Tips for Managing Business Growth with Accounting Software

Most businesses would welcome the chance to achieve 15% year-on-year growth without putting in extra hours or making significant investments. Research shows that this is possible with the right cloud-based accounting software, yet many business owners remain unaware of its impact. A growing business is better positioned to increase revenue and profitability, seize new opportunities, reach more customers and stay competitive. The benefits are clear, but the true value in accounting software lies in how it creates the conditions for growth by improving accuracy, saving time, and enabling better financial decisions. So, how exactly does it support business growth?

1. Why Accounting Software Matters for Growth

Effective financial management is the basis of business success, regardless of the business's stage or industry. However, taking the time to truly understand a company's financial position can soon fall to the bottom of the to-do list as the day-to-day realities of running a business take priority. In recent years, however, advances in technology, including the proliferation of accounting software, means that this task no longer has to be as onerous and time-consuming as it once was. This accessibility makes it easier than ever to gain the clarity needed to understand a business's financial health and create the right conditions for growth.

2. Driving Cost Efficiency Through Automation

Automating processes and the time and cost efficiencies this will bring is one of the main ways that accounting software can positively impact a business. This can be particularly powerful for multi-tasking small business owners, freeing up time to focus on core business activities rather than manually completing financial housekeeping.

For example, with cloud-based accounting software, recurring invoices can be automated, with personalised invoices sent on the same date each month. In addition, quotes can be turned into invoices in a matter of clicks, and email templates can be used to save time and encourage swift payment.

Accounting software also allows expenses to be more easily tracked and recorded, and even meeting reporting requirements is simplified. VAT reports can be created in seconds and formatted so that filing a VAT return is a simple task. Reports can even be automatically customised depending on location. As even micro businesses need to spend hours each month on meeting their financial obligations, automating processes can be a real time saver. Beyond automation, these platforms also strengthen financial visibility and control, particularly when it comes to cash flow.

Read more: Using technology and automation to support your firm's growth.

3. Cash Flow Visibility

Cash flow plays a key role in the financial health of any business, but monitoring and managing it can be a challenge. Manually tracking every transaction that goes into or out of a company is a challenging task, and, as with any manual process, there is a risk of inaccuracies affecting the numbers. Accounting software removes any guesswork and instead delivers an accurate, real-time picture of the financial situation in a simple, understandable way. For example, cash flow forecasts can be quickly generated to highlight incoming and outgoing transactions over a specific period. This level of clarity will make it easier to identify any potential issues around liquidity as well as take advantage of opportunities. This visibility helps business owners identify potential risks early while also spotting the right moments to invest or expand.

While the negative impact of late payers on cash flow has been well reported, the unpredictability created by late payments can also make it more difficult for businesses to grow. Accounting software can bring back some certainty to the area of payments with the ability to track outstanding invoices on a single dashboard, so nothing gets missed. In addition, offering clients the ability to view invoices online and make immediate payment can lead to accounts being settled more quickly.

Read more: How to Prevent Issues Arising with Your Business' Cash Flow

4. Better Decision-Making with Accurate Management Accounts

Utilising cash flow forecasts is just one way in which accounting software can help to improve decision-making within a business. The ability to access detailed real-time financial data, generate reports and forecasts, and view all of these in clear, customisable dashboards tailored to the unique needs of a business can be invaluable. Similarly, historical data can be accessed with ease, making it easier to spot longer-term trends and changes. This level of detail, in turn, makes it easier to track performance against KPIs, identify opportunities and respond quickly to any changes, all while generating long-term sustainable growth.

By moving away from manual bookkeeping, which is prone to human error, business owners can also have more confidence in their figures. Accounting software ensures financial records are as accurate and up to date as possible so that decisions can be made with confidence. It's also worth noting that cloud-based accounting software can be securely accessed anywhere there's an internet connection, and multiple people can view the information at the same time. So, if a decision needs to be made on the go and with the input of multiple team members, there's no need to wait until everyone is in the same place looking at the same screen.

Read more: An Introduction to Accounting Dashboards.

5. Understanding What's Working: Track Profitability Across Products or Projects

Of course, as with all areas of running a business, there's little value in doing things once and then moving on. When it comes to financial management and business growth, consistency is key, and using accounting software to track profitability over time across specific projects or products is a great way to ensure long-term success. Unlike manual accounting, which can be long and complex, accounting software enables users to categorise expenses and revenue, generating reports that provide valuable insights into individual products or projects. This involves setting up specific accounts for each product or project that needs to be assessed and tracking expenses and revenue accordingly. The software's reporting features can then be used to analyse profitability metrics such as gross profit, EBITDA and net profit.

Read more: How Three Hours of Accounting a Month Can Save Your Sanity

6. Choosing the Right Accounting Software for Your Business Stage

While the benefits of accounting software are apparent, choosing the one that meets the individual needs of a business can be more difficult. Rather than rushing into a decision, it's worth taking the time to consider a few key points before committing. For example, the size of the business and the number of transactions being processed are two key considerations. While a sole trader may only require basic invoicing and expense tracking services, a larger or growing business may need additional support in areas such as inventory management, payroll and VAT reporting. Similarly, established companies may require more advanced reporting and analytics features or multi-currency support.

It's also a good idea to opt for a tool that integrates with other systems, such as payment platforms for online payments and point-of-sale systems, so that the software can evolve along with the business. Security should also be considered, so look for software that has robust user authentication measures in place, as well as data encryption and server protection.

Ease of use and access to intuitive dashboards will be essential, but also consider the support options offered by the provider in case of issues or confusion. A responsive company with a support team that offers rapid replies and quick resolutions can be invaluable when decisions need to be made or reports filed.

7. Stay Compliant While Scaling

While growth is exciting, it can also be a challenge, so opting for software that can grow with a business is essential. Business growth can come with additional reporting requirements. For example, if taxable turnover exceeds the £90,000 VAT threshold, companies have to start paying VAT. This means VAT records must be kept and reports filed with HMRC every three months. Doing this manually would mean a substantial extra burden on a small business, but choosing software that automates this will take away any additional pressure. Indeed, scalable solutions that accommodate increasing transaction volumes and offer integrations and additional features as a business expands can only be a wise choice.

Whether it's automating processes, improving decision-making or encouraging accuracy, accounting software can have a big impact on business growth. By leveraging its real-time insights, more reliable forecasting, and built-in scalability, business owners can position themselves in the best possible position for success, both now and in the long term.

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Further Reading

The Benefits of Outsourcing Some Accounting Tasks

2024 Spring Budget: What does it mean for small businesses?

A Guide to Sick Pay for the Self-employed or Company Directors