Most people who earn their education in a field other than accounting learn about important financial concepts through trial and error. While this is a perfectly reasonable approach in the fields of science, manned flight and dog walking, when it comes to a business’ money, there isn’t any room for mistakes. For one thing, taxes have to be filed accurately. Further, for a company trying to do business in this electronic age, not knowing what is happening with the company’s money is more often than not a one-way ticket to bankruptcy.
Fortunately, computers have been available to businesses for decades, and one of the things computers do better than anything else is repeatedly add up the same columns of numbers. Since these numbers are stored in databases, those computers also make it possible for business owners to store and organize their data in numerous useful ways.
Data Mining for Profit
Now that the practice of data mining has been labeled with a buzzword, every finance-minded person believes they have discovered new technology. Nothing could be further from the truth. The very practice of taking a list of financial transactions and turning them into a balance sheet is, ultimately, data mining.
What accounting software does that an accountant does not is make it possible to adjust the questions posed to a database over and over again until the right information appears on the screen. For example, if a company knows that sales of books dropped in July and picked up again in September, they can rightly presume there was a reason and possibly remedy the shortfall the following summer. However, if they can see that sales dropped by double digits during a particular week in July, then they might draw a different conclusion.
When prospective new customers look at accounting software reviews, they will often notice other customers are more interested in these important core functions and less interested in fluff.
It should be noted such work would be prohibitively expensive if it were left up to an accountant. With a computer, it’s a simple matter of adjusting the questions.
At a tire store, customers who buy new tires are going to need a check of their brakes soon. They’re also going to need wheel alignment. They might even need rotors or a check of their suspension. The management running the tire store might be aware of all these facts, and further might be highly motivated to sell those additional products to their tire customers. But if all those sales are just stored on receipts someplace, it’s going to be a Herculean effort to examine them all to see which customers purchased which product and when.
But if that tire store’s management took the time to read accounting software reviews, made a choice and is using a quality application, they will have the option to drill down into their sales at nearly any level of granularity. Not only will they know which customers purchased tires, but they will be able to break those purchases down by car model, date and even what city the customer lives in. If they are particularly savvy, they might even ask their customers to fill out a survey to see what their mileage is like and how their commute times compare with other customers.
It’s all part of the magic of databases and employing the computer to do what computers do best.
Leaving aside the day-to-day, one of the most important things accounting software can do for a company is give the managers a clear picture of where a company stands at a given moment. Documents like Profit and Loss Statements and Balance Sheets give stakeholders a way to mark progress and to determine if one or more important categories are being overlooked. When these snapshots are combined into a chronological narrative, they can highlight crucial facts that might otherwise be obscured by distractions and busy work.
It should be pointed out that enterprise-class databases are available for nearly any computing platform now, including mobile devices and even on cloud servers. Setting up a basic accounting system for even the most humble business is a matter of setting aside a few hours and then maintaining the discipline to stick with it. The results of such discipline are likely to be quite lucrative.