Since we get quite a few people asking what cloud accounting is, we have decided to write an article explaining the term and summarising its benefits. It is divided into two sections:
1. What is cloud accounting?
2. How can it benefit me?
What is cloud accounting?
You probably come across this term more and more often. Cloud accounting or online accounting (as well as cloud bookkeeping) are becoming increasingly popular due to the convenience offered. Intuit predicts that 78% of small organisations will use cloud technology by 2020. The term cloud is widely used across the Web. Have you heard of Google Drive or Microsoft OneDrive? Maybe Samsung Cloud? What they all have in common is storing data on a remote server instead of using your PC’s hard drive and offering users safe and instant access to their files from any device connected to the internet. If you already store something in the cloud, you know how convenient it is. Cloud accounting, as the name suggests stands for using cloud-based software for accounting purposes. Nowadays, most of the software on the market offers cloud solutions, so if you’re using a desktop version, the chances are the cloud option is available too. In cloud accounting, all the data is stored online and accessible to both the accountant and the business owner at any time. It is very similar to online banking – you can log in anywhere and access the information you need, make payments, view past transactions and account balances in real time.
How can moving to the cloud benefit me?
1. Compliance with current legislation
First and most important reason for moving to the cloud is compliance with current legislation. Making Tax Digital comes around in April 2019 and it requires all businesses with the turnover above the VAT threshold to store relevant documents and submit VAT returns electronically. And this is just the beginning – HMRC intends to go paperless and have all the information from all sorts of businesses stored and submitted online in the future. It is better to be ready now (especially with all the benefits offered by cloud technology) and launch softly at your own pace rather than rush through it and risk being fined.
2. Safety and security of your data
Another huge advantage of using cloud accounting software is the safety and security of your data. The software allows to upload and store important documents in the cloud. Paper forms can easily get destroyed by a careless employee spilling coffee over them or simply misplaced taking you hours to locate. Data stored on a computer might get lost as the equipment can break down or be stolen. Due to the nature of the information, the safety is a top priority to the software developers, just as it is to the banks and other financial institutions. The servers are frequently backed-up and protected against potential attacks. The multi-factor verification systems and the highest levels of encryption are in place. It is the most secure way to keep your records.
3. Easy access to your data
You can access your data from anywhere. We do all sorts of things on the go: shopping, viewing bank balances or checking Facebook. I strongly believe that the ability to work when you are out and about is crucial and a great benefit of modern technology. How many times have you forgotten to do something when you were in the office and then remembered about it as soon as you left? And then it happened again. And again. Well, not anymore. You can send quotes and invoices, run reports, view and analyse any data, manage payroll and perform many other tasks on any device wherever you are. Your authorised employees can enjoy the access from any device, too – no need to worry about distributing information.
4. Get paid faster
Create online invoices when you’re out and about and get them paid faster with a link on the invoice allowing customers to make a direct, instant payment. Add a Direct Debit option to make it even easier to pay! Now you can not only check the status of invoices or customer balances anywhere you are, you can also track the invoices sent and see who’s received, opened or paid them. What’s more, you can set up automatic reminders when the invoice becomes overdue and stop wasting time on chasing late-payers.
5. Get most out of reporting
See a clear picture of your business performance at any time by running instant reports on the real-time data wherever you are. Profit and Loss, Balance Sheet, Monthly Cash Flow and many more. All the reports can be customised to suit your needs best.
6. Save time and money
Cloud-based software has great features allowing for huge time and money savings. You can connect to your business bank account and have statements come through everyday to reduce manual input. The transactions are automatically recognised and matched so that even less work is required. You can create repeating bills; invoices, credit notes, quotes and other forms are pre-populated saving you having to enter the same information over and over again. What’s more, there are hundreds of apps that can be connected to the software to make workflow even smoother. It’s more accurate, too.
7. Get more from your accountant
Clients using cloud accounting software get more from their accountants. Instead of checking for manual errors or entering data, we can offer more advice and spend more time on personal development allowing us to do our job even better and save you even more. We can work with our clients in real time – having correct and up-to-date figures enables us to give better advice. Both the accountant and the business owner can see all transactions as soon as they are processed so that you know you are looking at the same information.
8. Improved communication
Enjoy improved communication – from within the software the accountant can request any documents or information and you, as a client can easily submit it to them. People with access can also make notes on any item, making workflow smoother.
9. Save space on your hard drive and in your office
Apart from saving space on your hard drive, cloud accounting also means less paperwork and more room in your office – all the files can be stored electronically within the the software! No more over-filled folders and bags full of receipts and invoices.
10. HMRC audits made easy
Every year the government chooses businesses to audit. We understand this is a stressful event and it takes a lot of time to assist investigators and provide required evidence. The option to attach a file to the transaction makes it so much easier to find it when necessary.
Contact us now so we can help you move your business to the cloud
