I have written – more than once – on the attraction people have for all-in-one software.
It makes no sense. Yet it is pervasive. So, yet again, let me take another stab at this.
Look at your personal life. You have online banking. You do not send emails from your online banking, do you? Do you want to?
You go to Facebook, jump to Twitter, then LinkedIn (oh, whoops that is business). Each has separate log-ins.
Each software has a unique function. You need to do a personal budget. Facebook has a module for that. Just kidding.
Would you trust it if it did? I am not referring to security. Plain excellence. You would likely do a budget in Google sheets or Excel, right?
Three Industry Examples
Here are some business examples from 3 separate industries:
Real Estate Industry – core brokerage software could be Broker Wolf, or, more recently, Loft47. Neither has an accounting package. Broker Wolf has a sync to Quickbooks Desktop. Loft47 syncs seamlessly to Xero.
Home Health Care Industry – two main scheduling software packages are – ClearCare and Alayacare. Neither has an accounting package. They do a fabulous job at scheduling, tracking patients, and billings. They do not even have a payroll module.
Technology Industry – two main software packages dominate about 90% of the global market. Autotask and Connect Wise. Neither offer an accounting package.
When an industry-centric software does offer an accounting module they tend to suck. Really suck. How bad do they suck? Really bad. No bank feeds, horrible reports, not up-to-date with tax reporting to name a few things.
Conversely, when a great accounting package starts to add modules for manufacturing, health care, and so on, it will suck too.
The accounting software has a bigger problem. Think of the sheer, stunning number of industries they would have to add as modules! Why not just let really smart software developers have access to your software through open APIs (techy abbreviation for Application Program Interface)?
Then, boom, you get the best of both worlds!
Hilarious Spoof
Here is a hilarious advert for all-in-one business software just to really drive my point home, for the, uh, 3rd time…
Selling something, whether a product or a service, and not getting paid is brutally painful.
Sloppiness in your billing process will cost you. The ultimate cost is not getting paid.
As I have written about many times before, the cost of a bad debt is more than the actual dollar value lost.
What do I mean?
Consider a bad debt of $1,000. Did you lose just a $1,000? Yes, you did lose $1,000, but…
You need to recover that $1,000, right?
Let us say that you sold a computer for $1,000. The computer cost you $800. That leaves $200 to cover your overhead. That is called your gross margin.
To recover that $1,000 lost as a bad debt how many computers do you need to sell?
Five. Yup, gulp, five.
How so? Do the math.
5 computers sold @ $1,000 each = $5,000
The cost of those computers is 5 @ $800 = $4,000
The difference is $1,000. The bad debt has now been recovered only after selling an additional 5 computers.
So, is the bad debt just $1,000, or $5,000? I say $5,000.
9 Principles of Managing Accounts Receivable
Develop a clear, internal accounts receivable procedure.
Understand your new customer.
Credit check your new customer
Mutually agree terms with your customer before delivering goods or services
Issue the invoice immediately after delivery of goods or services.
Politely chase your customer before the invoice is due to ensure they are on track for payment.
Continue politely and persistently chasing your customer for payment if they have not paid by the due date.
Optional – for truly troublesome customers, go ‘nuclear.’
Thank your customer for payment as soon as possible after receiving it.
4 Cornerstones of Your AR Procedure
Schedule invoice chasing time every week.
Book the time out in your calendar in advance. Never cancel it, never miss it.
Maintain invoice communications histories.
Log all communications with every customer about every invoice. Emails, phone calls, letters, meetings – log it all
We use a cutting-edge program with our clients called Chaser. All communication gets logged in a portal for each customer.
Regularly assess problem invoices
For larger businesses, this may mean holding credit control meetings. For smaller businesses, this should be covered in regular finance meetings. Always complete bank reconciliation on the day of the meeting to ensure you are working with the most accurate and up to date info.
We stay on top of our bank reconciliations for all our clients daily. For clients who pay by cheque it is critically vital to deposit cheques received within a day.
Inform the business of bad payers!
If assessing problem invoices reveals customers with poor payment trends, let other departments in your business who have touch points with them know. This may be sales reps or account managers.
4 Questions You Must Ask New Customers
What information do you need to make payment?
Who should I speak to in order to settle payment on this invoice?
When do you make your payment runs?
What are your business details for invoicing purposes?
By getting answers to these 4 questions, you will avoid:
Getting paid late
Having to re-do invoices, resulting in more internal labour costs
If you are struggling with accounts receivable, message me, we can help.
I have discovered an addiction people have to a concept…
The concept is all-in-one software.
First, what is all-in-one software?
It is a software suite (usually cloud-based now) that, well, simply, does it all. Basic accounting module, inventory, manufacturing, Customer Relationship Management (CRM), accounts receivable, accounts payable, and more.
Why the heck would you NOT want everything in one place?
We have clients with upwards of 8 separate pieces of software. Each with a separate login.
What? Wait a second…I can hear you say. Are you trying to convince me that 8 separate logins creates more automation than one single sign-on?
I do not believe it, you say.
I will show you how with an example with one area – accounts payable automation.
Follow the Flow
You have a business with 12 locations.
A supplier emails a bill to your document hub software. No human touch.
