business management

As you approach the end of the calendar year, you may find yourself asking the same questions as last year: Is this the year that I upgrade my financial software? Do I have the right mix of applications? Does my current suite of tools meet my needs? Now is the time to asses your financial software systems and ensure that you are ready to tackle the New Year right.

Tools of the Trade

If you’re running your own business, you wouldn’t dream of trying to be effective without using the proper tools of your trade, and unless you are indeed running a financial services business such as accounting, securities trading, or the like, you should be familiar with the various financial tools available for running a small business—the necessary evils of your toolbox. You know you need them; you just wish you had an expert around when you do.

Accounting and Record Keeping

If you are not using some of the terrific tools out there like Inuit’s^© (www.inuit.com) Quicken^®, QuickBooks^® or Peachtree’s^© (www.peachtree.com) First Accounting^©, you are not using the finest available, and arguably the most cost-effective tools out there for the home business. Tools like these are absolutely essential to work through elements of your daily financial requirements when running a business including inventory, accounts payable, accounts receivable, tax, and basic payroll.

When I started out, I maintained meticulous paper records. I still have those large hard-bound green paper ledgers in storage as the truest art of the businessman — recordkeeping. Records are your financial map to where you are and where you’re going. They can tell you exactly what your business’s financial health is compared against the same period as last year; what your growth is; where your costs are; who you owe, and more importantly, who owes you. They form the foundation of your business and can be utilized to justify financial security from banks, investors and creditors.

Upgrades

Let’s say you graduated from the paper-based general ledger account book already and are using one of these robust tools already, let’s say Quicken 1998. Is it time to upgrade? The answer is not always yes. In fact, unless you have file compatibility issues with your PC operating system, or with vendors or suppliers, or you need to upgrade to the latest application version in order to take advantage of the ever growing suite of services offered by online banking (and there are many), your need to upgrade is less a function of what your current business needs are than where you want to grow.

Financial Projections

If you have an accountant, you should both openly discuss an assessment of where you want your business to grow in the coming year. Do you want to add the ability to receive online orders? What about automatic financial uploads to your accountant? What about online banking and payroll services? These questions need to be asked now whether you have an accountant or not. Does your current toolbox allow you to prepare for the growth and opportunities of 2008? If not, get the advice of an accountant and then do some basic research of the resources that are highlighted below on your own.

If you decide it’s time to upgrade, do so after you have completed your financial reporting for the current year, and have issued and audited your end of year reports. Then, upgrade and run those reports again. Check each and every line item on your annual financial statement, revenue reports, and your balance sheet. The accountants call this “tick and tie” and they do it for exactly this reason—you need to know that your financial tools are accounting for your business’s line items in the same way year after year.

Your Toolbox

If you are in business for yourself, you need the proper “tools of the trade” to do the job. The financial tools available for your toolbox today are easy to use, inexpensive, and absolutely critical to your success. The ability to generate financial reports seamlessly to monitor cash flow, financial ratios, and the overall health of your business are essential map points to tell you where you are and where you are going.

A Final Word about Back-Ups

As previous articles in this magazine have emphasized, it’s an absolute necessity to maintain off-site back-ups of your business data. The safekeeping of these records, both paper reports and electronic files, is as essential to your business’s financial security today and in the future. HBM

Gregory Grabowski, a registered Professional Engineer and reserve Naval Officer, focuses his Project Management talents to design and build facilities for corporate and government clients worldwide. His professional experiences have taken him to six of the seven continents. He resides in Southern California and enjoys adventure sailing.