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The Difference Between Cash Flow and Profit

Without controversy, the dream of every entrepreneur or CEO is to grow his or her business and make it profitable. However, not knowing the difference between cash flow and profit has rather caused many businesses to grow rapidly and then fail at the end.

Before you grow your business, you really have to understand the difference between cash flow and profit. Your cash flow statement is different from your profit & loss statement. Cash flow is the movement of cash in and out of the business as a result of operational, financial and investing activities. Profit, however, is the difference between your sales and expenses for a period.

Below are three ways a lack of knowledge by business owners on the difference between cash flow and profit can cause their rapidly growing business to fail?

First Way: Profitable Business but Bad Cash Flow

A business can be very profitable with growth possibilities but have a bad cash flow. A quote from income-outcome.com stated, “The vision starts the business, profitability helps the business grow, and cash flow is the day-to-day driver.”

You are running a production company where you’ve paid your suppliers and borne the cost of manufacturing the goods. You went ahead to supply the products to your customers and probably made about 30% or 40% of profit. However, you wait for the cheque and it comes 45 days later!

What does that mean, your business is profitable? Yes, you made a decent profit, but there was bad cash flow. And bad cash flow can kill your business. That simply means you’ll have to wait for your customers to make payments before going ahead with the next production!

Another avenue your growing business can fail if you lack knowledge on the difference between cash low and profit is when you are expanding your business. This is really dangerous. Be careful when growing your business, if you don’t take care, business growth can lead to business failure!

Second Way: Expanding for Profitability but Being Cash Handicapped

Let’s take an example: Assuming Mr. Edward has a shoe production company. His company produces 1,000 shoes per month with net expenses of  GH¢12,000.00 and net sales of GH¢ 20,000 per month. This means he makes a net profit of GH¢ 8,000.00 per month.

Well, his business is growing. Now he wants to expand his business and double his profit. This requires that, he doubles his inventory, enlarge the office space, hire more employees and increase other production costs.  To implement this growth strategy, Mr. Edward must have the physical cash available to invest in the business expansion. From there he can make his target profit.

But this is often not the case, most businesses fail to develop a strategic plan and analyze their cash flow position before embarking on the expansion. Most entrepreneurs just invest in more inventories without properly planning other cash needs. So, before they realize, they are left with utterly no cash in hand to cover the day-to-day operational costs. If this is not handled well, the growth can lead to business bankruptcy.

Third Way: Making More Sales but More Cash Flowing Out

It is amazing how this happens. Many business managers and entrepreneurs fail to find the net cost and the net profit of each product. They don’t add up all the small costs to the product before coming out with the final price for the product.

So what happens? For example: A business makes sales of GH¢ 5,000.00 but realize that GH¢ 4,800.00 has gone out of the business leaving a gross profit of GH¢ 200.00 which may not be enough to cover other operational expenses that were ignored. They made a lot of money but more cash was going out!


All business owners must first of all know that there is a difference between cash flow and profit. You can be making profit but still have little cash available to run your business. To avoid this, develop a strategic plan at all times taking into account a realistic cash flow forecast, good working capital cycle management and decent profit margins for all your products.

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The No. 1 Problem Facing SMEs in Ghana and How to Deal With It

Small and medium sized enterprises (SMEs) have been the backbone of Ghana’s economic and social development for the past decades. They are the major driving force for business development, employment creation, production of goods and services and internal income generation in Ghana.

According to the Registrar General’s Department as noted by Graphic Online, 90% of registered businesses in Ghana are SMEs. An SME Research Report by Ghana Web indicated that SMEs contribute an estimated 70% of Ghana’s GDP and account for approximately 85% of employment in the Ghanaian manufacturing sector. It is therefore implicit that to maximize the developmental potential of Ghana, the companies classified as SMEs must be assisted to develop.

So, what is the No. 1 problem facing SMEs in Ghana today?

The No. 1 problem facing SMEs in Ghana today is access to credit.

