Running a business can be a lot of fun, but nobody can prepare newbie business owners for the dark side of every business: bookkeeping. This is the tedious process of entering data into a spreadsheet, collecting long forgotten receipts, sending out invoices, and creating financial statements. Then again it’s still an important process, especially when it comes to statements, because if anything is recorded in an incorrect manner – whether that data is featured in your cash book or your ledger – you and your accountant will end up with a false report and a potential fine.
However, online accounting software can take care of that: not only is data entry reduced to the minimum but, thanks to it being entirely cloud-based, cashbooks and ledgers can be created in a jiffy as well. In other words, freeing up time to focus on the most important thing: running your business.
The Benefits of Online Cashbooks and Ledgers
Creating a cashbook where all your receipts and payments are kept in a chronological order can be easy – especially if you are doing accounting for yourself – but after a while there will be so much data it becomes virtually impossible to find the item you need. Now imagine this with the ledger where every single financial transaction related to your business has to be recorded. Even worse is when this data is stored in Excel or on a piece of paper, both of which can easily be damaged, destroyed or compromised.
When you use online accounting programs, however, your data is entered into cloud storage where your data can be easily accessed. Not to mention that every time you make a new entry the software automatically updates everything from your inventory and bank feed to your financial reports. This means that ledgers and cashbooks are also updated with the most relevant information, reducing manual data entry down to zero – a huge relief for both you and your accountant.
Cashbooks and Ledger in Online Accounting
No matter which accounting solution you choose, two features necessary for creating accurate and reliable cashbooks and ledgers are always present: a dashboard that provides up-to-date information about the current state of your business regarding finances and enables the creation of automated reports. This way you can easily monitor what is happening in your business and make the necessary modifications if certain data deviates from the ones that are supposed to be featured in your books.
However, accounting solutions are – by default – unable to create cashbooks and ledgers in the way most people might understand it. But the beauty of online accounting is that the above problem can be easily solved either by integrating third party solutions to your existing software or by using a complementary program created by the same company providing your accounting software. Such a solution is Xero’s Ledger and Cashbook, two programs specifically created for Xero Partners (bookkeepers and accountants) but equally useful for business owners keen on creating their cashbooks and ledgers on their own.
No matter which solution you choose – or which accounting software with complementary cashbooks program you prefer – if it’s possible to connect to your client’s or your own bank feed, then the software can import all transactions and reconcile them either manually or automatically, even on a daily basis. Since other files are also imported you can easily monitor business performance, manage fixed assets and generate additional reports for any purpose like creating workpapers for the annual audit.