Small business accounting software – The Chart of Accounts explained – Part 1 of 4

The essential reports you need to view the financial activity, the financial position and the timing of the amounts of cash coming in and going out of your business is generated from the information and balances recorded in your chart of accounts.

Good businesses know what they want to track and measure and why. The detail of what they want to track and measure is reflected in the design of their Chart of Accounts which in turn is a mirror of what is in their Business Plan.

Successful businesses use business planning to predict what they expect to happen in the weeks and months ahead. They always begin this exercise with the end in mind

Good businesses set less than five clear objectives and then think through and decide the best strategies to achieve them.

Strategies are then broken down into Activities with dates and priorities which are then communicated and assigned to the individuals or groups for execution.

The business plan details the assumptions about what sales are forecasted to happen when, what the future financial activity, financial position and cash flow is expected to be.

Each assumption helps you define the financial targets and understand the future financial impact. So it’s essential you are able to accurately track and measure these critical numbers

Cash provides the oxygen for every business and therefore it’s critical the supply and consumption is carefully managed to keep the business alive and help it grow and flourish.

The underlying financial and supporting information behind the critical numbers has to be accurately recorded and well organised to support effective business management.

This can only be achieved with enduring discipline, a well organised chart of accounts and good small business management software.

Because of the rapid emergence of SaaS systems, online small business accounting software now makes it possible for business owners to see real time view of progress of their business against their plan.

Every number in the accounts of a business has a story behind it containing events and characters the details of which cannot easily be recorded in an accounting system therefore Small business management software as opposed to accounting software is now an essential part of the foundations of a well run business.

Continued in - Small business management software – The join between planning and accounting – Part 2 of 4

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