Business owners who sat down once a month to reconcile their cloud accounting software may miss out on more than just real-time records. Add-on programs connected to cloud accounting software sometimes required businesses to reconcile daily for optimal results.
“If users don’t reconcile Xero regularly, then there’s a chance Debtor Daddy will send a reminder for an invoice that has been paid but not reconciled,” said Matt McFedries, founder of Debtor Daddy, a credit control app that automatically emailed late-paying debtors.
Slow reconcilers could avoid the embarrassment of emailing paid-up customers by setting Debtor Daddy to manual mode. But users would have to log into the credit control app which would undermine its appeal of hands-free debt management.
Other programs shared the message of reconciling ‘the sooner, the better’. Roger Gregg of Invitbox, an app that processed payable invoices, recommended looking at sales invoices daily for the financial position of the business, including outstanding creditors.
“You need to use Invitbox daily to get an accurate assessment of your ‘money out’ commitments. Also, the sooner bills are processed, the more chances you have to take advantage of early settlement discounts,” Gregg said.
Point-of-sale apps also functioned better when the connected accounting program was reconciled daily. “Daily reconciliation is super important. Problems usually arise when you leave register closures and reconciliation for several days and have to combine records, [making] your records less reliable and not give the full picture,” said Sim Ahmed, community manager at Vend, a point of sale program that connected to Xero.
Vend can be run without daily reconciliation but register accuracy proves difficult down the track, which is not the best accounting and retail practice, Ahmed said. Daily updates allowed Xero users to deal with only one reconciliation record.
Some cloud apps were less affected by the frequency reconciliation. For example, cloud based payroll apps only used the general ledger weekly at most.
Businesses should export journals to the accounting program only after the payroll was completed, whether that was weekly, fortnightly or monthly, KeyPay co-founder Richard McLean said.
“[This is] so [payroll] can be matched to the bank feeds and reconciled,” McLean said.
Receipt processing apps were less dependent on reconciliation but benefited from users taking action immediately to record receipts.
Users “absolutely can take photos (of receipts) later, but the aim is to use these tools to break the old habits of catching up on records at year end,” said Receipt Bank director Michael Wood.
SMB owners with a clearer understanding of the importance of updating their financial data for add-on programs were best placed to maximise the potential of the business, software companies said.
“We had one user that hadn’t logged in to Debtor Daddy for 18 months since sign up. Automation working at it’s best,” McFedries said.