools in the mining of business intelligence 75
2 Use of tools that support data modeling and analysis 72
3 Knowledge management skills 59
4 Project management skills 57
5 Change management skills 57
6 Knowledge of new approaches to funding and product development 57
7 Ability to use technology to attract, develop and manage talent 57
8 Knowledge of emerging payment platforms 56

Conclusion

Accountants and finance professionals have a significant role to play in the increasingly connected and interconnected ecosystem that will emerge as  technologies in this report come together to create the ‘new normal’.

The internet and cloud-based resources are reshaping various aspects of business. : from the way we finance, resource and develop new and existing enterprises, to the way we create, buy and sell products and services. Nothing in the future is certain, and the unforeseen interactions between these technologies promise to be both interesting and challenging.

 Summary of findings

Technologies Key impacts and implications What we have to do as accountants

Mobile /Cloud

Big data

Cyber security

Payment systems

Educational technologies

Social technologies

·         Faster and easier access to technology resources

·         A more connected world and workforce

·         Opportunity to automate more business processes and services

·         De-skilling of the accountancy profession

·         Vast amounts of data

·         Enhanced compliance and decision-making

·         New ethical challenges relating to data gathering and analysis

·         Challenges to data security and sovereignty

·         Challenges to traditional role of the profession

·         Expectation of access to accounting  resources 24/7, on any device, anywhere

·         Separation of skill and expertise from professionals

·         Explore new ways of establishing costs

·         Prepare for changing working patterns

·         Assess risks and address security

·         Plan timing for adoption and implementation

·         Develop change management skills

·         Enhance data analysis and interpretation skills

·         Recruit digital natives

 

·         Use technology to add value

·         Anticipate new regulation

·         Learn enough to know which questions to ask to gain insights

·         Adapt to meet changing business needs

·         Manage expectations of internal and external customers

 

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We are Hiring!

A reputable Company with specialty in providing Business Software to a variety of clients ranging from SME’s to large corporate is seeking to recruit a Marketing officer.

REQUIREMENTS:

  • A good  DEGREE in Marketing plus  a Certificate in a Professional Marketing program.
  • At least two years’ experience selling software solutions.
  • Good ICT skills.
  • Fluent in English, knowledge in French is an advantage.
  • Must have completed National Service in August 2015 and not earlier.
  • Not more than 26 years.
  • Good interpersonal skills.
  • A good composure under pressure.
  • An assertive personality will be an advantage.

 

JOB DESCRIPTIONS: 

  • Understanding customers’ specific business needs and applying product knowledge to meet those needs.
  • Cold-calling in order to create interest in products and services, generate new business leads and arrange meetings;
  • Identifying and develop new business through networking.
  • Marketing and promoting a portfolio of products.
  • Maintaining awareness and keeping abreast with new software offering from our suppliers.
  • Developing effective sales plans using the firms sales methodology.
  • Networking with existing customers in order to maintain links and promote additional Sales.

 

TO APPLY

Send CV and an application expressing your interest in the above mentioned vacancy.

Send application and CV to isjob.apply@gmail.com

The closing date is 24th November 2017.

Only short listed applicants would be contacted.

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Employment Opportunity

A reputable Company distributing ERP Solutions is recruiting Business technology advisors and Implementers.

Applicants must have interest in ICT, database concepts, computerized business applications, project management tools and good people skills.

WHAT WE LOOK FOR

  • Not more than 24 years.
  • Good interpersonal skills.
  • A good composure under pressure.
  • Good ICT skills with experience in basic programming.
  • Willingness to pursue a career in Business Management Systems.
  • Must have completed National Service in August 2017 and  not earlier.
  • A good Degree in accounting or Computerized accounting  will be an advantage.

WHAT WE OFFER

  • We offer good remuneration.
  • A structured training program covering the core knowledge required in our business.
  • An interaction with a variety of clients.

TO APPLY

Send your CV and a five year career plan to isjob.apply@gmail.com

The closing date is 24th November, 2017.

