Once upon a time, online accounting was a thing of the future, but with businesses increasingly opting for software in the cloud and HMRC ‘Making Tax Digital’, online accounting is in the here and now, says Rob Beasley, Online Accounting Specialist at Kreston Reeves.
Online accounting provides greater control over costs and cash flow – far more so than Excel spreadsheets and desktop software. For some, these alleviate the fear that data could be lost or compromised somewhere in the cloud, but the benefits of integrating online software into a business’s financial management outweighs the risks.
Basic, straightforward software packages such as Xero and QuickBooks Online, which are used by more than a million businesses worldwide, help firms of all sizes to manage their finances, plan, resource and make informed decisions.
A striking advantage is that online accounting enables business owners, managers and their advisers to be fully engaged with your business in real time, and on the move via iPad, tablet, PC, or smartphone; and not just at intervals when they receive a soon to be outdated back-up file. This deeper immersion means you get more value out of the relationship with your adviser.
Online accounting is good for all, but has obvious advantages for smaller firms, where cash flow is particularly crucial to survival and growth. The best online packages allow firms to schedule payments and automate sending out invoices, which ensures that cash flow is more visible and predictable. In fact, research suggests that invoices sent electronically, which can be dispatched the moment a job is finished, are paid faster. This naturally frees up managers to focus on business development, networking or improving their product or service, rather than bookkeeping.
Software can also help multi-divisional firms integrate their financial systems as appropriate. One client who inherited four inter-connected companies, was determined to take advantage of the digital age and now values being able to see his key financial performance indicators for the group at a glance. This allows him to make confident forecasts and projections thanks to a constantly updated digital blueprint of activities.
He can also share that information and any concerns with us, his advisers, in a dialogue not dependent on scheduled meetings, yet keeping everyone informed at the same time. As a result, he gets a faster response and we get a more thorough picture of what is happening.
The best online accounting systems provide a dashboard with a birds-eye view of performance, invoices, sales and outstanding balances, which your accountant and auditor can also see via shared log-in.
From an adviser’s perspective, we can identify potential problems or opportunities early for our online clients, and by being more regularly informed in between our face to face meetings, we can be more proactive on their behalf, which adds value to them.
The future is digital
A fully digital future for businesses makes sense in a world driven by seamless connectivity; especially considering HM Revenue & Customs’ plans for Making Tax Digital and the need for more regular reporting. Banks are also moving towards a fully digital future, with the promise of greater connection for and with clients who are also online. Lenders might also view businesses they can see in real-time more favourably when it comes to loans.
The advances made in accounting software means that the days of taking a bag of receipts to a bookkeeper for analysis are disappearing fast, as is the idea that an accountant is just there to keep the books balanced and the filing obligations met.
Online accounting frees up both clients and advisers to add real value to the development and growth of a business. The more we, as advisers, can be released from data processing tasks, the more we can offer support and strategic advice. It is a chance for businesses to be on top of their finances, and for those whom they rely on for advice to be in the same place. This only adds value.
Best practice makes perfect
An increasing range of functionality is being added to online accounting software, with a great deal of development energy going into improving notifications, alerts and ‘todo’ lists, all with the aim of better workflow management. There is also a flourishing app market growing up around the core online accounting packages, which a good adviser can guide you on.
Additionally, the growth of cloud-based accounting is already creating its own ‘big data’ from which client benchmarking will start to emerge to the benefit of clients and advisers alike. We can see a future where more is made of data analytics, real-time reporting and shared systems to help both us as advisers and our clients.
For instance, we will be able to draw upon shared intelligence and analysis of online data flows, which can guide us and our clients on workflow management best practice. Knowing more about our clients means that we will be in a better position to take a holistic approach to the advice we give them.
Online accounting is not a magic bullet, but it is a chance for businesses to be on top of their finances - and for those upon whom they rely for advice, to be in the same place… anytime, anywhere. Surely a good thing!
For advice and further information on online accounting and how it can work for your business, please contact Rob Beasley, Online Accounting Specialist at Kreston Reeves by phoning or emailing 01243 787627