In Aryeetey E.T’s study (recorded in Garriba Fuseini’s MPhil Economics Thesis) on 133 manufacturing firms in Ghana, he noted that “an overwhelming 60 percent complained of access to credit as the major constraint to expansion”. The study also confirmed the success rate in accessing credit as: 69.1% for medium sized enterprises, 45% for small enterprises and 33.7% for microenterprises.

Well, why do SMEs need credit?

The answer is simple: To get business projects off the ground, expand operations, invest in technology, employ more labour, increase productivity and improve competitiveness locally and internationally.

So what is the main factor keeping and preventing many SMEs from accessing credit? The lender’s inability to trust SME business management and their ability to pay back loans given to them! The banks, state and NGO financing institutions want to be sure SMEs can manage funds and pay back the loans with the required interest on time.

How then do we deal with the problem of access to credit?

The main way to deal with the problem of accessing credit is to get back to the basics—simply boost lender’s trusts and confidence in SMEs. Banks and Financial institutions are in the business of making good return on investment for their shareholders, so they will only provide financing to SMEs they deem creditworthy.

If you go to the bank for a loan, the first thing they will require of you is your business’s current financial statement. Your financial statement provides a picture of your business performance. The financial statement is a report card that informs lenders that you can pay the loan back on time with the interest.

But you know what?

Over 70% of SMEs in Ghana do not keep proper accounting recordsThey do not take accounting seriously but surprisingly take accessing credit seriously. To bridge this gap, finance houses have moved away from lending based on business performance to collateral based lending. To boost performance based credit worthiness, SME’s must give the lending insight into their business through proper accounting records and accurate financial statements.

To start the journey towards proper book keeping, SMEs must invest in training on business accounting and finance. The more SME business managers are grounded in basic accounting principles and analysis of financial statements, the more they can manage their businesses well, increase credit worthiness and get access to funding.

There is also a need for SMEs to invest in proper accounting software that can automate the accounting and cash management process. Accounting and payroll software help make the business information management process easy so that SME managers can focus on core activities such as  marketing, sales and operations—the integral part of every thriving business.

So to overcome the No. 1 problem facing SMEs in Ghana—access to credit—business managers and SME entrepreneurs must endeavor to keep proper accounting records, engage in training on accounting and financial analysis, invest in quality accounting software to manage the accounting cycle and then keep up to date with statutory reporting requirements of their business. Once the basics are well handled, the rest will take care of itself and accessing funds will be an easy process.

What do you think about the number problem facing SMEs? What was your experience accessing credit for business growth? Share your comments below? You can also contact Multisoft Solutions (email: info@multisoftgh.com or call: +233 030 2235149) to get tailored accounting services and software for your business requirements.

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Three Simple Tasks for Cash Flow Forecasting and Budgeting

Cash is the lifeblood of every business, implying that if cash is flowing in the business, the business will keep on moving and growing. Once cash stops flowing, the business will begin to experience hemorrhage and die! Hence, it’s crucial to engage in cash flow forecasting and budgeting to always know the health of your business.

Cash flow is simply the movement of cash in and out of your business. And cash flow forecasting or budgeting is analyzing the cash flow movement and making future prediction based on that analysis. Cash flow forecasting can be done via accounting systems or using Excel Spreadsheets.

Cash flow forecasting and budgeting, enables you predict the future inflows and outflows of your business so you can plan ahead for mishaps. Cash flow forecasting and budgeting insights can also enable you to maximize the use of money, control costs and avoid financial wastes.

There are three simple steps for cash flow forecasting and budgeting.

Step One: Estimating Cash Inflow

Cash inflow is simply the cash flow into your business. This is basically your cash and credit sales. Thus, the very first step is to analyze your sales for the previous week, fortnight, month or quarter, and project how these will translate into cash for the subsequent period.

If your business requires credit sales, then you need to use some probability to make these projections. Learning how to invoice and receive payments faster can also help you increase the probability of credit sales becoming cash. Once you are done, find the totals of your cash inflow projections and write it down as the total.