Only short listed applicants would be contacted.

 

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Multisoft Solutions Partners with SAP

Our vision has been to be a one stop shop for Software developers and users of Business Management software solutions. We are a consortium of highly skilled professional accountants with vast array of experience in the software space. Our areas of specialization is drawn from our team of qualified accountants, payroll/tax consultants, database administrators and software developers. Anchored on our vision is our desire to leverage across all facets of our skills to deliver turn-key solutions to our clients.

Over the years, we have built formidable partnership with the best in the industry. We believe that working together and sharing expertise with our local and foreign counterparts puts us ahead of our competitors in terms of providing “rest-assured” solutions to our clients.

We have established ourselves as the best accounting and payroll software vendor and implementation partner in our sub-region and gained international recognition.

WHY WE PARTNERED WITH SAP

SAP is the acknowledged market leader in enterprise application software, they are revered for their robust solutions across industries and various localizations. The SAP solutions portfolio supports core business areas such as Finance and Products, as well as Customer and Supplier management.

Among the vast portfolio that SAP offers, Multisoft Solutions is focused on SAP Business One ®. The SAP Business One application offers an affordable solution that is capable of running the entire business, from accounting and financials, purchasing and inventory, sales and customer relationships and project management, to operations and human resources.

SAP Business One® offers…

A Complete and Customizable Solution  

SAP Business One is a single, integrated solution that provides clear visibility into your entire business and complete control over every aspect of your operations.

Every business is different, and we acknowledge that! SAP Business One is designed with flexibility in mind. Whether deployed on premise or in the cloud, you can access SAP Business One at anytime, anywhere via any mobile device.

What’s more? SAP Business One offers real time reports in dual currency. Which means your ledgers would be kept “sacrosanct” in their respective currencies. Say good-bye to conversion difference “wahala”.

Your employees can start using it from day one. As your business grows, you can customize and extend SAP Business One to meet your evolving needs.

A 3600 view of your business

SAP Business One provides powerful analytic and reporting tools. It includes a complimentary and fully integrated version of SAP Crystal Reports® for SAP Business One, so you can gather data from multiple sources and generate timely and accurate reports based on company-wide data. Integrated with Microsoft Office, SAP Crystal Reports lets you choose from a variety of report formats and control access to information displayed.

Industry-specific solutions for your expanding business

Take advantage of the extensive industry functionality, best practices and processes built into SAP Business One. As your business grows, you can extend SAP Business One to meet your specific  industry challenges using the Business One Studio ®, software development kit, or over 500 add-on solutions built by  partner developers.

Consumer Products & Inventory

Consumer Products & Inventory

Meet customer demand and develop new revenue streams with SAP Business One for industrial manufacturing industry. Shrink supply chain costs, accelerate cycle times, minimize scrap and re-work and ultimately speed time to profit.

Manufacturing & BOM

 

Professional Services

Deliver consistent, high-value services to your clients with SAP Business One for Professional services and consulting firms. Improve resource planning, project management, billing and more.

Retail

Give your customers the products, information and personalized shopping experience they want – across any channel with SAP Business One for retail. Harness real-time customer and POS insights, engage shoppers, and optimize everything from merchandising to your supply chain.

Wholesale distribution 

SAP Business One for wholesale distribution offers improvement in everything from demand planning to inventory and supply chain management, with flexibility.

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Succession Planning for Family Owned Businesses

Succession planning for family owned businesses seemed to be ignored! Has contemporary HR addressed the succession planning challenges facing family owned businesses??

Contrary to popular belief, there is ample evidence that family businesses perform better than non-family businesses. In fact, ongoing research has shown that family businesses don’t only outperform non-family run competitors but they are also better managed.

Regardless of its size, the family business shares a number of significant qualities that bring special benefits to the community and economy in which they operate. For example, they tend to be more labour intensive and less capital intensive which results in a higher capacity for job creation with less employment volatility.

