Cloud Accounting

What is Cloud Accounting?

Recording the income and expenditure of your small business to keep track of your historical financial performance is nothing new. Double-entry bookkeeping has been around for centuries and accounting software has existed for decades, giving finance teams the ability to record and track the money coming into, and out of, the company.

Traditional accounting software

Prior to cloud, most accounting software was desktop-based. In other words, the actual application was installed and run from the hard drive of your office desktop computer. This has a number of drawbacks, including limited access to your data, the need for constant software updates and the ongoing cost of backing up all this financial information.

Cloud accounting software

Cloud accounting (or online accounting) has all the same functionality as desktop accounting, but moves the whole process to the cloud and expands upon it. There’s no desktop application – you log in to an always-up-to-date online solution and all data is safely stored on a cloud server. Most cloud platforms will also have an open API, which basically means third party software can connect with your system to provide even further value to you as a business owner.

Benefits of Cloud Accounting

Moving accounting from the desktop to the cloud has been a huge leap forward in financial management, with many of the drawbacks and cost implications of traditional accounting being removed from the equation.

Access your accounts anywhere

Cloud accounting gives you access to your key business numbers 24/7, from any location where you can access the internet, removing the need to work from one central office-based computer. Log in via a web browser from your laptop, or use your provider’s mobile app to access your accounts from your phone or tablet.

Access to real-time information

By keeping your bookkeeping and bank reconciliation up to date, you can achieve real-time reporting. Instead of looking at historical reports that are days, weeks, or even months out of date, you have an instant overview of the company’s current financial position. This real-time overview is vital when looking at your cash position, planning future spending and when making big financial and strategic decisions as a management team.

Access to the app ecosystem

Open APIs mean you can add a range of third-party apps and tools to expand your core business system. There are cash flow forecasting apps, online invoicing apps, industry-specific project management tools and a host of other practical solutions to choose from. These tools enable you to further save time, reduce resourcing costs, identify problems further in advance, and generally ease the pain of unnecessary admin that’s weighing you down.

Live bank feeds

Many cloud accounting platforms offer live feeds to your bank accounts, giving you the ability to link your banking directly with your accounting. Instead of manually keying-in each bank statement line, or uploading a .CSV file that you've downloaded from your internet banking portal, a live feed pulls your bank data straight through into your accounts. This speeds up bank reconciliation and gives you a more accurate view of your bank balance.

Always working with the latest software version

When you log in to your accounting platform in the cloud, you’re always using the latest version of the software. There’s no need for time-consuming and costly updates – you just sign in and start working. Plus, you don't have to be responsible for applying security fixes - your software provider will handle that for you automatically.

Secure sharing of data

When you’re working with your accountant, bank or other advisers, you can easily grant access to your accounts with cloud accounting software. There’s no need for USB memory sticks or sending emails back and forth. Your advisers have safe and secure access to all your financial information, in real time. This is quicker, safer and gives your advisers the information needed to support and advise you, going forward.

Connected online payment

Payment apps like GoCardless can be connected to your online accounting and invoices, allowing customers to pay you automatically, speeding up payment times and reducing the burden of admin work on you or your staff.

When should your company use Cloud Accounting?

To get the most from cloud accounting, it pays to make use of the additional digital connectivity and real-time data capabilities that cloud offers.

The enhanced real-time data capabilities of cloud accounting make it ideal if your business wants fast access to detailed financial breakdowns, management information and key performance indicator (KPI) metrics. And with most platforms offering an open API, there’s a wealth of choice when it comes to building an app stack and creating a custom suite of business apps.

Using automation to reduce workloads

The cloud accounting ecosystem allows for automated bookkeeping, automated cash collection and automated bank reconciliation, all of which radically cuts down on your team’s admin workload.

Getting more insight from your financial data

With instant access to real-time reporting and financial intelligence, you and your management team have the numbers, insights and key data needed to make sound and informed decisions.

Paying VAT or GST online

Paying your taxes is far quicker and simpler through a cloud accounting platform. Your transactions will be recorded as you go, and can then be swiftly exported into the relevant tax return templates and sent digitally to the revenue.

Getting MTD-compliant

Making Tax Digital (MTD), the UK government’s move to digital tax accounts, requires mandatory digital record-keeping and tax returns. With a cloud platform, you’re digital-ready and can send returns in the required iXBRL format.

Working remotely

If you want your business to leverage the benefits of remote or flexible working, cloud accounting allows the management team and your finance department to access all the key numbers from anywhere they have access to the internet.