Step Two: Estimating Cash Outflow

Once you have made your cash inflow projections, you now have to figure out your cash outflow. Your cash outflow is the cash flowing out of your business. This makes up your cost of doing business—variable and fixed costs.

Based on your previous business financial records, analyze the cost of sales and cost of operations. Then finally sum all up. This will now help you know the total amount of cash outflow for the week, month, quarter or the year.

Step Three: Estimating Cash Balance

The final step is to put the numbers together and find the cash balance. To find the cash balance, you simple have to add your opening bank balance to your total cash inflow and deduct the total cash outflow from it.

Opening bank balance +Total Cash Inflow –Total Cash Outflow = Cash Balance

Once you are through, you can now use the information from the cash flow forecasting and budgeting to make cash decisions, manage inventory, control costs and run the entire business operations.

You can contact Multisoft Solutions Office if you need assistance or an accounting system to facilitate the process. Kindly leave your comments about this post on the comments section below!

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FAQ=Payroll, HR Software & Employee Self Service

Capabilities of Sage Payroll and HR solutions

Sage offers a range of modular yet fully integrated solutions for HR, Payroll, Time & Attendance, Recruitment and Employee Self-Service. For a full list of features and benefits please refer to the Products page of our website or request for a DEMO PRESENTATION

How quickly can Sage Payroll and HR be implemented?

A typical Sage Payroll and HR installation can take anything from one (1) to six(6) months.  ‘Go Live’ is very dependent on a number of factors:

  • The number of software modules purchased
  • The implementation phases and the availability of resources from the vendor and the organization. User ownership has always been fundamental to the success of software implementation projects. It is therefore important that both parties provide sufficient resources to the project, and that these resources are available and knowledgeable.
  • Number of parallel runs required to confirm user acceptance and confidence. Getting Payroll right in Ghana requires that we take on opening balances for some payroll elements.

Key amongst these is the computation of bonus taxes. Bonus tax computation is indexed to annual basic salary and also current and previous bonuses paid during the tax year.  You certainly will require these cumulative figures if you want to get it right.


Secondly, the employer is required to present a tax certificate to the employee for all period worked during the tax year. Generation of these certificates can be a nightmare if your data is in two disjointed systems.

  • Complexities in the payroll formula especially when all the variables are in the payroll software.

Once the exact requirement is established, a detailed project plan/SIP (System Implementation Plan) will be put together detailing each stage of the project and anticipated timelines from installation to ‘Go Live’.

How will a business assess its requirements in readiness for Payroll computerization or system change?

There are many factors that need to be taken into consideration to establish your requirements prior to making contact with a vendor.

The key factor being your ability to define the challenge:

· Where are you experiencing the highest productivity loss and the highest number of errors in the current system?
· What information/reports are being requested that currently cannot be delivered
· The security issues with the current system , are you experiencing poor security and data validation controls
· Finally make a list of all you would like to do but are unable to do now.

In doing the above, you have to involve the following people:

· System Users
· System Managers
· System Customers
· System Sign Offs

Evaluate the supply options based on:

• Industry experience of the vendor and partners
• Scalability of the Product
• Speed of Installation
• Ease of use
• Size and formats of data fields
• Data validation capabilities of the product
• Security
• After sales support

Is training required to use the software?

As with any software package, a certain degree of training is required to ensure that you get the maximum ownership of the system. The amount of training that will be required to use our Sage Payroll and HR will be based on the number of modules you have purchased, how you intend to use the system and whether any non-standard configuration has been implemented to meet your requirements.

Your training needs will be discussed with you at the start of your project, so the amount of training and the cost of that training will be known prior to project commencement.

In addition to the training provided at the start of your project, you may decide that you require additional training, this could be for new employees who will be using the software (we do not recommend ‘hand me down’ training), refresher training or training on new functionality that may have been added to Sage Payroll and HR.

