The foundation for every business is Finance because to start a business or grow a business, you need to bring together all the resources which include money, people, and capital that are needed to turn your innovative idea into reality.
This is why managing your finances should be one of your top priorities on your ‘To-Do’ list for your company.
Managing finances is a challenge, especially for the early stages of small businesses. According to statistics, an average of 49% of businesses in the UAE fail because of a lack of proper management.
The most daunting task for small business owners is the mismanagement of cash flows. There would come a point where you would wonder “Where did this amount come from?” or “why isn’t it balancing?” when computing your finances. There are other instances where you would either miss the deadline for bills or overspend which isn’t easy to control as well, especially since you already have a lot on your plate as the owner.
BUT FEAR NOT, Thanks to our developed technology, science, and IT Engineering, software have been made to help you in managing your finance – These are called accounting software. You may have heard of them at some point. Some popular ones are QuickBooks, ZOHO, Xero, and FreshBooks.
But right now, we are going to discuss ZOHO Books.
What is ZOHO Books?
ZOHO books is an accounting software that functions as a financial organizer. With this application, you can see your categorized list of spending, balance your checkbooks and statements, be reminded of your list of bills, create and send invoices, manage your bank transfers and deposits, and many more.
There is no need to keep a filing cabinet or a mass folder of sheet files on your desktop because ZOHO Books will keep all of your business data neat and organized.
In this article, we will explain to you the basic functions of ZOHO Books. However, if you want a more thorough professional explanation that’s personally catered to your business needs, then check out Freelance Finance Controller – this company offers affordable rates to start-ups and small companies to help all of you reach success.
They don’t give cookie-cutter solutions; all their solutions will be custom fit for your company’s needs. This includes setting up your accounting and financial system and process, giving you advice on your business strategies, and assisting in your registration and filing needs.
How to use ZOHO Books?
Basic Functions (Tabs)
Dashboard – you have an overview or summary of what’s going on in your company. The information in the dashboard includes your total receivables, your total bills or debts, and your cash flow which includes your anticipated earnings or due expenses. You can also see your top expenses made during the period along with an income chart. There is also a bank and credit card category as well as a watchlist for products for your company.
Items – in this tab, you can add details to the item or list of items your company is selling such as their selling price, cost, dimensions, etc. Although the name of this category is ‘Items’, this function can also apply to services. You can even group your items such as creating a bundle package with different items or services in the mix if you want to give your customers more options.
Banking – you can connect your bank and credit card to ZOHO Books and the application will be the one to sort out all your transactions.
Sales – this tab contains everything you need for your sales such as the list of customers you do business with, sales orders, shipped and unshipped packages, invoices or receivables with their payment method, the actual cash you’ve received, common or recurring invoices and customers, as well as returns or product defects.
Purchase – this tab is for all your costs and expenses. There is a list of vendors you did business with as well as a list of expenses and common expenses that you can pay on a set date and time. There is also a purchase order option and a bill where you will place the information from the purchase order. There is also a categorized list of payments made and a list of common or recurring bill options where you can set a date or time when the system will automatically pay that bill. There is also a vendor credit where you can return all your defective goods or supplies.
Time Tracking – there is also an option for those that are basing the prices of their services on time. You can place a project, its details, and the time sheet to keep track of your hours.
Accountant – there is also an option where you can manually change or adjust data yourself to make sure everything in your accounting is correct. You can manually add a journal entry or bulk update if there’s big data that hasn’t been added such as an invoice, purchase order, or any other big records that will significantly change your accounting records. There’s also a chart of accounts where you can check the name or the terminologies of all the transactions you use in your business.
Reports – These are your financial statements and all the data that you will need when you need to create a report for your business.
Things to take note of
Here are some common misconceptions about accounting software.
1. Interchanging revenue and profit.
Don’t mistake revenue for profit. Revenue is what you receive for giving your goods and services. Profit is the money that you have left after using it to pay for all your expenses – it can either be profit or loss. This is why we all dread the end of the month whenever we receive our bills! Of course, there are some expenses you must make to give your services. And just as there are necessary expenses, there are also unnecessary expenses you can go without.
"How can I tell which is necessary or not?” – use ZOHO to see which account or expenses you pay frequently within the year or month.
2. Cash = Revenue misconception
There are times when your cash at hand can be deceiving. The reflection of your cash at hand doesn’t determine the total revenue or total profit of your business.
Why? Because debts exist.
Debts will either decrease or increase your cash in the near future. Let’s say you’re planning on selling a Christmas-themed product this coming December, so you bought supplies in September with the remaining money you have. You’re anticipating that you’ll be able to offset that expense by the end of the year once you finish selling your seasoned-themed product. However, at the end of the month, you suddenly receive a bill from a supplier from your last transaction. Because your company is short on funds, your few options are to either borrow or take out from your savings.
Likewise, if you suddenly receive a bill from your customer from last year that finally paid you, then your total cash increases, not your revenue – because of the moment you finished giving your service or product to that customer last year, your revenue was recognized, which means that they get a bill declaring that they owe you.
You don’t get cash yet until they pay.
You’re not alone, a lot of businessmen face the same dilemma. There are times when you would forget your bills until they send you a reminder about the deadline.
With ZOHO Books, you can prevent these kinds of surprises and constantly update yourself with all your bills and debts.
3. Mistaking Product cost as an Expense
A product cost is NOT an expense. The difference between a product cost and an expense is that you will get back all the costs you incurred while making your product which will be your Gross profit. With expenses, there are some expenses you can do without and exclude from your list.
The product cost is the basis you will use to determine the pricing of your product. An example of this is buying materials to make your product. If you’re a merchandiser, then the amount you paid to your supplier for the batch of products is your product cost.
No need to worry, because ZOHO Books would help you organize them. But of course, it’s up to you to correct any entries you see.
4. Starting and Setting up alone
All in all, although this software is designed to help you run your business, you can’t use it to its fullest if you haven’t grasped all of its uses and settings. This is why it’s best to start with professional help by consulting with a professional accountant and continue alone using the information you got from the session. It will save you a lot of time and money in the long run.
If you start right and properly, then you will continue to grow at a steady pace.
So don’t hesitate and book a session now with Freelance Finance Controller so that they can help you get started with ZOHO Books!
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