Make Accounting Systems More Profitable

Spring 2009

By Gene J. Marks, CPA

Do you or your clients ever feel like you are using maybe 20 percent of the features of your accounting software? You are. In fact, you’ve probably spent a lot of money to replace the previous system, yet you are not doing much more than you were before.

The good news is that you can do something about this situation. You and your clients can make more profitable use of your accounting software and increase the return on the investments you made.

Whether your practice is running a small package, such as QuickBooks or Peachtree, or a mid-market application, such as Microsoft Dynamics GP, Sage’s MAS product line, or other mass-market or industry-specific software, you can get more out of existing accounting systems.

Get Alerted
For starters, you need to be proactive rather than reactive. Simply put, being proactive means finding things out be-fore the you-know-what hits the fan so you can take preventive action. Many accounting applications have features for creating rules and alerts. Even if this feature is not available out-of-the-box with the current accounting system, you or your clients can create alerts, called "triggers," if the system uses a SQL database, and most do. Third-party, add-on software that handles alerts and rules is another option. With the alerts, clients will be able to get immediate notice when an invoice goes overdue or a product is selling poorly, for example. The red-flag options are almost limitless.

Get Daily Data
If your clients are running monthly income statements out of their accounting systems, congratulate them. That’s more than most business owners. Then tell them to stop doing it. If they want to manage things more effectively, help them create a custom "Flash Report" that can be run every day with a click from their accounting system. Key financial figures can be included in this report, such as open receivables, payables, purchase orders, sales to date, payroll costs, and so on. Make the report particular to their business, and help them convert the report to graphs. If you do not know how to do this, have a consultant do it.

Take Reporting to a New Level
When it comes to reporting, help your clients kick it up a notch. Accounting systems have hundreds of reports ready to be used. Take a little time to review them, pick out a good four or five, and bring them to the attention of your client. If there is information they would like to be getting, but the report isn’t available, create it using reporting tools such as Crystal Reports, Microsoft Access, or Microsoft Excel. Dynamically linked spreadsheet reports that refresh with new data with each click will keep your clients’ meddling and error-prone fingers out of the accounting system, too. This will mean less headaches for you at year-end.

Get Another Demo
If accounting software was purchased from a reseller or partner, have them walk through the software again and provide recommendations for using it better. Ask lots of questions, press them on better ways to do things, and find out what their other clients are doing. Do this once a year. Software vendors are always coming out with new bells and whistles. Stay current with them all.

Read the Ledger
Do your clients have the skill and patience to read financial data? If so, have them put those skills to use. Print out their general ledger every month, and have them read it. We are talking about their business after all, so they may find it fascinating how much they spent on office supplies or if they are missing an order from a customer who agreed to a sale weeks ago. They may be surprised at how many interesting things can be learned by reading the data the accounting system holds.

Messages to Customers
Accounting systems can also be marketing systems. Most accounting systems allow some customization of invoices and other documents, so help your clients turn those items into advertising. Every invoice, packing slip, and order confirmation sent to a customer should have a custom message. Announce special pricing or invite them to the next trade show booth. Use graphics and pictures, or ask survey questions. Just be sure to change messages frequently.

Cut Inventory
There are too many business owners that don’t keep accurate inventory details in their accounting system. If a client has inventory, teach them to better track it in their accounting system. Have them take physical counts and test the quantities. Make sure the software’s order entry and purchasing modules are talking to the inventory module. Help them create reports of safety stock and slow moving items. Remember the previously mentioned alerts? Use them here to send e-mails when inventory is running low or not turning. Turning inventory just a little more will cut overhead and increase cash.

Do it in Bulk
People often talk of recurring headaches or recurring nightmares, but recurring can be a good thing too. A good accounting software application should allow the setup of recurring bill paying or invoicing. Most do. A lot of time can be saved by avoiding duplicate data entry. Have clients create a batch of monthly checks or cash receipts, and use that batch again and again each month or week.

Make Marginal Change
Your clients’ accounting systems should be able to assign costs to inventory items. The client may know each component of this: costs from purchase orders or vendors’ invoices, mark-up for overhead and labor, and, finally, how much they’re charging for each item. Now teach them to bring these elements together. Show them the magic of a weekly gross margin report. Blow their minds by having them look at every single job that goes out the door, and attack those orders that fall below an acceptable gross margin. They will soon discover which customers are costing them more money than they think, and they can get rid of products that are not making enough.

Avoid Deadbeats
Accounting systems have a lot of built-in features to help your clients avoid getting fleeced from the occasional sleazy customer. Teach them about using credit limits, convince them to start generating finance charges, and have them start sending statements. If their system can flag the bad guys before an order is placed, have it do so. Show them the magic of their accounts receivable aging report, and make sure they always agree to the general ledger while you’re at it. Have them look at the invoice days outstanding reports, and set up alerts to get an e-mail when a customer exceeds a receivables limit. Just by digging into your client’s accounts receivable software module, you’ll help them figure out all of these features they are not using.

Certainly, a client will never use 100 percent of their accounting software, but if you think about some of the suggestions provided in this column, you can help your client get more productivity from the software he or she already owns. This will result in a few extra bucks for everyone concerned if done correctly.

Gene J. Marks, CPA, is president of The Marks Group PC, a technology consulting firm based in Bala Cynwyd. He can be reached at gene@marksgroup.net.

LAST UPDATED 4/3/2009

Make Accounting Systems More Profitable

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