We also run other Software trainings for our Clients. Contact us for more details.


What is Employee Self Service?

Employee Self Service was originally conceived to streamline the process of updating employees’ personal data and remove the administrative burden on HR.

Employee Self Service software modules allow employees to complete timesheets, expense claims, leave requests and other absences online as well as initiate the workflow associated with their approval. It is this latest functionality which has had the most impact on organizations.
How will my employees benefit?

Employee Self Service software will empower employees to take control of their personal information and update employment records and contact details without having to ‘form fill’. The system will enable them to log in and review information held on them.
Employee Self Service also allows employees to make decisions on their HR and training needs. Employees can access historical training records and qualifications online without having to contact HR directly. Research has shown that by allowing staff access to their personal records promotes a more trusting and open working environment.

What functionality will employees be able to access?

Subject to security, employees will be able to:
· View and update personal data at any time from any place that has access to the network, whenever it is convenient for them
· View leave entitlement available and taken balances
· Request and approval of holidays and other absences e.g.: compassionate leave
· Enter personal timesheets
· Enter expense claims and monitor their approval
· View and/or print their current and previous payslips
· View training and qualifications data.

How will a manager benefit from Employee Self Service?

Self Service will enable managers to approve holiday requests quickly, analyze staff attendance and evaluate staff training requests at a touch of a button. They will also be able to check or input employee payroll data and approve employee timesheets, helping to improve and maintain the accuracy of data.

Is installing a new system disruptive to the business?

Not at all. We suggest that a small implementation team is set up to manage and introduce Employee Self Service. Our experience has shown that most of our clients want to ease their system gently with the minimum of disruption.

By gaining confidence through a ‘read only’ access area, where name and address details can be checked, employees and managers will build up their confidence quickly and learn to trust the system. From here they can progress on to accessing and changing simple data to finally being able to use all of the system’s functionality.

You can read more details about what’s involved in implementing Employee Self Service Software here.

Kindly let us know your comments on FAQ via the comment section or better still you can email us info@multisoftgh.com.
Management Information Systems

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You Need to Integrate Your Business Solution. Here’s Why

By Anton van Heerden, Executive Vice-President and Managing Director, Sage South & Southern Africa

Accounting, payroll & HR and payments are at the heart of any business. By integrating this golden triangle of business processes and systems, organisations can reduce manual administration and free up time to spend on more value-adding activities. With integrated solutions, businesses can achieve higher levels of automation across their businesses, become more productive and efficient, and gain better visibility into their performance.

Here are a few benefits companies can achieve by implementing integrated business solutions.

1.    Reduce redundant data capture

An integrated solution that brings payment, payroll and accounting functionality together eliminates the need to recapture or manually import payroll data into the accounting system each month, and then reconcile financial data with bank statements. That can save hours of work each month for the accounting and payroll teams, while also ensuring that the business always has up-to-date payroll information reflected in its financial systems.

  1. Better visibility into business performance

If companies have completely up-to-date payroll, HR and payments data flowing automatically to their accounting systems, they’ll have access to the reports and information they need for better planning, forecasting and budgeting. They’ll have insight into cash flow, human resource capacity and utilisation, and business growth they can use to optimise performance and plan for the future. Because there is no need to collect information from separate databases, reporting is faster and more accurate.

  1. Fewer errors

Eliminating the need to recapture data means that the possibility for human error to creep in is vastly reduced. What’s more, all of the company’s business systems draw their data from a single database, reflecting a single, accurate version of the truth. This creates trust in the business’s financial data and helps the business to avoid making costly errors in tax or payroll calculations.

4    .    Less paperwork

Integrated payroll, HR and accounting solutions can help the financial and payroll teams to stay on top of the mountains of paperwork involved in managing the workforce. For example, if an employee updates his or her personal information in the HR system via employee self-service, the integrated payroll software should automatically update. This means less work for HR and payroll staff, and fewer chances for data capture errors.