Other benefit of the family structure are:

  • Innovation can be achieved at relatively lower costs because it uses  internal sources of capital andreinvestment of profits
  • Foster entrepreneurial instinct at the family level as they often act as incubators for new companies.
  • Family businesses also take a longer-term view of their strategy and are less concerned with short-term shareholder value, which holds them in good stead during tough economic times.

But despite all of these positive characteristics, why do Ghanaian family owned businesses follow the founder to the grave, are there any lessons to be learnt?

While the answer is not as easy as one would hope, succession planning for family businesses is a critical factor to the future success of them. The ultimate challenge to the founding family is its ability to ensure continuity of the business into the next generation, and at the same time retaining the collaborative harmonious family relationships.

Change, and in particular succession, is driven by the biological clock. In addition, factors such as leadership, management and departure or exit style of the founder, the size of the business, its structures and conflict management procedures all impact on the succession process.

Succession planning for family owned businesses is a journey that must be planned. It must address both the transfer of business ownership and management continuity. This is hardly the case in Ghana, we see the transfer of ownership without any conscious effort at ensuring the continuity of the business.

Some of the key characteristics of the family businesses structure that need to be modified to allow for a smooth and successful generational transition include:

  • The highly centralized decision-making system of family owned business must be replaced by a culture supported by formal policies and procedures; there must be an accepted way of doing things.
  • The entity must diversify its dependence on one or two key individuals for its survival and growth. In most cases, founders  stuff their kith and kin in the board so much that they dilute the board’s effectiveness , resulting in weak infrastructure that directly affects decision making
  • Succession planning must be embedded into the day to day running of the business and must not be relegated to the tail end.
  • Structural defects within the family (divorce, polygamy and unwarranted familial pressures)usually impact the operations of the second generation. It is the duty of the founder to address these defects before passing on the reins else it endanger the continuity of the business.
  • Our inheritance system makes it even more difficult for an entrepreneur to choose a heir to carry the business forward. Under the paternal system of inheritance, the business is handed over to the eldest child or the child of the eldest wife. Under the maternal system; it is the founder’s sister’s eldest child. These may not always be the best choices, as the individual may not have the ability, education or skills to successfully lead the business into its next stage.
  • A final dimension is the influence from Son-in-laws and daughter-in-laws, this group have a strong influence on the chosen successor but may not hold the same values and morals that have served the family well.

A famous saying about family owned business is that “Father, founder of the company, son rich, and grandson poor). The founder works and builds a business, the son takes it over and is poorly prepared to manage and make it grow but enjoys the wealth, and the grandson inherits a dead business and empty bank account.

The succession planning for family owned businesses is a process that should ideally be seriously underway by the time the business leader is in his or her late forties or early fifties, and the children in their mid to late twenties. As you get older, your influence will naturally wane.

Yes, it takes time and resources to complete this process but it could mean the difference between a thriving business that continues to bless you and future generation, or a sad statistical footnote. It’s important to remember that it is never too early to start the succession planning for family owned businesses.

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Why Small Businesses Must Take Accounting Seriously

It is said that “Accounting is the language of business”.  And this why small businesses must take accounting seriously! Well, since accounting is the language of business, then it means if you can’t speak the language of accounting then you should not start a business or even dream of owning or running a business!

It’s quite amazing that most entrepreneurs have the zeal and passion to do business as a result of the skills they have acquired for a particular activity or the availability of capital at their disposal. Unfortunately most of them are not able to use financial information to make business decisions.  To most, the acquisition and manipulation of financial data is seen as a burdensome!

In an article published by All Business Editors on “Top 10 Reasons Why Small Businesses Fail,” three out of 10 reasons small businesses fail has to do with accounting and financial management: “Failure to Track your Expenses, Overspending and Lack of Reserved Capital.”

This again underscores the fact the reason why small businesses must take accounting seriously and invest in accounting training programs. As the business grows there is a need to invest in accounting software that takes out technicalities from accounting and financial management processes.

