How 2 businesses use financial management tools for forecasting

Efficient financial management is imperative for every organisation, but it may not be every small business owner’s forte.

Fortunately, financial management tools have levelled the playing field, and there are benefits to integrating multiple functions in one place.

A wide array of software solutions can help you meticulously and accurately track your income and expenses, generate invoices, manage your payroll, ensure tax compliance, and capture and analyse your financial data – all in a single platform.

Nathan Rigney at NGR Accounting says financial management tools can prevent small business owners from overspending by organising income and expenses into categories.

“Many small business owners think they’re doing better than they actually are,” he says. “Categorising your money helps ensure you have enough for taxes and staff super, for example, and you’ll detect any cash flow problems as they arise.”

Nathan likes Xero’s Budget Manager, which enables you to see your profit and loss and what you have to spend, while a premium version can analyse your data and where your business is going.

“If you keep a really clean file over time, you can look at your trends, which can help you project into the future.”

Benefits for businesses

Tristan Evert says QuickBooks Online has been instrumental in getting his digital marketing agency On the Move Marketing off the ground.

“I use it for everything,” he explains. “It sends recurring invoices to repeat clients, sorts my bank transactions and income into tax categories, and calculates my GST. My tax return is ready in 10 minutes.”

As with any new program, Tristan says it took some time to get used to the layout, but now he’s set up the rules, “everything happens automatically”.

“I definitely recommend sitting down with your accountant who can take you through different features and how you use them,” he says.

He loves being able to check what’s coming in and going out each month, and the projections for his business over the months ahead.

“This allows me to work out when I need to cut back on spending or find new clients.”

Here are five of the tools on the market for sole traders and small businesses.

Tools for financial management

QuickBooks

Quickbooks allows business owners to manage finances, track expenses and create invoices. It’s regularly updated and boasts robust security measures.

However, integration can be tricky and it only allows one company per account.

Xero

Xero is loved for its intuitive and user-friendly interface and enables users to generate invoices, track expenses, conduct payroll and customise insightful financial reports.

But like many financial tools, it can take a while to get your head around all its features and you may need additional software for advanced accounting.

With Prospa, you can open a Prospa Business Account and sync your transactions to Xero, which can help you simplify admin.

Rounded

Rounded is designed with sole traders and freelancers in mind and provides a simple, intuitive and beautiful interface that allows users to send invoices, track their income, manage their expenses and keep up to date with tax requirements.

However, it doesn’t provide payroll functions, or track inventory or expenses.

MYOB

One of Australia’s most popular accounting platforms, MYOB is scalable for both small and large businesses, and boasts all the usual features plus payroll, detailed reporting capabilities and comprehensive inventory management.

But for those only seeking basic accounting, it may be too complex and expensive.

FreshBooks

Ideal for sole traders and small businesses, FreshBooks is easy to use and simplifies invoicing, expense tracking and time management.

It’s more affordable than some on the market but may be limited for those seeking advanced accounting features.

But while accounting software is an essential way for small business owners to crunch their numbers, they don’t take human behaviours and habits into account, which is where a financial adviser can help, says Nathan.

“You need to actually interpret the data to take action on your business. This will help you see what may be holding you back, where you need to focus your attention, and the parts of your business you could outsource.”