Should I use cloud accounting?
The term ‘Cloud’ is simply a buzz word of the last few years, but it has substance and is certainly a relevant discussion for your business to be having. Cloud accounting serves the same function as accounting software that you would previously have installed on your computer, except it runs on an external provider’s server and you access it using your web browser, over the Internet (just like internet banking). Your data is securely stored and processed on these external servers which gives rise to the term “in the cloud”.
The Cloud experience should deliver the following early experiences:
- Your I.T. reliance including management/hardware/software is reduced to simply a reliable internet connection;
- Your business reporting is more timely, access is improved and general structure is more flexible;
- Your workflow and processes gain efficiency as a range of new opportunities are available to you; and
- Data storage security will be improved as most Cloud providers adhere to and deliver stronger levels of data security than small business.
As an accountant, cloud accounting has made the largest fundamental change in recent times as to how we do business. Our clients are loving it and simply, we are too. We no longer have to phone the client for a backup of their latest file, wait for them to post it in (as usually the file is too large to email it through) and then review it. We are now on the phone to the client and at the same time reviewing their financial affairs. We are instantly able to assess how a business is tracking and discuss relevant and timely plans to help improve their businesses performance.
That’s the benefits as an accountant but what about for the actual business owner. I run Xero, one of the larger cloud accounting programs, for my husband’s business.
It has reduced my book keeping time to less than 25% of the previous time taken. I no longer have to allocate one Sunday a month to do the book keeping for the month, I can have it processed in less than 2 hours. As well as this, the full concentration that was required on an old system is not required – making sure you put the correct date and correct amount (to the cent). Cloud accounting programs import your transactions directly from your bank account. This means the date, amount and description that would appear on your bank statement – is already in your cloud accounting program.
I can now do my book keeping on the couch, watching TV. Because it is in the cloud, so long as you have internet connection (which is basically everywhere these days) you can get the job done anywhere. As well as this you are not tied to the one computer/laptop where the program is installed. I know business owners who get their book keeping done on their phones while waiting to pick their children up from sport, school, friend’s houses…
Invoicing and debtor management.
Quotes can be turned into invoices quickly and easily. Invoices can then be emailed out as soon as the job is done. Xero tracks when and to whom the invoice were emailed to – therefore no more excuses that they didn’t receive the invoice! The invoicing system is easy to use, and the part I find most favourable is that because it’s so easy to reconcile the transactions, I am able to stay on top of the customers who owe us money daily. It has an automatic reminder email system – therefore when a client hasn’t paid by the due date, it will automatically send out a reminder email, less time chasing up money and more time for fun stuff.
If you are not already using a cloud based accounting program such as Xero, I would seriously recommend your investigate your options. It can half, or my time quarter, your book keeping time – and as a business owner you are much more valuable generating revenue for your business that making sure your bank reconciles.