5    .    A platform for self-service and mobile working

A modern, integrated business system that draws together payments, payroll & HR, and accounting is a platform for more efficient ways of working. With accurate and up-to-date payroll and HR data available, employees can use employee self-service to access information about benefits, payroll, leave, and expenses. They can even update their information themselves. This can save managers, HR, and employees a great deal for time.
This sort of environment also means that managers can get access to up-to-date business information wherever they are. They can monitor employee and business performance from their mobile phones, knowing that they have accurate information at all times to inform their decisions.

Closing words

As the global market leader of integrated accounting, payroll and payment systems, Sage enables our customers to focus on their business and helps them to leapfrog to the future. An important element in this strategy is freeing entrepreneurs from the low-level admin and data capture so that they can focus on growing their businesses.

Source: Sage South Africa Newsroom

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How Legitimate Software Outweigh Costs of Pirated Cheap Software for African Businesses

Some Small & Medium Businesses in West Africa try to cut corners and save money by pirating business software. This is a shortsighted approach, since legitimate software licences yield powerful return on investment (ROI) and allow organisations to eliminate the heavy costs and risks associated with pirated software.

That’s according to, Magnus Nmonwu, Regional Director for Sage in West Africa, who says that any discussion about pirated software should not only focus on the dangers of piracy but also on the many advantages of going legit. “Today, software is more affordable than ever, thanks to flexible volume licensing agreements as well as cloud (online) software offerings,” he adds.

“For example, you can buy software as an online service, paid per month and per user. That means you don’t need to spend a lot of money upfront to get access to the best technology. There really is no justification for not buying legitimate software licences for your business.”

Nmonwu outlines five benefits of legitimate software licenses:

  1. Access to top-notch technical support and service

With officially licensed software, you can phone/email the vendor or an official reseller for support and expert advice when you run into a problem or simply need some advice. That can save you time and money as you can often resolve the technical issue without spending hours of your own time on it or paying for a technician. This keeps your business running smoothly. Official resellers are able to help you with services such as training and installation. You also get the instructions and documentation you need to make the most of your legitimate software solution.

  1. Regular patches and software updates

When you buy officially licensed software, you will get the security patches and feature updates for your product, ensuring that you remain up to date with the latest version of the software at all times. This will help you to improve your information security and allow you to benefit from the latest functionality. When it comes to accounting and payroll software, these regular updates are essential because they keep you up to date with the latest tax and labour regulatory requirements.

  1. Fewer technical issues and less risk of malware

According to a Business Software Alliance (BSA) study, computer users around the world cite the risk of security threats from malware as the top reason not to use unlicensed software. There is a very good chance that pirated software you buy from an unethical retailer or download via the Internet will contain some spyware or malware.

Indeed, in some cases the motivation for giving or selling you pirated software is to plant a virus or key-logging software on your computer to steal your information. The risks you face could include theft of sensitive data (customer and financial records, passwords) or loss of all your data.

  1. Supporting your country’s economic development

When you buy your software legally, you are helping your country and community to grow. The BSA noted increasing the amount of properly licensed software in use globally by 1 percent could add an estimated $73 billion to the world economy, compared to $20 billion from pirated software.

Your purchase benefits the local companies that sell, support and distribute the software. It also gives software vendors incentive to localise products for your market and invest in your economy. The result is that the ICT industry can create jobs and develop new services. Your government also gets its slice of tax revenue for social services spending and the software vendor earns revenues it can reinvest in making its products better.

  1. Long-term value and cost-savings

If you buy legal software licences, you will be able to establish a stable, reliable and effective IT environment, which will save you money in the longer term. For example, you won’t need to keep re installing pirated software when it becomes out of date – you can simply upgrade. Furthermore, you will be able to plan for the future and work with the vendor or its resellers to design a solution that makes sense for your business.

