Why unified franchise accounting software benefits everyone in a franchise system.
By Andy Cheetham, Founder, Lime Licensing Group
Soon enough it’s that time of the month again when franchisees need to report their monthly revenues. Some see this as a great opportunity to get their accounts up to date. Some see this as a bit of a chore. Some even forget what franchising is all about and choose to report inaccurate revenues, others are just late! As a result a regular topic amongst franchisors concerns bookkeeping and reporting. Should franchisees be on the same software? Well ideally Yes. However, there are a lot of franchise networks whose franchisees are all on different bookkeeping software. This comes about for a few different reasons.
Experienced business people sticking to what they know.
Many franchise owners have previous or existing business interests. This means that if they are used to one system with a previous company they are reluctant to adopt and learn any new bookkeeping software. However, this is somewhat misguided since the fundamentals of most accounts software packages share common elements. The difference between one bookkeeping software package and another lies in the efficiencies and user friendliness built in. Generally speaking, since most franchisees aren’t very good at accounts this user friendliness matters greatly.
So the best bookkeeping software for franchisees is the one that optimises the user experience, and therefore makes life easier for the franchisor and the franchisee. That software is Xero, and I’m not being paid any commission to say that!
Preference of their current accountants.
Many accountants want their clients to adopt the software they are used to using with their other clients. It makes their job easier. Maybe they get a commission too. As a result a lot of new franchise owners just go with that in the absence of any direction from the franchisor.
It always surprises me how much influence some franchise owners allow their accountants to have. All I will say is that a new franchisee should be listening to their franchisor and not their accountant. The accountant’s job is to organise the numbers but the franchisee and the franchisor are the entrepreneurs. They are the ones who are working together in the franchise system.
Harnessing the recommended suppliers.
Franchisors have mandatory and optional suppliers. The mandatory suppliers have been given this status for a good reason. These are the suppliers who are already on board, have proven themselves over time and add tremendous value to the system. Those suppliers together with the franchisor and franchisee are the ones who have the biggest influence on the success of the venture. So if you’re a franchisee then don’t just blindly accept what your accountant wants you to use! In the case of bookkeeping software companies like Xero have proven themselves to be perfect for SME’s in franchised environments.
Why you and your franchisor need to be using the same bookkeeping software.
Adopting the Franchisors mandatory accounting supplier means new franchisees get their system setup super quick adopting nominal codes that are already being used and all the various default settings that the make life easier for the new enterprise. So during your training period you wont have to work anything out, the Franchisor has already done that and you or your employees will be trained on how to raise invoices and reconcile the accounts. The Franchisor can train you on this, and help you going forward because they use the same system.
You are running a small business and part of that should be keeping your accounts up to date. At the end of every month all your expenses should be in, your bank should reconcile, your debtors and creditors up to date, and your end of month report to your franchisor issued. But, beyond this there is a story being told through your accounts. Trends can be analysed, and you and your franchisor studying those trends nearly always has a massive positive impact on your business. It’s no good if you are all on separate accountancy software. A unified accounting system means everyone is creating the same reports, in the same format – and that matters greatly in any business analysis across multiple franchised locations.
Franchisors In house bookkeeping
Your annual accounts cost is made up of two main elements. There’s your day to day bookkeeping and then your end of year accounts. Some Franchisors will offer a bookkeeping service and since most small business people don’t do this particularly well it makes life very simple when you’re all on the same bookkeeping software. So you might as well start out this way if that is an optional element in your franchise system.
At Lime Licensing Group this is an area of franchising that is often overlooked but now that you have read this you won’t overlook it now will you?
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