Lack of accounting software at banks hurting small companies
September 07, 2012
Various departments within a company need to be on the same page when recording their finances - from revenues to expenses and tax charges. Usually, business divisions use the same financial software firm-wide, but the same cannot be said for the outside companies they work with.
This is also often true of the banks they do business with. A recent study explained that when small companies and their financial institutions are not on the same page fiscally or use vastly different systems, both parties are often adversely affected.
Integration would be better for companies
According to CPA Practice Advisor, Barlow Research Associates recently released a whitepaper outlining the problems that arise when a bank and a small company are not aligned within their accounting programs. The study, called "Financial Institutions Can Win by helping Businesses Manage Cash Flow," explained both startups and banks tend to use financial software to keep track of their money. Additionally, the differences between the two can be vast, mostly because small companies tend to use internet tools as well.
If banking executives could integrate their systems, CPA Practice Advisor noted, smaller businesses would most likely see more benefits from their recording and banking operations. Moreover, the source said, without the influence of business-based associates, financial institutions would see a dip in cash flow and potentially go under.
"Being central to their client's cash flow management process means that banks can caputre a brader base of payment volume as alternate business payment methods emerge," Bill.com CEO and founder Rene Lacerte told CPA Practice Advisor.
Small businesses see more success with software
Even if the services of their preferred bank do not mesh well with accounting programs, a small company should never forego using software to manage their capital. According to PCWorld, proper use of such programs can save a startup hundreds of work hours by streamlining and easing tasks.
The source said that though professional accountants and bookkeepers can often greatly benefit a business, owners may save time and money by going it alone with the use of software. These programs are often invaluable in making other work-related tasks easier, PCWorld noted, like planning and filing taxes.
Entrepreneurs might see the best results if they combine the two, many industry experts believe, which can be done by hiring either a full-time or temporary accountant to manage financial software.