Blog Post 4

The best financial tools for small business owners

22 June 2021

Small business owners are saddled with a lot of responsibility. Business development, customer service, staff management, planning, forecasting, budgeting, expense management, hiring, and most important of all: delivery of service. A lot of that responsibility is unrelated to the core service offered by the small business - let’s call it ‘administrative overheads’. When we say ‘administrative overheads’, we mean things like planning, budgeting, expense management, accounting, etc. Things that aren’t really related to why you started the business begin with or the skill or service you’re providing.

As an example, let’s look at an electrician. They might spend most of their 9-5 driving from appointment to appointment, fixing electrical issues, working with customers and suppliers, ultimately delivering the service that they’re trained to do. But, like with any small business, the more it grows, the more the ‘administrative overheads’ grow. Unfortunately, for small business owners short on time, most of it needs to be dealt with after hours.

Let’s get real, though. It’s 2021. There are tools around to make administrative overhead easier to manage and less of a burden. Broadly, we would categorise these into a few groups:

  1. Cloud accounting platforms (e.g. Xero)
  2. Expense management tools (e.g. Expensify, Dext)
  3. Reporting tools (e.g. Tableau or simply Microsoft Excel)
  4. HR systems (e.g. Employment Hero or Culture Amp)

In this blog, we’re going to run through how we think about these tools and discuss how they add a huge amount of value to small business owners. Hopefully, they’ll go a long way in helping to reduce the amount of time spent on administrative overheads.

Money - Cloud-accounting platforms for small businesses

A well-run accounting function can prevent a lot of stress and lost time for small business owners. The challenge is that accounting is sometimes neglected as something done once a quarter. Building a regular, repeatable accounting habit (or even just checking in with your bookkeeper fortnightly) can make the bigger things (e.g. audit, forecasting, budgeting, and reporting) much less painful.

In the Australian market, there are a few very good, well-known cloud-accounting systems. You’ve probably even heard of them: Xero, MYOB, Quickbooks, Reckon. All of these providers have pretty compelling offerings where you can keep things as simple (or as complex) as you like.

We’re fans of keeping things tidy, simple and accurate. In that spirit, here’s a very quick summary of what a cloud-accounting provider like those listed above will be able to do for you:

  • Pay bills
  • Send invoices
  • Claim expenses
  • Scan receipts
  • Bank connections (critical)
  • Accept payments
  • Track projects (e.g. from enquiry → quote → acceptance → delivery → invoicing → payment)
  • Payroll (this can get super complex, so it’s great to have an accounting platform that can help out on this one)
  • End of month reconciliation
  • Capturing data (e.g. payment info, late payments)
  • GST returns and superannuation payments
  • Reporting

Each provider has a few specialist features, which it’s worth investigating. Here’s a great article from Canstar that provides a bit more insight into each one and what their users are saying about them. Happy researching.

One thing we’ve listed above that you’ll certainly need (and that will save you a huge amount of time) is a bank connection. A bank connection means that your accounting system ‘syncs’ with a bank account. What this means for you is that when you log in to your accounting provider, you’ll see a list of transactions ready to be reconciled. This ensures that nothing slips through the cracks, and your books will be kept in tip-top shape.

At Archa, we’re working on a best-in-class accounting integration that will allow you to sync your business spending with your accounting system, unlike other business credit cards. You’ll be able to tag transactions with expense codes, attach receipts, and log everything into one source of truth. Working with a company like Archa (with built-in accounting integration and expense management tools) gives you a whole new level of control over your company’s spend.

Spending money - Expense management

We’ve all been there. You’re reviewing your transactions at the end of the month (via your accounting platform, thanks to your bank integration we talked about earlier!), and as usual, you’ve found a couple of mysteries. As a small business owner, there are few things that can get the blood boiling, quite like random spend on the company card.

Or worse. You have to hunt down the receipts to reconcile those transactions, and low and behold, they’ve been put through the wash or lost. A headache you could probably do without.

That said, we all know how absolutely critical it is to empower your team with a way to pay for things, be it travel, entertainment or everyday expenses, so as to not prevent them from doing their job. However, when these issues arise, the easiest solution has traditionally been to put it back on the employee. If they’re not going to capture receipts, then why not have them pay for it in the first place? Good in theory, but reimbursements are the bane of most owners' existence.

We think an optimal approach to expense management is to think of it as a tool to support your growth ambitions and that automates the majority of the expense management process. The theory in practice: delete expenses that don’t fuel growth and aren’t essential. Double down on spending that is directly linked to business growth. Get rid of manual reimbursements that are costing you time.

Archa will help you recognise both whilst eliminating reimbursements.

We also know that small businesses often have a long list of SaaS services (see: Slack, Xero, Google Workspace, among others). Small businesses with up to 50 employees use between 25-50 SaaS solutions on average! We counted ours at Archa, and we’ve just passed 33 SaaS solutions (🤯).

We were blown away by that statistic, but what’s even more interesting is that no one has built a centralised hub to help businesses manage their subscription expenses. We thought we’d jump in and help solve that problem. We’re working on a truly groundbreaking solution that will help our customers see, audit, and control their subscription spend. Join our beta to get the first look!

If nothing else, you certainly need a solid expense management system. A good system used properly will remove headaches and give you hours back in your week.

HR systems - what is it, and when would it make sense to get it?

HR systems like Employment Hero or Culture Amp will help you do a few things. Depending on what type of business you are running, they’ll become extremely relevant or not needed at all. For businesses with more than 20 employees or so, we think an HR tool becomes pretty important.

Depending on the tool you use, they’ll help you manage leave, implement and manage benefits to retain your best talent, test and measure engagement, enhance productivity, and identify where you might have cultural issues in your workforce. What’s great is that many of these tools have existing integrations into the tools you already use, like your accounting platform.

Retaining talent is critical, and with a good system to manage benefits and leave, you’ll be putting yourself in a better position to make sure it happens. Often your accounting system will have a built-in system to manage leave, but sometimes it falls short. A system like this might just be what you need.

Reporting and analysis - You’ve got the data and the systems; now what?

If everything we’ve talked about above comes together as it should, you’ll have a lot of information at your disposal. How you make the most of it is a fundamental question. Many companies with complex financial systems and processes use equally complex tools for large scale data analysis (see: Tableau). One tool that is seen as essentially the gold standard for forecasting and other financial analysis is good old Microsoft Excel.

Excel is as complex or as simple as you like. Sometimes I use it for fairly simplistic arithmetic when I need absolute certainty, and sometimes we use it to forecast profit and loss (P&L) for years in advance, taking into account hundreds of variable business inputs.

A good accountant will have a solid grasp of Excel as hygiene. Developing your own basic understanding is equally important so that you can play around with growth scenarios and understand your company’s stress points. Test out what happens when you encounter unexpected costs or when you grow at 5x your planned rate. Understanding how to use Excel will help you sleep better at night because you’ll get a better grip on the different concerns you might be worried about (and how they’ll impact the bottom line).

At Archa, we’re combining a corporate card and spend management platform into a single tool for small businesses.

To effectively run your small business to its full potential, you need a solid understanding of what’s going on financially. We weren’t satisfied with the corporate cards available in the market, so we decided to build one that combined business credit, SaaS management, card issuance, and expense reconciliation into a single platform.

We’re doing what the banks aren’t: focussing on what small business owners need to grow. We integrate with your accounting provider to ensure that your bookkeeper is more efficient, too.

Join our beta program here to help us on our mission to help small businesses everywhere grow faster and give teams more time back in their day.

Corporate Credit