Importance Of Online Accounting For Small And Medium Businesses Post COVID19

<p style="text-align: justify;">The operations of most of the businesses are impacted due to the complete lockdown imposed by almost all countries. Impacted most are the small and medium businesses that struggle from month to month in managing their working capital, production, shipments, finance, compliances, etc. A sudden lockdown made the small businesses temporarily paralyzed as business continuity was never a major point of discussion until the crisis hit earlier this year. Experts feel that even when the lockdown is lifted, the businesses will take at least one year to come back to the pre-corona period levels provided efficient measures are adopted by the business owners.</p><p style="text-align: justify;">Being in the client servicing industry for close to 12 years, I can say from my experience that the small businesses were operating in a traditional way for a long time. Where systems operate in an offline mode and often consist of old and redundant processes. However, to overcome this phase where potentially most of the small business risks going out of business, drastic measures are required. One such measure that is need of the hour is having an online finance/accounts department. As they say, finance is the backbone of any company, and accounting is an integral part of a typical finance department, therefore, protecting the books of account and having them 24 hours 365 days available is of utmost importance. Below are some of the points I believe are important for SME owners to consider.</p><ol style="text-align: justify;"><li><strong>Ease of Accessibility -&nbsp;</strong>Most of the offline accounting software are not user friendly and require a minimum of 6 months to get trained to use the software. Online accounting or Cloud-Based accounting software are very easy to use. Most of the accounting entries can be done by just a click of a button and several features partly automate the book-keeping.</li><li><strong>24/7 Data Availability -&nbsp;</strong>Whether you are working from home on your laptop or are out somewhere you can access any reports or account or track your payments by just opening the application. The data is stored on a server and can be accessed from anywhere in the world. All you need is the Internet. I firmly believe that this feature of a cloud-based accounting system will be key to many SME's especially after the mandatory lockdown imposed due to Corona Virus. A lot of our clients were struggling before the payment of taxes or before paying salaries or making vendor payments or following up with the debtors as they just didn't have the information available for close to 2 months.</li><li><strong>No software installation -&nbsp;</strong>All the offline accounting software requires an installation on each device meant to use. For e.g., The software is installed on systems accessed by the finance team, procurement team, sales team, and management. This could be easily resolved by having an online accounting system. As the books of account can be accessed by just using login credentials.</li><li><strong>MIS Reports</strong>- This can be the game-changer for small and medium businesses. Based on my experience with small businesses, the owners often come with a problem, "I don't know what my profitability is?" or "I just don't know if I am making enough for myself" or "I don't understand my Working Capital cycle." and many more. These problems can be solved by simply implementing MIS reports in your business system. A lot of online accounting software gives you an option to create relevant reports. The reports are inbuilt and can be customized as per need. However, for more complex reports or business-specific reports, I would recommend contacting an expert on the matter. I will be covering this in detail in a different article.</li><li><strong>Sustainable and Reduces Paperwork -&nbsp;</strong>In an offline accounting, there is a big chunk of time that is devoted to managing documents, printing vouchers, taking copies, physical signing of documents as per the delegation of authority matrix, storing these documents, etc. With a cloud-based accounting system, you can upload all these documents on the server linked to each relevant entry. All the stakeholders need to approve through the system itself. This can significantly reduce the paperwork and time spent in managing the documents.</li></ol><p style="text-align: justify;">There can be many more benefits of using a cloud-based bookkeeping system, however, I tried to highlight only those which have a major impact on small and medium businesses. I hope that everything mentioned above gives a different perspective to the SME owners and contribute to helping them manage their business more efficiently and effectively.</p><p style="text-align: justify;">&nbsp;</p>
KR Expert - Tanuj Keswani

Core Services

Human insights are irreplaceable in business decision making. Businesses rely on Knowledge Ridge to access valuable insights from custom-vetted experts across diverse specialties and industries globally.

Get Expert Insights Today