Will cloud accounting save me from stormy weather?
Business Team partner Matt Williams spells out five compelling reasons why cloud accounting should be important to your business.
Cloud accounting uses internet-based software to store data on servers around the world. There are many packages you can use, such as Xero, Free Agent, Recon, and Equipment Online, but all liberate you from using a hard disk in your office or even the old school cashbook and bag of receipts.
At Critchleys we are a gold partner with Xero as it has grown from 50,000 users five years ago to a million worldwide users now, and here are my five reasons why the cloud is important.
1. Live information
You can invite key people in your business – directors, sales staff for example – into your data, which means that, across the company, you have an accurate, up-to-date picture of the state of the accounts.
This can help us identify issues or opportunities and enables us to keep pace with, even be ahead of, our clients. It is great for proactive tax planning and streamlines communications internally and externally because everyone has access to the same data.
2. Access from anywhere
You are no longer tied to a computer because you can access accounts on smart phones, tablets, and even Smart TVs. There are also point of sales devices that feed straight in to Xero, which means that, if you are a café or shop owner, you don’t have reconcile your till at the end of a day, you just push a button and the data is fed in.
3. Integrating with other software
I was introduced to Xero by a plumber who was working at my house about three years ago. When he finished, he asked me to sign off his worksheet on an iPad and, within seconds, the invoice had arrived in my email inbox and his app told him where his next job was.
It was a real eye-opener because I could see how beneficial this was to the efficiency of that plumbing business.
4. Getting paid quicker
Once I opened the email from the plumber, there was a link encouraging me to pay now. I clicked and paid immediately and, because it is so easy, most people choose to do the same.
Gone are the days of postal invoices which people deny they have received because you can be notified when it has been received and even send a reminder. Generally speaking, clients using Xero are receiving payment 10-15 days quicker than before.
5. Digital tax is (almost) here
Making tax digital is HMRC’s way of getting regular information from taxpayers like quarterly tax reports. Some of this will be coming online next year and by 2020 we can see that almost our entire client base will be involved in this system.
Xero and other cloud-based systems are already capable of interacting with HMRC systems and just require a developer to switch it on. This will be very smooth compared to taking the information from a cashbook, organising it in a style and format HMRC wants and then uploading it.
In short, in three years’ time, if you’re not using some kind of cloud-based system you will be behind the competition.