Closing words

“As the global market leader of integrated accounting, payroll and payment systems, we have become an indispensable business partner. In a time of seismic technological change and digital invention, our smart people are making software more accessible and affordable for businesses of all sizes,” he says. “We enable our customers to focus on their business and help them to leapfrog to the future.”

Source: Sage South Africa Newsroom

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How Cloud Accounting Makes “Invisible” Admin a Reality

By Magnus Nmonwu, Regional Director for Sage in West Africa

If you are like most business builders, you probably do not enjoy doing bookkeeping or working on your taxation administrative tasks. You would rather focus on what you do best – growing the company, bringing out new services and interacting with customers and employees. Even if you run a one-man business, an accounting solution can help you streamline all the paperwork and other number crunching or time-consuming activities, so you can focus on the important stuff.

There are many other benefits – from generating financial reports to complying with Federal and State internal services’ requirements. It is no longer expensive to acquire these tools or solutions, thanks to cloud-based accounting packages that offer a small monthly subscription fee to get you going.

Here are five questions to ask yourself if you have not yet invested in these accounting solutions:

  1. Are you struggling to track your cash flow, income and expenses?

Many entrepreneurs use paper records and their bank statements to keep track of the flow of money into and out of their businesses. This makes it hard to keep track of payments expected, outstanding bills and the company’s precise, up-to-the-minute position with income, expenses, assets and liabilities.  It also becomes time-consuming, and time should be spent doing revenue-generating activities or creating new business development relationships and opportunities.

With the right accounting package, you can generate a range of financial reports with a swipe on your mobile device or a click of the mouse. You can track sales performance, see which of your product lines are profitable or not, generate forecasts and budgets, and easily call up profit and loss statements, while tracking your debtors and creditors.

  1. Are you spending a lot of time filing financial records and doing your books?

Business owners without accounting solutions know the tax year-end ritual of printing out bank statements, digging paper bills and invoices out from boxes, and spending hours adding everything up.

This amounts to wasting valuable days of your time each year that you could be out selling to customers or doing billable work. Or you could be spending money you might invest elsewhere in your business to pay someone else to do all your tedious and time-consuming paperwork. An accounting package gives you one place to keep your accounting records – and they will be accurate and up to date.  It also affords you the opportunity to call-up historic information and make projections into the future.

  1. Is your accountant asking you to invest in accounting solutions?

If your accountant tells you that you need an accounting solution, take heed. The accountant is probably billing you heavily for doing a lot of manual work on your behalf. He or she may also be concerned about your ability to produce accurate financial records in a timely fashion.

With an online accounting solution, you and your accountant can work on the same set of books at the same time from anywhere in the world. You can be processing your invoices, while your accountant is busy running reports, for instance. There’s no more need for the accountant to come to your office for some simple paperwork.

“The benefits of cloud solutions are huge for us in terms of scaling our business nationally, supporting our clients virtually, with no loss of data, no installations and no backup efforts,” says Chioma Ifeanyi-Eze, the founder of Nigeria’s first online accounting shop and Sage One partner, Accountinghub.

  1. Are you struggling to stay on top of issuing and paying invoices?

Do you spend a lot of time each month generating invoices for your customers and keeping track of your purchases from, and payments to, suppliers and service providers? With the right accounting package in place, you can quote from the accounting solution and then generate a customised, professional-looking invoice when it’s time to bill. You should be able to easily create recurring invoices quickly and simply for each customer that needs to pay you the same amount each month. You will also benefit from features that make it easier to track your own creditors.

  1. Do you find reconciliationsto be a pain?

Manual reconciliations are slow, inefficient, and prone to human error. With the right accounting solution, you can link your online banking account to your financial solution and each day your accounting records will be updated automatically.

Closing words

Business builders and entrepreneurs don’t go into business to wrestle with red-tape and manage admin. New technologies like artificial intelligence will make life even easier, allowing us to interact with accounting software in more natural ways. Our vision is to make those administrative tasks invisible by 2020 by automating the back-office functions so we can free business builders up to follow their dreams.

