More and more businesses are making the switch to cloud-based digital accounting, particularly with Making Tax Digital now in place. If your business has not yet done so – and you’re not alone – there are a number of reasons why now might be the time to take a closer look.

What exactly is cloud accounting?

Things have moved on since the days of traditional spreadsheets such as Excel or accounting software that was installed onto a computer hard-drive. With cloud-based accounting there is no software to install or update and it’s not at risk from technical glitches or malware.

See also: Six accounting hacks for SMEs and start-ups

Instead, all the data is held digitally and securely on a remote server. You send your data into ‘the cloud’, where it is backed up for you.

What cloud-based software is available?

There are several options available when it comes to cloud-based accounting software which all have their place in providing a service for different types and sizes of businesses.

Below are some options that are worth having a look into. If possible, it’s always worth doing a trial with the software you choose before you subscribe to make sure it has the functionality you need, and you are comfortable using it.

Please note, this is not an exhaustive list.

Using Xero as an example, what are the benefits of this cloud-based software for my business?

Xero has the functionality to allow you to:

  • Create real-time financial reports - all the information you need is to hand
  • Set up automated bank feeds for effortless bank reconciliation
  • Easily create invoices, record expenses and track cash flow online
  • Not specific to your office computer - easy access to your accounts through the internet form any device including your computer, smart phone or tablet
  • Corresponding paperwork can be electronically stored with transactions e.g. a HP agreement with a purchase
  • Multi-user access makes it easy to collaborate online with your team and accountant
  • Everything is online, so there’s nothing to install and everything is backed up automatically
  • Upfront business costs are reduced – version upgrades, maintenance, system administration costs and server failures are no longer issues - they are managed by the cloud service provider
  • Xero is Making Tax Digital-ready – helping VAT registered businesses comply with HMRC’s new VAT reporting rules

See also: Seven smart saving tips for start-ups

Dealing with a drawer full of receipts – now there’s an easier way!

Are you someone who stuffs their business receipts into a drawer to ‘deal with later’? If so you’ll know that it can be a nightmare trying to sort out expenses and reconcile your books. Now, there’s a much easier way.

Receipt Bank is just one of the many add-ons to Xero but we think it’s worth a mention because it’s ideal for keeping track of receipts, especially when working away from the office.

By taking away the need for manual data entry, receipt bank extracts the key information from your bills, receipts and invoices. It then publishes the data straight onto your accountancy software.

How do I make the switch across to the cloud?

If you do decide that cloud-based accounting software is the way forward for your business, you may be wondering what the next steps are. Thankfully, transitioning your accounting system does not have to take up too much of your time or resource and there is plenty of help available.

It is important to discuss the options with your accountant, to ensure that you make the right choice for you and your business, and they should be able to offer advice and support throughout the transition.

It’s best to have a date in mind as to when you’d like to switch over. Many businesses find it easier to transition on the first day of a new accounting period, or VAT quarter for example.

See also: What's the importance of cash flow forecast?

Most cloud software will allow you to import existing data so that you have a starting point and prior year comparative balances.

More information

Thorne Widgery are Xero gold partners and we offer a hassle free set up service to both our clients and also to non-client who need some extra support. Our packages include options not only to set the system up but to show you how to use the system so you feel comfortable with the software and use it to its full advantage.

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