Accounting of Services Oriented Business - Needs & Solution
Accounting of Service Oriented Business
The nature of services business is exceptional as far the accounting operations are concerned. Services oriented organizations provide services which can also be termed as intangible.
The services oriented business /organizations usually hire highly skilled staff members to provide services to their customers the examples of services can be generally charged on hourly basis (lawyer fee, professional services of accountants/ auditors), labour, consultancy, training services.
Business operations vary on the basis of investments made to run the company operations, for example a heavy equipment rental business or a car rental business have to buy machinery/ vehicles to start providing services using those assets whereas minimal investment is required for a company setup involved in specialized services, for instance, legal services, services of accountants/ auditors, labour, consultancy, training and educational services.
The Accounting of Service Oriented Business
The primary objective of the services businesses is to provide services and receiving payment in full or partial. The recording of transactions (revenue) is sometimes on cash basis (recorded when received) or it is on accrual basis, which means that revenue is booked at the time of provision of such services and related funds will be received in future period(s). So in case of accrual system of accounting services are provided and bills / invoices are raised of the work completed against which payment is expected in toto or in partial payments. Construction business is the best example for progressive invoicing and payments against such invoices are spread on different period(s). In such a scenario it is important to have the invoices tagged with payment status.
Now here comes the interesting part, sometimes it so happens that services are provided on continuity basis, in accounting terms these are called Recurring Transactions. These transactions may recur / repeat on weekly, monthly, quarterly or annual basis. Sound online accounting software having repeating transactions feature can be a best companion in saving the hassle of recording such transactions again and again.
Most of the services oriented businesses record revenue on the basis of invoices/ bills issued to customers (this is called accrual system of accounting) but some small business owners also record revenue on cash basis (this is called accrual system of accounting), which means that whenever cash is received revenue is accounted for in the accounting system.
As far the expenditures of services providing companies are concerned, these also vary on the basis of activity of the business but they are part of business. For services oriented sector expenses are recorded either on accrual system or on cash system of accounting. Whatever the system of accounting is in practice, the recording of expenditures is expected to be easy and understandable.
Services oriented businesses generally expand rapidly which leads to not only starting new projects but also new businesses because of small amount of investment required in most of the business activities which represent services business. In such a scenario there are possible branches (multiple locations) to manage not only the operations but also accounting affairs of the newly opened branches/entities. A committed Online Accounting Software always comes up with contingency plan of how to manage locations and accounting affairs of location & projects.
A very easy way to manage locations and projects in online accounting software is the control one should be a control freak in order to have the maximum out of business and from having control means control over financial aspects of the company.
Taking control over your transactions and ultimate authority on business affairs provides you with error free accounting environment. A good online accounting software allows you to approve and post transactions remotely and letting the only legitimate business transaction part of financial statements.
What matters the most?
Well in services business, the small business owner should be considering control over cash & bank transactions, keep an eye on receivables, and remember the payment to be made to vendors. Proper and periodic count of cash available with the accounting professional, the second most important thing is the management of accounts receivables and with the help of right online accounting software this can be done with minimal human error-free mode and finally your Vendors are the best business partners, so keeping them happy is as equal as managing your receivables.
Small business owner is usually the accountant of the company being the simple accounting setup, made simple by effective online accounting software. There are many Online Accounting Software designed for service oriented businesses, but before taking this decision the small business owner should keep one thing in mind that the online accounting software is simple, user friendly, easy to use and surely easy to understand the reporting mechanism.
A cloud based, simple to use yet powerful online accounting software is key for smooth running of service oriented business operations. move2clouds has all the features that are required for service industry needs. Once you signup for move2clouds, you will be able to use the following key features
|End to end accounting||move2clouds is the powerful online accounting software providing a complete functionality of all key accounting features including maintaining cash records, expenses, location and project reporting and transaction approval system|
|Transaction Approval System||As non-profits are entrusted with donations and charity funds, a strict approval system is required for cash disbursement. move2clouds provides the strict user rights system for transaction approval. You can specify the system rights that certain users can only enter transaction and shall then submit for approval by concerned approval authority.|
|Location and project accounting||In move2clouds, you can record funds based on each location and then can track expenses/cash out flows for specific relief/charity projects. A detailed project and location based reporting is also available in move2clouds – the Powerful Online Accounting Software.|
|Vendor Management||You can record a complete set of vendor related transactions in move2clouds. Record their bills, pay them on due dates, get vendor aging reports. Along with that you can maintain different vendor categories to record various group of vendors classifications|
|Recurring transactions||When a small business owner issued an invoice to its customer, whether it’s one time invoice or the recurring invoice, it is important to keep track of money to receive. Get the best out of move2clouds with move2clouds instant reminders/ notification of the payments to be received ad keep your cash flows updated all the time. The business sector providing services are instantly notified with move2clouds payment reminders, your due invoices, overdue payments are just a thought away!|
|Receivables Management||When a small business owner issued an invoice to its customer, whether it’s one time invoice or the recurring invoice, it is important to keep track of money to receive. Get the best out of move2clouds with move2clouds instant reminders/ notification of the payments to be received ad keep your cash flows updated all the time. The business sector providing services are instantly notified with move2clouds payment reminders, your due invoices, overdue payments are just a thought away!|
|Online 24×7 Secured System||When it comes to availability, move2clouds is available online 24x7x365 on secured servers of Microsoft Azure. You are free from needs of backup, data loss worries and hassle of expensive hardware infrastructure. The moment you sign up for move2clouds, you are up and running in less than 60 seconds without any technical requirement.|
|Affordable Solution & Timely Support||You will not be spending on separate support service package. You will have a dedicated self serviced support portal, option of generating support ticket and easy to understand video guides. All this at no additional cost.|
|Reporting||The small business owners craves for logical financial reports made possible by move2clouds the Powerful Online Accounting Software. Whether it’s Income Vs. Expenses, Cash Inflow/Outflow, Financial Ratio Analysis, aging analysis. move2clouds best fits your needs and our passion in delivering high quality accounting application to our users.|
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