Software pulls out the amount, the tax, the supplier name, and even the account code.
(**NOTE** here you will likely have an experienced accounting technician checking that everything is coded to the correct account. She will make any coding changes as needed.)
Next, the software publishes it to the accounting software automatically. It attached the bill. No human touch.
Another piece of software looks into your accounting software to route the bill just emailed to the correct department head for approval.
The department head gets an email from the software with bill attached. This person approves the bill with one click.
The software takes that approval and attaches an audit report into the accounting software moving it to “bills to be paid”, along with a copy of the bill and the audit report.
Note that so far this has been one mouse click by a human.
The accounting manager goes into the bill payment software. It sees that the software has auto fetched all the “bills to be paid”, along with the copies of the bills and the approvals (audit reports).
The accounting manager approves the bills for e-signature. (One or two mouse clicks).
The CFO gets notification via email to approve a bill for payment. She clicks “approve” in email.
This audit trail of approvals and e-signatures is recorded in the software.
The software then pays the supplier into their bank account.
Lastly, it records the payment into the accounting software.
Summary of What Just Happened
Okay, what just happened?
The software took care of multiple functions where in the past data entry clerks would have done it. (And done it often very poorly).
The human steps were:
Accounting clerk checked that the document extraction software coded the bill to the correct account
The department head approves the bill for payment (one mouse click)
The Controller and owner each e-signed the payment (two mouse clicks)
The software did this:
Extracted the details on supplier bill
Posted to accounting software
Routed bill via email to department head for approval
Posted approved bill as “ready to pay”
Attached documents including audit report at each stage
Posted the bill payment to the accounting software.
How many logins were there?
The accounting technician logged into the document software
The accounting manager logged into the bill payment software to approve payments
No all-in-one software can do all of the above. Some steps, yes. Not all.
Why Does This Work So Well?
Specialization. When you go to a doctor he will always refer you to a specialist depending on what he discovers, right?
Your doctor will not send you to a nose and throat specialist if you have a sore foot.
Each doctor becomes highly focused on her speciality.
It is the same with software. We use a software called ApprovalMax to route bills to department heads for approval.
The accounting software does not do what ApprovalMax can do. The accounting software acts like a traffic cop receiving requests from the specialized software. It is the hub.
You would not trust a doctor who “does everything”. Nor should you trust a software that claims to do it all.
Two weeks ago, I wrote about all the stunning, very cool software available for small businesses.
Amazingly, these software programs can be used for small businesses up to $100 million in sales volume.
However, some people have concerns going fully into the cloud. In this week’s blog I will address those concerns.
Firstly, My In-House Servers are Safer Than the Cloud
Really? How so? Are they physically safer? Can they be compromised by theft, hardware failure, heat, cold, dust? Are they sitting in a locked, air-conditioned room?
Are you fully satisfied that your backups are restorable?
I once thought I had a perfect backup system for data on our servers. I even tested our backups regularly to ensure they worked.
Then one day, I needed to restore some lost data. Oops. Gone. I have no idea to this day, why I could not restore the lost data. But it was gone. That was a wee bit of a shock.
Managing servers in-house can result in:
Lost data
Hardware failure
Software failure
Outside attacks to steal your data
What Do I Get When I Use a Cloud- Based Software?
Peace of mind is the main thing you get. We started our online accounting business in 1999. We used the latest servers (Dell) and the latest Windows Server software.
We placed our servers in a walk-in vault in our board room in downtown Victoria. We installed air conditioning units in the ceiling.
Still, the headaches and stress was great! Often Windows server software updates changed the way everything worked together.
I had many sleepless nights hacking the registry of Windows so all our clients and Team members could keep logged in.
We then moved to a data facility, and still, many sleepless nights when something broke, or there was a power outage at the server facility.
Moving 100% of our clients to the cloud a few years ago was a huge relief.
Everything was now managed by massive teams of experts for both hardware and software.
You could float on a cloud of peace.
So, is it secure?
Super secure.
As an example, check this out for details (how Xero manages your data):
If It Is So Secure in The Cloud, How Does Data Get Breached?
It is true, your data can be breached.
But first, know that your data is encrypted when it leaves your computer. Second, it is encrypted on the journey back to your computer.
At Xero, unless you let one of Xero’s support Team in by inviting them, they cannot access your data. When you need support, you have to invite them in. They have no way to access any other way!
So, how do breaches occur?
By:
Accessing your user email and password
Phishing attempts
How to Protect Against Data Breaches?
There are 5 things you can do to ensure your data is never breached:
Use secure passwords. Avoid your pet’s name with your date of birth, as an example;
Use multi-factor authentication. Usually this is a unique code generated by another piece of software on your phone. That, combined with a good password, is virtually impossible to hack;
You can check logs of when you last logged in. Look at these logs once in a while to ensure no one has gone in except you and your Team;
Have up-to-date reputable anti-virus software installed. (**NOTE** Windows 10 has been great having built-in anti-virus checks);
Beware of hacking or phishing emails. Do not get hoodwinked into thinking they come from your software provider just because they look official.
Finally, there are ways to dump your data from the cloud to your desktop computers. I will write more about that in another blog.