Source: Sage Africa News Room

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Creating Financial Statements Using Sage One Accounting

Creating financial statements using Sage One Accounting is one of the simplest to-do things in small business accounting. With Sage One Accounting perfectly designed for small business businesses and start-up companies, creating financial statements is no more a tedious and tiring process again!

First of all, what the heck are financial statements?

Financial Statement as defined by Business Dictionary is “Summary report that shows how a firm has used the funds entrusted to it by its stockholders (shareholders) and lenders, and what its current financial position.”

As report card is used by schools to access a student’s academic performance, the financial statement is also used to access the business’ financial performance, profitability and creditworthiness.

The financial statements of a business usually consists of:

  • Income Statement/ Profit & Loss Statement: this shows the gross and net profit of a business over a period of time in transacting business activities.
  • Balance Sheet: this financial report shows the current assets, liabilities and net worth of the business at a particular time or date.
  • Cash flow Statement: this entails the cash inflows and inflows of a business over a period of time as a result of its operating, investing and financial activities.
  • Equity Statement: this statement reports the changes in retained earnings or the return on the investor’s capital invested in the operation of the business.

The first two are the most basic financial reports which make up the financial statement of every business-small, medium sized or large company!

Donald Trump, the multi-billion real-estate mogul and the president of the United States of America said in his book, Think Like a Billionaire, “Periodically, I ask my financial department for what I call my financial “small shot.” This report reflects among many other financial data, my cash balances, investments, sales of condominiums units, and so forth. If I didn’t check on it regularly, I would be in a big financial trouble, and I would have no one to blame but myself. You should pull yours together once in a while.”

As rich as Mr. Trump is, if he is so much concerned about his financial reports, how much more should small businesses and Start-up Company’s regularly check on their financial reports?

You’ll have to check on it regularly, so you can run your business well. Creating the financial statements using Sage One Accounting makes it simple in processing these financial reports for your business. If you don’t have Sage One Accounting Program yet, kindly contact Multisoft Solutions Limited to install one for your business!

Once installed, processing the reports is very simple.

On your dashboard, move over to the reports button. The reports button displays reports such as “Profit & Loss Report, Balance Sheet Report, and other vital reports.”

To process your Profit & Loss Report, simply click on the button, enter the dates you want to run the report from and to and then chose the report format (either PDF or CSV Format). Then, there is your report on your lap.  The same process goes for the balance sheet. However in this case, you will just have to enter the date of the date for the balance sheet.

Isn’t it so simple? Make the processing of your business financial reports easy by creating financial statements using Sage One Accounting.

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Five Things that Will Make You Receive Payments on Time

There is nothing more painful in running a business than when you have delivered the orders, but your money is not being paid and you need more cash to operate your business. When this happens, you need to go to the school of collecting accounts receivables. Well, this is the school where we learn the five things that will enable you receive payments faster.

When you run a business and your payments come in time, you have cash available to cover all your operational expenses, then, aiding your business run smoothly like an oiled machine. Sadly, this is usually not the case in practice because customers are not always predictable and entrepreneurs are also inadequately prepared to deal with such kinds of customers.

Many a time, business people are so busy delivering their services and keeping customers happy to the total neglect of equally important activities such as account receivable collections. If you don’t have anybody do the collections job, the job never gets done! That’s simple!

To survive in business, Billing and Account Receivable Management which involves receiving payments faster are two critical business systems that must be created and the process must be as follows:

  1. Assign a Resource to the Billing and Account Receivable Function.

Assign a person—maybe your accounts clerk or sales clerk to be responsible for collecting account receivable. Make the person’s duties, responsibilities and results very clear. Don’t forget to manage by delegation, not abdication; this will help you check on the progress and ensure the job of account receivable is done well. The function must not only concentrate on the net proceeds but also on the withholding taxes associated with the payments.

  1. Develop a Credit Policy & Standards

The banks don’t loan money without ensuring that you agree to their credit policy, terms and standards. So why do you sell your products and services to your customers without any term, condition and policy in place when you want to receive payments faster? You surely are joking with your business!

