Each time a customer makes a purchase from your business, a small package of information is produced. We call this “transactional data.” (If you’re a business owner, you’re probably familiar with this.) This data includes all sorts of information amount the transaction: the amount of money spent, the date of occurrence, the location of the buyer, etc. On the surface, it all looks fairly mundane. But, when strung together, these data strands form a log of purchases that is deceptively important: the financial DNA of your company.
The proper management of this data can mean the difference between the success or failure of a business. Each time transactional data is produced, it must be entered into your accounting software, so you can track cash flow, prepare billing, and manage your finances. Speed is important; accuracy is critical. And you are accountable. As the business owner, it is your responsibility to ensure the correct information gets entered into your accounting software. That’s where things get interesting.
In the past, a person, maybe you, had to manually enter the transactional data into your accounting software. Some businesses still do this. (But you really shouldn’t. We’ll explain.)
Here’s what’s not-so-great about manual entry:
First of all, manual entry is slow. Before you can input any data, you, the merchant, have to wait for a “batch report” from your transaction provider. If you have multiple providers, you will have to wait for multiple reports. By the time you receive your batch report(s) and enter the data, the information is already stale. That makes real-time analysis of your cash flow impossible, which, as you can imagine, can be a serious problem for growing businesses and start-ups.
Manual entry is time-consuming and, therefore, expensive. With manual entry, a person has to translate every one of the data points from the batch report into your accounting software. With hundreds, potentially thousands, of transactions, this is a slow, labor-intensive process, and it adds up to a significant expense.
Humans make mistakes (especially when it comes to data-entry). Even if the individual is experienced, there are bound to be errors when a person manually transfer information from one system to another. Some of the most common mistakes include: duplicate entries, incorrect data, or data applied to an incorrect account. These mistakes may come with a heavy cost, whether it’s improper billing, miscalculated cash-flow, or the penalties that result from inaccurate filings.
Now, businesses of every size can integrate their accounting software with their payment processing system, which automates transactional data input.
This is what businesses and accountants love about automated transactional data input:
Automation eliminates human error. Your data seamlessly flows from the point of transaction through your accounting software and into the general. With an integrated system, the data-input process is fully automated, so you no longer have to worry about costly mistakes.
The input is instantaneous, so you can track your cash flow in real-time. This is especially valuable for small businesses and start-ups, which may be navigating a narrow margin and keeping a close eye on their cash flow. Read more about the importance of cash flow management here (this article is about construction, specifically, but it applies to all businesses).
With an automated system, you no longer need to input transactional data and/or pay an employee to enter the data, so you save both time and money. Businesses with an integrated system no longer need a dedicated accounts receivable employee on their payroll. Plus, with most of the process automated, businesses spend less time training employees to process payments.
…But, how do you know whether your payment processing system can integrate with your accounting software? Do you have the right software for your system? And how do you make integration happen?
By integrating your payment processing system with your accounting software, you will automate transactional data input: saving you time, cutting down costs, reducing risk, and allowing you to conduct real-time cash flow analysis. For small businesses, proper integration can mean a significant competitive advantage. So, how do you make it happen?
At Klein Hall, our financial experts have helped businesses of every size, across industries, integrate their payment processing system with their accounting software. We are experts in small-business finance, we have a versatile understanding of various accounting technologies, and we will work with you to select and integrate the optimal accounting solution for your processing system.
Accounting software integration is just one of the ways Klein Hall is helping retailers gain a competitive advantage and prepare their business for the future. Click to learn more.