If software can track your orders, why can't it do your bookkeeping as well?
Problem: Avoiding high accountants' fees and long waits for cash-flow statements
Solution: Off-the-shelf accounting software
Payoff: Lower accounting fees; improved cash flow
Richard Creel first used a computer when he purchased one in 1984, seven years after buying Colonial Drug Store, a small shop in Florence, S.C. He bought the computer to track prescriptions for the shop, but he soon realized he could save money if the computer could handle his accounting as well. After years of relying on an accountant to handle his bookkeeping, Creel now processes his own monthly reports, as well as accounts receivable and payable, and depends on his accountant only for quarterly and year-end tax filing. He has stabilized his cash flow and saves about $150 a month on accounting fees.
In the beginning Creel tried and was impressed with a test disk of pharmacy-specific software that tracked prescriptions, patient records, and drug payables and receivables. He purchased the software, as well as an IBM PC and a separate 20-megabyte hard drive, and taught himself how to run it. "If you play with them, you can usually figure out how programs operate," he says. He liked the way the software organized his accounting for the pharmaceutical end of the business, but for tax purposes he had to keep those financials separate from the ones for the rest of the shop. So he couldn't just dump all his numbers into the pharmacy package.
What pushed Creel into using accounting software for the whole store was his boredom with writing checks for the same amounts to the same suppliers month after month. He bought an early version of Quicken (from Intuit, 800-624-8742; $39.95) in 1989 to crank out printed checks. In 1992 Creel upgraded to Intuit's small-business accounting software, QuickBooks ($159.95), and its payroll add-on software, Quickpay ($199.95), after trying out some other packages. The more he played around with QuickBooks, the more of his finances he realized it could tackle.
Creel had taken a few accounting and finance courses in college, so he understood the basic concepts driving the software. "I kept plugging numbers in, and each time, the picture evolved a little more," he says. "Once you get the categories set up, it's easy to do." Paying his accountant to keep his ledger was an expensive method of bookkeeping, so Creel started adding ledger-maintenance functions to QuickBooks as well.
First he structured the software to track and total his payables. Then he started transferring the prescription financials into QuickBooks' overall business financials. Now whenever he fills out an electronic check, the software posts that amount to the ledger and categorizes it. So his payables are organized by the time the check is done printing. Once a week he spends five minutes figuring out payroll taxes. Monthly, he dumps the pharmacy receivables into QuickBooks.
"Everything I'm doing now I was already doing for my accountant by hand," Creel says. "He'd just put it all into his computer to make sure it came out all right." Now Creel stores it all himself, printing out reports just for his accountant to use in filing taxes. The changes have cut his accounting bills in half.
Creel has learned the importance of playing by the numbers. "I can get a cash-flow report in the middle of the month without paying my accountant and waiting for him to send it." Checking those reports has helped Creel even out his cash flow. Before, he might have placed a heavy inventory order in anticipation of a busy weekend, without giving much thought to when the bill would arrive. Seeing the numbers taught him to spread purchases out over the month, with an eye on payables.
"You know, I was leery of the software at first," he says. "I didn't know if I could figure it out." Now he tracks cash flow, sales, and profits daily, learning a little more each time he logs on. -- Phaedra Hise