Accounting in the Cloud
Cloud software is not a new thing. Xero launched in New Zealand in 2006! The industry however is in its infancy in many ways and still normalising and shaking out. This has led some people to be slow to adopt, fearful of providers failing and taking their financial records with them. It is for this reason that many back up their cloud software with other more trusted services such as DropBox.
To recap, cloud accounting is more accurately cloud bookkeeping. It provides a tool to generate quotes/estimates and invoices, log purchases and expenses and significantly automate bank account reconciliation. Added to this, functionality has broadened to include payroll, VAT, stock control and multi-currency. If done correctly, cloud software really is "beautiful" for clients and accountants. However, it really is an example of garbage in garbage out; subscribers can make a real mess of their cloud accounting account and it can take an expert a long time to unpick which can be costly. On the other end of the scale, if the bookkeeping is done accurately it is a dream for client and accountant alike and with records this will kept and easy to interpret, clients should really be offered discounts on their final accounts.
Of course, cloud accounting is not a replacement for an accountant. It cannot add value in terms of analysing, forecasting, advising and the reporting still lacks refinement.
So, resolved to create streamlined accounts and be more connected anywhere you have internet access to your finances, which cloud software do you plump for? There are a myriad of options and by its very nature the marketplace is global. Xero, FreeAgent, Kashflow, Clearbooks and QuickBooks, just to name a few, are all occupying a similar space in the market. Most of them operate different pricing plans which are more expensive the more functionality you have. Entry level will have restrictions on the number of invoices you can generate, whilst at the top end you can have a full payroll process and multicurrency functionality. The answer depends on the idiosyncrasies of your business. If you wish to use the tool to control your stock, QuickBooks has an established stock control system. If you are a fully digitalised firm, Xero have a market-leading edge regarding synchronising a wide range of apps. Other factors to consider are whether you have payroll requirements, if you trade internationally etc..
In summary, cloud accounting software empowers the client to access and control his/her finances and that can only be a good thing. As bookkeeping and transactional accountancy become automated, it opens the door for the kind of engagement between business owner and accountant that really adds value and insight for better strategic decision-making.