Are you still doing the books by hand? If so, you might want to reconsider. Traditional bookkeeping methods can waste valuable time and be prone to avoidable errors. Spreadsheets, though an improvement over physical books, is also not an efficient option, especially when dealing with many orders and clients.
With manual bookkeeping methods, processes such as balancing sheets, producing income statements, and extracting data for developing business insights can be challenging. On the other hand, an automated accounting system makes accounting simple, efficient, accurate and reliable for business projections.
A produce ERP software like Silo automatically syncs payments, accounting, inventory, sales, and reporting in one place. This payment and collections solution processes payments, automates workflows, and gives business owners real-time visibility into how their financial decisions are impacting their bottom line.
What is bookkeeping?
Bookkeeping is the process of organizing and recording financial transactions that have taken place over a specific period. Proper bookkeeping helps produce businesses make key operating, supply, and financing decisions using the data in its system.
To understand the true financial standing of your producebusiness, your financial statements must be accurate, up-to-date, and capture incoming and outgoing transactions.
Why you should quit using manual bookkeeping methods for your produce business
1. Data entry errors
Errors may be as simple as logging information in a wrong column, transposing numbers, or failing to accurately document details about an order. However simple, they can translate into more serious consequences like erroneous tax estimation, increased operational costs, incorrect expenditure calculations, and wrong revenue estimations if not detected early on.
A produce accounting software prevents wrongful data entries by automatically creating invoices and by transmitting data from the inventory unit of your produce business. It also helps to identify duplicate entry errors and rectify them.
2. Difficulty in tracking invoices
Some customers may need reminding and, with a large client base, there are sure to be delays and missed payments from time to time. This makes it difficult to track payments, which in turn affects cash flow.
Converting into a more modern system can give you an advantage over the competition by giving your customers an overall better buying experience. Some clients will appreciate your company’s ability to stay ahead of the curve.
A good produce accounting solution or enterprise resource planning (ERP) software can create invoices using information collected from your barcode scanning system and automatically keep track of customer due payment dates.
It may also be designed to remind customers of their pending payments. Some ERPs can even allow customers to process payments directly from the invoice.
3. Time and labor intensive
A financing software makes data entry faster, speeds up the collation of invoices, and expedites purchase orders and payrolls that are to be printed or mailed to customers.
4. Poor reporting
In most produce business facilities, extensive reporting is done at the end of the week. This means it might be difficult to acquire certain financial reports in a timely manner.
A financing software, in contrast, extracts information, analyzes, interprets and produces graphical and written reports based on data almost instantaneously. Common reports you receive from ERPs and financing software facilitate payroll and sales analyses, stock evaluation reports, receivable and payable reports for profits and losses.
Real-time access to these reports help you stay on top—allowing you faster reactionary measures, adjustments to your business strategy, and turnover times.
5. Potential file loss
The safety of your files is not guaranteed when your produce business runs on traditional bookkeeping methods. A stolen ledger book, deleted spreadsheet, corrupt file or impaired system can make a mess of your accounts.
A computerized or automated system is a much more dependable way of storing data. The data is hosted on a cloud server and not on any particular device that may be damaged. Therefore, all business data remains protected even if your local PCs become corrupted or in need of repair.
Some ERPs have a role-based access feature which only allows authorized users to access the business’ financial data. This feature helps protect sensitive accounting information against a host of potential security breaches.
The above-listed points outline several reasons why manual bookkeeping methods could be placing your produce business at risk and holding you back from evolving into a bigger brand. With an automated system, you can make your processes more efficient and arrive at better business decisions based on accurate data.