What is the cloud?
The cloud is a general term for any information you can access online. For example, when you log into your online banking, you are accessing information from the cloud. Computer applications such as accounting packages can also run in the cloud, which means you can access them from anywhere with an internet connection and work on them as if they were installed on your office computer.
What is cloud accounting?
Book-keeping traditionally involves the historic record-keeping of what has happened with a company’s financial records. It generally happens several days after the event, so the records are inherently out of date. It is traditionally also done in one location, with the accounting records saved on an accounts package in an office and accessible only by a few.
Cloud-based accounting is a radical shake-up of the traditional book-keeping method. Rather than using a package installed on a computer or office server, users can log into it and work from any device with an internet connection. This means the accounts of a business are accessible anywhere, be it through an internet browser or smart phone app.
Cloud accounting packages also have the capability to speed up the processing of transactions, meaning the information available is much more up-to-date. They have direct bank fees and can automatically (or with very little input) post a lot of the transactions which previously would take up so much of a book-keeper’s time.
What are the advantages?
There are a number of key features and advantages to using a cloud-based accounting system, and the significant ones have been listed below:
- The accounts can be accessed from anywhere with an internet connection, allowing directors to see, at a glance, the company performance and position and take action as required. Different users can be given different levels of access. So some can be read-only, or only have access to certain areas. This can be a more efficient method than using email to share information as users can login and access what they need directly.
- Real-time bank feeds allow information to be processed much more quickly, and the accounting package can take care of a lot of the simple repeat entries with little or no input from the user. Most of the major banks are supported which removes the need to manually copy information. Invoices can also be filed electronically which helps with record-keeping, and there are even add-ons available which can read a scanned invoice to determine what it is, to help speed up the posting of the details.
- Plug-ins are available which allow things like expense receipts to be photographed and directly inputted into the software through a smart phone. Sales representatives can, for example, raise quotes for work and generate purchase orders from their smart phone. Invoices can be created from anywhere and sent electronically to customers as soon as the work is agreed, and customers can pay these invoices electronically if they wish at the touch of a button, which has the opportunity to improve cash flow.
- Cloud accounting packages are updated continuously by the provider which means you constantly have the latest version. Traditional accounting packages require manual updates and many people will have experienced conflicts between different versions! This is a thing of the past with cloud accounting. There is also lower capital expenditure as cloud accounting packages are usually paid for on a monthly basis.
- Back-ups are usually taken care of by the provider, so you no longer have the cost and complexity of doing this yourself. The information is not sitting on a single server or hard drive, which takes away the risk or corruption, theft, fire or flood.
- You can give your accountant access to the data, so if you’re stuck on a particular transaction or issue, they can help. If you would like your VAT return figures checked, for example, before they’re submitted, your accountant could login and do this easily.
The role of the accountant is changing with these advancements in technology, as a lot of the labour intensive work is streamlined. This allows accountants to act in more of an oversight and advisor capacity. The accountant can continue to offer ancillary services alongside the book-keeping with a more integrated approach, including statutory accounts preparation, payroll and corporation tax for example.
There is a proposal from HMRC to move towards digitally filing a company’s records every quarter for the purpose of corporation tax from 2018. Cloud accounting packages allow for more up-to-date information and easy electronic financial reporting, which helps with the ability to produce these records for the purposes of digital filing. By moving to a cloud platform now, you will hit the ground running by the time these rules come into effect.
Are there any disadvantages?
It is important to consider all factors when deciding whether to move to a cloud-based system. Security is important and must be considered as your records are now stored online. However, it is worth noting that the companies involved invest a lot of time and expertise on the latest security so the records may well be more secure in the cloud than they are on your office server. With traditional accounting packages, if your laptop is stolen the records could potentially be accessed, but with cloud accounting they are all stored online, removing this risk.
What are the options?
There are a number of cloud accounting packages on the market, and you should choose the option you feel most comfortable with and best suits your needs. Shipleys has partnered with Xero for our cloud accounting offering.
Online training courses are available and Shipleys has experts who are on-hand to assist. You will need to undergo a process of moving your records from your existing package onto the cloud-based platform, as getting the set-up right and investing the right amount of time in this is important. We can assist with this process too.
Our licence also allows us to offer these packages at a cheaper monthly fee than you would be able to obtain by going directly to the provider, and we can be as involved or uninvolved as you like. We can take on the full book-keeping service, making all the necessary entries into the system, through to a high-level oversight, perhaps just checking VAT returns or advising on certain transactions. The solution can be tailored to you, as flexibility with cloud accounting is one of its major benefits.
Please contact Rob Wood on email@example.com for more details.