Are you familiar with cloud accounting? If so, you perhaps see it as just a useful bookkeeping tool for your accountant. However, it can be much more than that; it can be something that supports you in your business.
Cloud accounting is much the same in principle as traditional accounting. Most businesses keep digital accounts nowadays anyway; this just moves them from a machine in the office to ‘the cloud’. The software runs on remote servers and the data is more widely accessible, via the Internet.
This means that your information can be absolutely up to date, and is easy to share with your team, your accountant and HMRC. With Making Tax Digital in operation for VAT and on the horizon for other aspects of tax, it is really important to be ready.
Over and above that, cloud accounting is a powerful business tool that will help business owners like you take control of their business finances and make better decisions.
Your cloud accounting set-up
The components of your system are likely to be:
- Cloud accounting platform, the underlying software that records your data and makes everything work. You can raise invoices in your cloud accounting platform and send them to your customers as soon as work has been signed off. Make sure the due dates are clear and correct, include bank details for easy payment, link any payment integrations you use, and if you take recurring payments, ensure your Direct Debit system is in place.
- Cloud invoice automation tool, which allows you to scan in your invoices and receipts and then submit your information electronically.
- Cloud credit control system, which will email invoiced clients post-invoice due date, with you in control of what happens and when you want it to happen. You should reconcile your sales ledger at least weekly, preferably daily, to avoid chasing customers unnecessarily. Also, link your electronic bank feed – that’s a secure connection between your bank account and accounting – into your cloud accounting platform so you can easily reconcile payments received.
- Cloud cash flow forecasting tool, which can be synchronised with your cloud accounting platform. Reconcile your bank and sales/purchase invoices at least weekly, and ensure expected dates (not dates raised or dates due) on your invoices are updated weekly to give you confidence in the accuracy of your cash flow forecasting.
How do I implement cloud accounting?
As a first step, we’d recommend you have a talk with your accountant to see what they recommend. They should be well-informed, experienced in using the systems and perfectly placed to give you valuable advice about how your current systems can transition to cloud accounting, and how everything will work.
If you want a second opinion, we can help. Just pick up the phone and call the team on 01772 204102.
Implementation is a project, so choose a project manager from your team. They can work with your accountant to get everything organised. For example, you will want to choose and set up your cloud accounting platform and move across your historic data.
You will want your cloud accounting platform to be able to work with your cloud invoice automation tool, so invoicing happens seamlessly, and you and members of your team will no doubt require some training to get up to speed with everything.
Cloud accounting confers a host of benefits; these are the ones we think are key:
- Knowing your profitability and cash flow allows you to make decisions that are not just better-informed, but better for the business.
- You have clear, up-to-date records, so if you require funding you won’t have a mad scramble to get everything pulled together before speaking with potential lenders.
- Basic procedures, like invoicing and chasing payment, are taken care of automatically.
- Even if your team work remotely, they have access to the same data.
To get started with transitioning to cloud accounting, call the team on 01772 204102. We’ll walk you through the benefits for you and your business, and the process for you and your team.