We have been in business for a long time now and thankfully our bookkeeping workload hasn’t kept pace with our revenue growth. It has moved in our favour the whole time. Partly because our web finance engine has helped with this but also because we are more careful about what accounting work we inadvertently create for ourselves through our spending behaviour.
Cash Expenses
We used to have a lot of trivial expenses to capture and manage. Taxi fares, books, biscuits for the office etc. We dropped cash expenses completely by making those costs the responsibility of employees and paying them more for doing this for us. This means we aren’t dealing with lots of little receipts to enter. The employee can simply add them up at tax time with a calculator and claim them through their own tax return as a work expense.The simple fact is it’s easier for an individual to account for their work expenses at tax time than it is for our company.
Buy versus rent/subscribe
We also looked at the accounting cost of buying some products. e.g. buying something that needed to be depreciated instead of just renting it. I believe its easier to make monthly, quarterly or annual payments for something that we can claim 100% of than it is to manage the asset through its effective life from an accounting perspective. It also has obvious benefits to cashflow smoothness and removes upfront capex hits.
Online versus Off-line
Probably the single best insight was actually practising what we preach in our off-line to online argument. We moved everything we could. That saved software spend, server management time and backup costs (employee time). We stopped buying software and started paying for subscriptions. This saved on depreciation management, upgrade costs and all the other ASP benefits we have explained until we are blue in the face. An example of this was that we used to use Broadcast for our email notifications, now we use Campaign Monitor.
We use the Google Apps SaaS e-mail system. This meant we had outsourced backup and virus scan of email and gave as anywhere anytime access. An interesting side effect of this is that now we only need firewall software because all incoming files are scanned at our company servers or at our mail server level. This interestingly means our PC’s run quicker because it’s resources aren’t being wasted scanning endlessly.
Company Credit Cards instead of Employee Cash Expenses
We established company credit cards for online and retail purchases for our business and instructed employees never to use cash.
Bulk Entry
Being “accountant like” because we write accounting software we used to be very pedantic about some of our earlier bookkeeping work. We have changed out of necessity and one example is bulk entering credit card statements rather than as micro transactions. i.e. in Saasu we enter a statement in a single Purchase transaction with multiple line-items. Many of you no doubt already do this but there will be those of you who track this in a Directors Loan account or Owners Equity type of account like we used to do.
Invoice Automation
Saasu automatically generates our invoices. The only manual work here is adjustments. We also automatically generate our recurring purchases where the price is static.
Moving from paid software to open source
We switched to open source for some applications. E.g. instead of buying more Adobe Photoshop licences (which is a great application) we started using Paint.NET for web graphics. This is free and has very similar features. The added benefits being free upgrades and accordingly no accounting work if you never have to buy it.
Automated Payments
We set-up direct debits, we do this a lot now, even with variable expenses because the providers of these services will tend to have the ability to “cap” the spend.
Rent everything you can and generate the transaction automatically. Capex wastes time, money and inhibits the natural evolution of you business as you become constrained by old assets. The world changes too quickly.
There’s more we’ve done but we will work on a support note around this topic over coming months.
