Cloud accounting isn’t right for my business! We disagree.

We have come across this common misconception time and time again from business owners who want to embrace the power of cloud accounting but don’t think it’s right for their business.

Let’s look at a case very similar to those we have encountered with our clients.

How it’s always been done

John Smith, Director and Owner of ABC Printing, has run his business for thirty years and has grown to the point of employing three people, with 10 clients on his books.

Highly organised, Mr Smith keeps every transaction, invoice, purchase, expense and payroll payment on locally saved spreadsheets and paper documents.

While this works for him and his staff, it takes him days out of every accounting period to calculate tax returns, VAT liabilities and payroll.

As the business has grown, John Smith has found this approach more complex and time-consuming, as he has had to keep records of more staff costs and tax calculations.

This comes to a head when, during one accounting period, John is unable to locate a crucial document and therefore submitted a late return and receives a fine.

What’s the issue?

Taking a wider view of ABC Printing and John Smith’s approach to keeping financial records, we can see a number of challenges that have resulted from using manual methods, whether on paper or through his own spreadsheets.

Every entry requires manual input. Locating specific transactions can feel like searching for a needle in a haystack for this team.

This method also leaves ample room for human error, from miswritten figures to lost documents – something John has now experienced at his cost.

This is particularly true for VAT submissions, which John must do through Making Tax Digital (MTD) by using compatible software. Without a cloud accounting solution, John is at risk of non-compliance or needing to dedicate even more time to migrating data or implementing bridging software.

In addition, as the business grows, so does the volume of paperwork, making it increasingly difficult to maintain accuracy and efficiency.

More widely, Mr Smith is likely to suffer from less efficient decision-making without instant access to accurate data and associated analytics.

Turning to the cloud

Lauded as a beacon of accounting efficiency, cloud accounting has also presented some perceived challenges to more traditional businesses – despite its ability to address the very real issues faced by entrepreneurs such as Mr John Smith.

How? Let’s see:

• Automation – Many cloud accounting systems allow users to automate repetitive tasks, which could have saved Mr Smith some of the days out of each period he spent on preparing accounts and VAT returns.
• Access – Accessible anywhere, cloud accounting supports remote working and would enable John to provide a hybrid arrangement to staff who need it, in turn boosting retention.
• Collaboration – John’s accountant can far more easily access relevant data to ensure that he doesn’t miss another accounts submission.
• Compliance – As a VAT-registered business, ABC Printing must submit returns through Making Tax Digital (MTD) using a compliant software, which will be far more accessible and easier to use when storing financial information in the cloud.
• Storage and space – On a practical level, Mr Smith cannot continue to store paper documents and locally-stored spreadsheets forever! Cloud accounting requires far less hardware and storage space than traditional methods, which can also reduce costs.

What support does John need?

Despite the clear advantages to cloud accounting, John and his team are likely to need some support to make the most of any new system.

Staff training emerges as a significant challenge, as employees accustomed to paper-based methods must learn to navigate new software.

As a smaller team of four, ABC Printing has a tight-knit staff which enables John to clearly assign responsibilities to each person when it comes to keeping financial records and preparing accounts. However, if he looks to grow his business in the future, most cloud accounting solutions are highly scalable and so new staff can be onboarded and trained easily.

Data migration is also likely to be a concern for John, as a meticulous person with a large amount of paper and spreadsheet records.

We would be able to offer support in this area, working with John and his team to ensure that all data is moved accurately and in compliance with data protection regulations.

Finally, with significant experience in digital transformation, we’re well-equipped to guide business owners like John through the transition process and build new workflows that suit his team.

From selecting the right cloud accounting software to suit his needs to training staff on its use, we can provide end-to-end support through an ongoing relationship that prioritises efficiency and accounting accuracy.

Do you relate to John? We can help you too. Contact us today.