Why use nettTracker?
To be very brief, nettTracker is here to: -
Save time (no need to update spreadsheets and enter journals manually)
Increase accuracy and consistency in financial reports
However, those two points above may not instantly mean much, so lets go into a bit more detail.
At nettTracker we understand the importance of cashflow to a business. It’s vital, without enough cash, any business is likely to fail. However, when reporting financial activities of a business, the movement of cash moving in and out of a bank will not tell the complete story as to how a business is actually performing.
Unless you are a very small business, calculation of tax will not be based purely on cash received and paid. If you need to produce management accounts to directors, banks, trustees, or anybody with an interest in the financial well-being of an organisation, accounts need to be prepared on an accrual basis and meet generally accepted accounting principles.
True accrual accounting requires different accounting concepts to be followed. In basic terms, income or expenditure that relates to a specific period should be correctly reflected (matched) in that period. The purchase of equipment for a business should not be treated as an expense if it’s likely to have a useful life of several years (even if the tax write off is 100% in one year).
Let’s give some examples of how nettTracker can help:
A company purchases computer equipment to the value of $25,000. If the entire cost is shown in one month, the profits for that month will be reduced by $25,000. If computer equipment is expected to last for 3 years, the overhead cost for depreciation will be $694.44. nettTracker can automate this entire process
A business has sent invoices out in January that total $150,000. Of this value $140,000 relates to annual subscriptions. The income can only be fully realised in the accounting period to which it relates. This could mean that the actual income for January should be $21,666, with a further 11 months of $11,666 to be deferred from February to December Using nettTracker the import tool can be used to adjust multiple invoices, or manually enter an adjustment and nettTracker will release the appropriate values back to the profit and loss over the desired number of months.
A company has received a deposit that relates to a project, but has not recorded any of the cash received to the profit and loss. The project may have been worked on for a couple of months, and the profit and loss may look like there have been costs incurred and no income recorded. In this example nettTracker can be used to accrue income. All the appropriate adjustments being made to the profit and loss, with a statement regularly updated that reconciles to the balance sheet.
A company is using a sub-contractor to work on their behalf, but the business is not receiving any bills for the work done, yet sales invoices have been raised for works as the project has progressed. This could make certain months of a profit and loss report look more profitable then they actually are. Use nettTracker to create accruals so that cost is correctly matched to income.
Each year or quarter bills are be paid that relate to future periods. Annual insurance, quarterly rent, annual subscriptions, annual maintenance contracts. Use nettTracker to create the prepayment that will adjust your profit and loss for the desired number of months.
For all of the examples shown above, fixed assets, prepayments, deferred income, accrued income, and accrued expenses, a huge amount of time can be spent handling these adjustments. Not only creating one journal, but ensuring all future journal entries you need are set up.
In addition, for each balance sheet category that is being adjusted, a reconciliation will be required at the end of a financial period. nettTracker maintains statements for all of the entries being made so it’s easy to understand the values reported on your balance sheet. So there is no need to manually update spreadsheets for all of the provisions made.
nettTracker can also be used to make retrospective adjustments to prior months in a current financial year. If an adjustment had been missed, this can be rectified in few clicks with all months adjusted, and a statement fully updated.
The days of manually updating spreadsheets, and spending hours reconciling the history of an account should be long gone. Spend minutes working in nettTracker each month instead of hours on spreadsheets.
The financial year-end
nettTracker has a complete year-end routine. When the balance sheet accounts have been reviewed and closed, all statements as at the end of the financial year are saved. Essentially for accountants, ‘working papers’ for fixed assets, accruals and prepayments are all sorted. More time saved.