To make life simple and allow business owners the space to concentrate on running and delivering of their services, owners must invest in tools that will help track and manage the following:

  • Where your cash is going so you can management it better
  • Who you owe and who owes you
  • Understand your customers buying pattern
  • What stuff is selling the best , to who and where
  • Your banking relationship
  • Your month end tax nightmare.

These are just a few out of the many reasons why small businesses must take accounting seriously  if they really want to survive, grow and thrive in the business world. If you need formal training in accounting and financial management for your small business, kindly send an email to training@multisoftgh.com for more information and registration details.

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Sage One Accounting

The evolution of today’s business world requires prompt, reliable, advanced, and modern technology. It has become essential and prudent for decision makers to have access to their business information wherever and whenever.

Multisoft Solutions is honored to introduce the most cost effective solution on the market to help manage financial information of corporate entities such as yours. Sage One Accounting is a simpler and flexible accounting  solution that provides you with insight you need at reduced cost.

Sage One Accounting can offer you the following;

  • Get more done, in less time: Accomplish much more, much faster—check on inventory, take orders, approve expenses, or pull up-to-the-minute reports—and make informed decisions on the spot.
  • Get the insight you need, when you need it: Evaluate risks and monitor performance in real-time with user dashboards, self-service business intelligence, and reporting tools.
  • Go where your business takes you: Access data on mobile devices, check inventory, take customer orders, make purchases, and view key performance indicators on the go.
  • Easy to use and cost effective: integrate your business processes at remote branches and Head office into one common system.

We will be glad to have an appointment with you to further discuss the Sage One Accounting our solutions among others. To reach us kindly call;  + 233 0302235149 or email: scgbd@multisoftgh.com   or view software features on www.Sageone.com

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4 Ways to Manage Small Business Accounting

There are basically four ways to manage small business accounting system! Once your business is up and running, you must focus on managing cash flow and the financials of the business or else the ship will begin to sink!

When business begins to grow—new customers coming in, orders come from various places, deliveries become plenty, many customer issues to handle— many entrepreneurs and business managers become engrossed in the day-to-day operations and the running of the business.

Too much success as well as too much failure can destroy a business. Once business is growing, the managers and CEO must begin to plan and develop systems to manage that growth or else the business will shrink to death.

One of the critical areas to plan and manage is business accounting cycle. Basically, there are four ways to manage small business accounting!

Doing It Yourself

At the early stages of the business, you’re the business. You manage the sales, marketing, operations, customer service and the accounts of the business. How skilled and organized you are in these areas will help you do it much better.

If you have basic business accounting knowledge and skills, you may do it yourself manually. However you need training if you’re weak and can’t manage or understand the essence of accounting in your business.

Multisoft Training Services offers accounting training to entrepreneurs, business owners and managers who are in this stage of their business development process.

Subcontracting to an Accounting Firm

As your business grows, you will need a professional to help in checking the accuracy of your business accounting figures and also help design the accounting system. At this stage, it is wise to find a credible and established accounting firm that will coach, guide and help you.

An accounting firm will take the headache out of the daily book keeping chores and process your accounting data into useful financial information and also assist with the interpretation of the figures for decision making.

Let’s help your business succeed! Subcontract your accounting to Multisoft Solutions Ltd.

Hiring an Accountant

Once the business grows, the accounting transactions will become enormous, making it difficult for the business owner or business partners to manage. At this stage, you’ll be replacing the accounting firm with a qualified accountant or bookkeeper. If you choose to use bookkeepers, then it is advisable to retain the accounting firm in a supervisory role.

The accounting firm together with your accountant/bookkeeper will act as the Accounts & Financial Department of your growing business empire.

Investing Accounting Software

At each of the above stages, it is important to support your team with the right accounting tools. Wrong tools will hinder the team’s performance and result in inaccurate data and reports.  Accounting firms are likely to come along with their own tools and may also walk away with the tools when their contract comes to an end.

To stay in control and hedge against frequent change of the accounting tool, it may be a good idea to own your own business accounting software. It is synonymous to buying a car and hiring the driver.

