There’s no escaping the information economy and the importance of real-time data

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Amazon could probably pick a better gift for your spouse than you could after ten years of marriage. It’s nothing personal. It’s just Amazon’s business to collect data on what we buy, how much we spend, and what might float our boat in future. That’s because data is the currency of modern business. It’s not just about knowing about your customers though. The more you know about what is going on in your own business, the more you can grow. This is especially true for small businesses where cash is king, and the ability to accurately forecast and allocate capital can be the difference between success and failure.

The cloud now offers unprecedented access to data and not just for the likes of Amazon. From store owners to sole traders, cloud accounting tools offer access to the data they need to grow their business quickly and sustainably.

The Information Economy

This information economy is nothing new. We have for some time lived in a world where nearly everything that can be measured is measured. In some ways, data is more democratic. The catch, however, was that it used to take a lot of time and money to find all this out. Not for nothing is the global market research industry is worth over $40 billion. And if you wanted to know what was going on within your own business you either waited until the end of year audit, or you paid someone to dig through a mountain of paperwork to give you a more up to date picture. Real time information required a sizable insights department, leaving many small businesses putting their faith in gut instinct and a few excel spreadsheets.

None of which is ideal for an entrepreneur working to tight margins; but how do you manage your finances properly when you haven’t got the right information to do so? Enter the cloud.

The cloud is bringing accurate, useful data within the reach of everyone. Whether you conduct business in a boardroom or on a building site, cloud accounting software allows small business to access their financial data at any time, anywhere.

Doing the books was once an end of month, or even end of year, burden, loathed by business owners and accountants alike. The former would be up until the small hours, hunting for receipts that got lost in the van, or eaten by the dog. The latter would then be charged with making sense of a box of oil stained, teeth-marked scraps of paper in time for June 30th. At the end of this, the business owner get’s to find out what happened a year ago, which isn’t much use for anyone apart from the taxman. Let’s face it, no one is sad to say goodbye to that era.

Next steps to data success

There are two steps to making your accounting useful again. The first step, as any good tradie knows, is getting the right tools. That starts with some proper accounting software that understands the needs of a small business, whether it’s Xero, QuickBooks Online or one of the many other systems available. It’s important you pick the one that suits your needs so make sure you look around. And the best thing about this software is how flexible it is.

There are hundreds of add-ons for Xero and QBO alone. You want to automate reminders about unpaid invoices and start getting money in faster? Try Chaser. Looking for a better employee management solution? Deputy has your back. Looking to send your paperwork to your accountant the moment it comes in by taking a picture of it on your phone? You need Receipt Bank.

These tools don’t just make your life easier; they help you grow your business. This takes us to the second step. Getting your business relationships right. Specifically, the one you have with your accountant.

Your accountant is only as useful as the data at their fingertips. If you only talk to them once a year to discuss what happened 12 months ago, then you’re not getting the full picture you need to succeed. But what if they could tell you the health of your business right now? Even better, what if you could find out how you would be doing in six months time? Now that’s a game-changer.

With tools like Receipt Bank, you can submit your invoices the moment you receive them. The data is automatically extracted, and entered straight into your books. No more historical data, this is your business right now. And the next time you’re pondering a big purchase, all the data you need is just a few clicks away on your phone. And your accountant has everything they need to produce accurate forecasts to guide your future development.

Why stop there? You can use the cloud to analyse average delays between issuing invoices and their payment and tighten up your collection process. You can track your equity ratio to plan your hiring and expansion. You can keep better track of company expenses and reimburse your team on time. In short, you can do business better, based on the most accurate data possible.

One thing is for sure – data isn’t going anywhere. No one is going to go back to being cold after fire has been discovered. But this doesn’t need to be a worry. This is a huge opportunity for small businesses to step up their game, go beyond gut feeling and get a grip on their finances. After all, this information was once the preserve of big corporates, with whole departments dedicated to poring over the numbers. Now all you need is a smartphone and an accountant. This goes to show – you don’t have to be Amazon to get the most out of the information economy.

This content was brought to you by Receipt Bank. World leading software that automates your bookkeeping. To discover more or sign up for a free trial of the product please click here.

Image sourced: Getty Images