Develop your Credit Policy & Standards and ensure that your customers agree to it and append their signature. This can be a simple one or two-page document—very applicable if you run a business where you get paid in 30 days or more after delivery.

  1. Develop Multiple Payment Options

If you expect customers to pay on time, then you must make it easy for them to make payments. So develop multiple payments options; bank deposits, bank cheques, cash payments, debit card payments, mobile money payments and electronic (online) payments.

Sage Pay Now, integrated to some versions of sage accounting software have multiple payment options to ensure that your customers pay you faster.

  1. Prioritize Invoicing and Do it on Time

If you don’t invoice your customers, expect them to forget to pay you. If you invoice your customers and do so in time, then expect them to also remember to pay you and even pay you in time.

So, it boils down to prioritizing invoicing and invoicing in time. Study your customer’s cash flow schedules and bill them accordingly to receive payments faster. Also send them reminders via SMS, email or phone call when you realize that the customer has by-passed the deadline for payments! Sage Accounting System makes invoicing simple and easier!

  1. Acknowledge and Appreciate Customers When they Make Payments on Time

Whatever you appreciate, appreciates. Your customers are human beings, not robots. Human beings love to be complimented when they do what is right and that is what propels them to continue. So what? Acknowledge and appreciate your customers when they make upfront payments or pay their bills on time! A simple “Thank You Message” is all you need to urge that customer to continue the cycle.

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The Four Accounting Tasks Every Small Business Must Know

In order to manage effectively and wisely, there are four accounting tasks every business owner must know and put in place for business success.

  1. Setting Up an Accounting System

The very first accounting tasks required is set the accounting system for the business. An accounting system is simply a process or a procedure that tracks and reports the day-to-day financial transactions of your business. The transactions will usually originate from the key accounting cycles (Payable, Receivable, Inventory and Bank) and supported by documents such as purchase orders, goods received notes, invoices, receipts, deposit slips, cheque books etc.

An accounting system can be prepared manually with a notebooks, Microsoft Spreadsheet programs or a well-tailored and already designed accounting software.

It is important to understand that the system you adopt will ultimately determine the volume of data you track, how the tracking is done and the reports that are being prepared! Thus, it’s necessary to engage the assistance of experts in accounting and business management system to assist design the system for your new company.

  1. Entering Transactions into the System

Once the accounting system has been created, the next task is the day-to-day entering of data into the accounting system. Data capturing can be time consuming, very disruptive and sometimes resulting in more time being spent on back office rather than on the business.

Business is simple, it is all about buying and selling, however these administrative/ book keeping tasks create nightmares and sometimes prevent business owners from achieving their business objectives, i.e profit.   That is why you need to make the decision to either discipline yourself to do it yourself, subcontract to an accounting firm, hire a bookkeeper or use an external accountant

“8 out of 10 entrepreneurs who start businesses fail within the first 18 months…. … Businesses need to at least get the basics right in order to survive…” – Eric T Wagner – Forbes

  1. Processing the Financial Data

Once you have entered the financial data, the next step is to begin the data processing task. Processing the financial data is nothing but to close each business day’s accounts before moving to the next business day’s work, so you can easily prepare financial reports.

The financial data will eventually be used to prepare the financial reports and budgets of your business. These are vital information that will help the management, staff, investors, customers, bankers, and creditors!

  1. Preparing Financial Reports

In school, academic reports measure how well a student is performing.  In the hospital, when the doctor issues a health check report, that report shows how well your body is performing. In business, the financial reports indicates how well the business is performing financially.

There are different types and kinds of financial report required to measure the various aspect of your business health. Reports such as the status of your customers, total sales made, total accounts receivables, gross margin, net operating expenses, earnings before taxes, net profit, net worth and many more are very critical in building and developing your business!

What’s on your mind concerning the four accounting tasks? Share your comments below.

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