Sage One Accounting Software for Small Businesses and Start-up Companies

Business accounting software helps your accountant to do the work with ease, faster and with greater accuracy. With Sage Business Accounting System, you can get a lot done accurately and in less time.This is not obviously the last step in the four ways to manage small business accounting but rather a step that complements each of the first three. As your business grows, you’ll have to invest in more sophisticated accounting software.

Kindly contact Multisoft Solutions Office for a free consultation on the right tool for each of the three stages.

Management Information Systems

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The Importance of Accounting Software

In this fast moving and developing world, the importance of accounting software in facilitating and streamlining business transactions cannot be underestimated!

Your business is doing well, your operations team is busy, you’re wise enough to get an account, however your accountants are growing tired from manually managing the accounting of the day-to-day business transactions.

Dear business manager, you need to upgrade and invest in credible accounting software that can make the work easier your accountant! You have t realize the importance of accounting software in making things faster, easier and simpler for you and your accounts department!

The following are some of the importance of accounting software and the benefits they will bring to your business.

Accuracy of Financial Reports

The main reason for accounting in business is to provide the management of the business with credible, relevant and accurate financial reports that will help in making better financial decisions that will ensure the health of the business.

There different kinds and types of human errors that your team may make unknowingly that will affect the final data on the trial balance and financial statements. Making decisions based on this information can cost you a lot of money and sink your business.

Accounting software is however a computer program which will eliminate or reduce the human errors that your accounting team may make in the processing of the financial data. Entering the right data into the software is then a necessary key to getting the right information.

Simplicity and Ease of Use

Accounting software makes the work of bookkeeping and accounting simple and easy for the accounting department. The computer programs contain the necessary accounting books, journals and systems to process the financial data into a financial statement.

The simplicity of accounting software is in its ability to calculate and handle hundreds of business transactions which will be difficult in handling manually. The software reduces the headache of manual accounting. Making the accounting department to enjoy their work and do a great work!

Speed in Processing Financial Reports

You are meeting some business investors, government officials or your banker, and you are required to come along with your most current financial reports in the next 2 hours. I bet you, it’s going to be a headache and pressure on your team to produce the report for you in just two hours.

However, by using accounting software, the report can be processed effortlessly for you in 2 hours. That means you can have the meeting, negotiate deals and grow your business. Accounting software have in-built report making modules and this makes it easier for you to access the financial health of your business on a weekly, monthly, quarterly and yearly basis.

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7 Financial Reports Every Business Owner Needs To Run A Successful Business

Running a successful business seems to be the goal of every business owner. However, it doesn’t come on the silver platter! Business financial reports are like X-rays that help business managers, entrepreneurs and investors to know the financial health of the business. Business owners who want to stay in control and make a difference must appreciate the purpose and value of financial reporting.

Research has shown that the most successful businesses are run based on numbers. The numbers in your business are the key indicators of your business health and the future of the business. Ability to run a business based on financial reports is great skill!

So what are the top 7 financial reports for a small business owner?

  1. Customer Transaction Report:

This is the first financial report that every business has to keep track of and know. The Customer Transaction Report is simply an overview of your customers, sales generated through each customer and outstanding debts to be paid. This report gives business managers a glimpse into the effectiveness of the account receivable, sales and marketing functionality of the business!

Items to pay attention to in the receivables cycle:

  • The longer an invoice goes unpaid the less likely it will ever be paid
  • 26% of invoices 3 months old are uncollectable
  • 70% of invoices 6 months old are uncollectable
  • 90% of invoices 12 months old are uncollectable
  • On average, businesses write off 4% of their Accounts Receivable!
  1. Supplier Transaction Report:

This is the report that provides snapshot of your suppliers. Every business—manufacturing, wholesale, retail or service based—need a kind of input to serve their customers. This report provides information about your suppliers, the outstanding debts due the company and the purchases made from each supplier. The report is most useful if its total matches the ending accounts payable balance in the general ledger.

