SolveYourProblem
Article Series: Accounting
Home & Small Business Accounting
Computerized
Accounting, Software and Support
There are many versions of accounting software
available to small business owners, but accounting is only
one aspect of recordkeeping. Word processors, databases, spreadsheets,
and all sorts of graphics can aid you in managing the financial
and clerical aspects of your business.
There
is probably no area of greater confusion to the self-employed
businessperson than the true costs and benefits of installing
and using a computerized accounting system. Such business owners
frequently have an inflated picture of the benefits of computerized
accounting and an incomplete understanding of the costs. Some
computer resellers and systems installers are unwilling to
point out these conceptual errors, which often results in some
unpleasant surprises and bad feelings.
First and foremost, computerized
accounting is not simpler than manual accounting. Even the very best
accounting system
will not magically convert a clerk into a bookkeeper. In fact,
many full-charge bookkeepers insist that computerized accounting
requires sharper bookkeeping skills than a manual system. Manual
systems generally break tasks down into simple steps. Errors
are not automatically carried into other accounts. Second,
if you are going to bring your accounting in-house, you need
to realize that a computerized accounting system is not going
to straighten out a manual accounting mess. Small, rapidly
growing businesses, faced with limited capital and cramped
cash flows, often put off establishing proper accounting procedures
until a sunnier day. A manual accounting system verging on
a bad dream can become an almost impossible nightmare when
computerized. To "go onto" a computerized accounting
system, your books have to be in perfect order. Accounts receivable
and payable have to be exact and up-to-date, and beginning
balances must be accurate.
Moreover, where staff is already stretched, part-time help
may be required, because the two systems should be run in parallel
for at least two months. In this way, mistakes are more easily
caught and corrected and the business need not rely on the
new system to provide accurate data. Your staff simply must
have time to learn the new system. Expect three to six months
to return to earlier efficiency. The system you purchase will
not do everything exactly as you want it. Some modifications
may be needed to produce the output you need; these won't be
free. Plan on involving an accountant in this task. Don't expect
the package seller to provide advice only an accountant should
provide. And some tasks simply do not lend themselves to easy,
efficient transfer to computers. Computers are only tools.
Finally, let's look at the support
issue. Support
includes all the services necessary to get and keep your
computer system
up and running and as productive as possible. These services
include instruction, education and maintenance both under warranty
and other. Some resellers include preventive maintenance to
service your computer before it stops working. The accounting
package reseller probably captures a gross margin of 20 percent
to 40 percent of the accounting package retail price. Out of
that margin, sales commissions and all overhead expenses must
be paid. Most support requires not only a thorough knowledge
of the package, but a sound grounding in standard accounting
procedures. Well-trained and equipped support personnel normally
need to charge at least $60 to $75 per hour to make a reasonable
profit. Therefore, on average, one should probably not expect
more than one hour of qualified support "free" for
each $1,000 of purchase price. Free, unqualified support generally
costs you more than you can afford. # # # # # SolveYourProblem.com : 2007
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