The popularity of cloud accounting continues to grow, with many businesses moving away from more traditional accounting systems thanks to the flexibility offered by cloud-based solutions. In this article we consider some of the benefits of cloud accounting.
Why move to cloud accounting?
Cloud accounting packages are user friendly. They are, on the whole, designed for the end user rather than for accountants or financial experts. They are modern, simple and easy to understand.
They are accessible on any device with an internet connection. There is no need to be situated in an office, or where the records are stored. For example, you can record your expenses while on the road via an app on your phone, or produce a sales invoice which is entered in your company books and on its way to the customer long before you get back to the farm or estate office.
They save time. Cloud accounting systems can link directly to your bank account, automatically downloading transactional detail and reconciling transactions, meaning that data input time is significantly reduced, as well as the risk of error. Making regular data back-ups is no longer required as data is automatically backed up in the cloud.
The user is provided with real time information, meaning that a business should be right up-to-date with its financial position in a couple of clicks.
They reduce cost. Where traditional accountancy software packages tend to be more expensive, with annual subscriptions payable, the new cloud-based systems tend to be cheaper and can cost as little as around £20 per month for most bookkeeping and recording needs. The subscription cost is payable monthly.
The ability to integrate cloud accounting packages with other apps which add further, sector specific functionality, is a huge advantage.
The downsides of cloud accounting
There are, of course, some downsides.
The user is entirely reliant on the internet connection. Whilst availability of superfast broadband is spreading across the UK, problems with connectivity in rural areas are well documented. Internet connectivity is still slow, intermittent, or even non-existent in many rural areas.
Whilst free support is provided, unlike traditional providers where you may have been able to pick up the phone, most cloud accounting providers prefer email and online support, which can be slower. That said, support providers, including your accountant, can log in and see exactly what you see.
Systems have been known to throw up errors from time to time. You cannot fully rely on the automation of the system. However, the systems do have an artificial intelligence, and learn transactions and patterns the more they are used. They can make mistakes, but as with other non-cloud-based accounting packages, review of the information should pick up any errors.
Many cite concerns about security. However, in reality, cloud accounting packages are probably much safer than traditional packages. Your data does not travel with your computer, or on any storage device. The data cannot be lost or corrupted. Whilst no system can be completely safe from cyber criminals, providers offer the highest levels of encryption and protection.
The popularity of Xero
Many more landed estate and rural business clients are now moving to cloud accounting solutions. In the last few months, we have transitioned several estates and rural businesses from more traditional packages to Xero.
Those businesses are also looking at other cloud-based sector specific apps to help them manage their businesses, particularly apps that integrate seamlessly with Xero, such as Re-Leased, AgriWebb and Figured:
- Re-Leased streamlines property portfolio management, using ‘set-and-forget’ workflow automations to manage property inspections, rent reviews, repairs and invoicing. There is also functionality to allow tenants to report issues to the landlord through the software.
- AgriWebb is a farm management app with a range of tools to improve livestock management. The app digitises farm mapping, herd management, tasks and farm record keeping, making it simple to record farm activities whilst on the farm. The app also integrates with government databases, automatically syncing with the farmer’s government account.
- Figured is a livestock, dairy and crop budgeting, production tracking and forecasting tool which facilitates the collaboration of the farmer and their professional advisers, including bankers and accountants, around the same data in real time.
All three of these packages dovetail with and automatically share data with Xero, simplifying financial management and eliminating duplication of effort.
There is a huge range of Xero-approved apps for all manner of industries and sectors. One client is looking at the possibility of an integration between Xero and a specific app for managing their golf club business, for example.
A summary of cloud accounting
It might not be for everyone just yet. However, with increasing digitalisation of business operations and reporting and, of course, Making Tax Digital, cloud accounting is certainly here to stay. The pandemic has increased remote working and has really highlighted the advantages of cloud accounting solutions and accelerated digitalisation for many businesses. With investment in superfast broadband and improving coverage across the UK, cloud accounting will surely become a much more viable option for many rural businesses.