The report can also be used to track the following:

  • How much you owe your suppliers.
  • How long you’ve owed your suppliers.
  • Which of your suppliers you owe the most money.
  • The credit limit your suppliers are giving you
  1. Inventory Valuation Report:

Accounting for your small-business inventory seems like a straightforward matter, but actually it is not. The method you choose can affect your taxes, the value of the total business, your ability to borrow money and your cash flow.

You must examine the implication of the valuation methodology prior to deciding on which way to go. Most small business software’s will allow the three common options; average cost, First in First out (FIFO) and Last In first Out (LIFO).  Always talk to your advisor prior to embarking on the journey.

The Inventory Valuation Report analyzes the list of your items or goods, its movement from the supplier’s business through your warehouse to your final customer. The value of the item as it travels the process is dependent on the adopted valuation methodology.

The report can be used for the following:

  • Identify goods present
  • Reason for shortages
  • Delivery problems
  • Identification of slow selling goods.
  1. Cash Flow Report:

I’m always amazed when I run across Chief Financial Officers who don’t believe a cash flow statement is the most important part of the financial package when it comes to small business management.  Small businesses run on cash and knowing where cash is and where it’s gone is among the most important things a small business owner must know.

Cash flow is simply the money coming into a business from sales and other receipts and going out of the businesses in the form of cash payments to suppliers, workers, etc. Cash receipts and cash payments in a trading period are not necessarily the same as the accounting revenues and cost applicable to that same period, reason being that customers need not pay cash for goods sold until sometime afterwards while the firm may not pay for materials and services used until afterwards.

The cash flow report provides an overview of the cash inflow and cash outflow in your business. The cash flow report entails the cash at hand, cash in bank and all credit card transactions.

Your cash flow report enables you to track the following:

  • Tells you if you’re running out of money while you’re profitable
  • Tells you if the owner is taking too much money out of the business.
  • You will see the results of building inventory, letting receivables grow or paying suppliers more quickly
  • How capital purchases take out money
  1. Tax ReportDefinition:

 A VAT return shows how much VAT is due on Sales (output VAT) and how much VAT can be reclaimed on Purchases (input VAT) dictating how much is paid or reclaimed from GRA for a given period.

Any company that has a turnover in excess of the threshold as specified in the Income Tax Act (2016: GHC200,000)  will need to contact GRA with the view to be VAT registered and complete a VAT return. Small business accounting software’s like SageOne have these returns built into the system. Just concentrate on the accuracy of the data capture (capture your sales and purchases) and the system will generate the returns for you.

  1. Bank Reconciliation Report:

A bank reconciliation is used to compare your cash records to those of your bank, to see if there are any differences between these two sets of records for your cash transactions. The ending balance of your version of the cash records is known as the book balance, while the bank’s version is called the bank balance. It is extremely common for there to be differences between the two balances, which you should track down and adjust in your own records.

If you were to ignore these differences, there would eventually be substantial variances between the amount of cash that you think you have and the amount the bank says you actually have in an account. The result could be an overdrawn bank account, bounced checks, and overdraft fees. In some cases, the bank may even elect to close down your bank account.

It is also useful to complete a monthly bank reconciliation to see if any customer’s cheques have bounced, or if any cheques you issued were altered or even stolen and cashed without your knowledge. Thus, fraud detection is a key reason for completing a bank reconciliation.

  1. Withholding Tax Report:

Withholding tax is the tax to be deducted from the ex VAT invoices of your supplier. The deduction ranges from 3% to 20% depending on the nature of the supply or the tax status of the supplier.

The tax is deductible from Suppliers who supply services to a company as independent contractors or consultants.

Image: Income Tax Login

The law requires a person effecting payment to another person to deduct the exact tax at source and pay it to the Commissioner no later than 15th of the following month. A withholding agent who fails to withhold tax is personally liable to pay to the Commissioner the amount of tax which has not been withheld.

With the help of Sage One Accounting, You will be able to get quick access to these financial reports and make wise and intelligent business decisions that will help your business grow.

Contact Multisoft Solutions to set up Sage One Accounting for your business.

Management Information Systems