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Why Your Small Business Should Move to Cloud Accounting

by | Jun 2, 2017

Why Your Small Business Should Move to Cloud Accounting


Are you holding your business back by not using Cloud Accounting? It is proven that the biggest risk to business failure is cash flow. Being offline you almost certainly have average to poor cash visibility. Cloud tools can help you change all that – no more spreadsheets and late nights looking at bank statements!

 

Cloud Accounting

The Traditional Approach – Poor Cash Flow Visibility, time consuming, no online access, systems can only be used by trained professionals.

 

Sales

Invoices are raised (often in word and transferred later) and downloaded to email to the client (or post!). If you are using a system, such as Salesforce or Streamtime, the sales invoices are usually raised there and then duplicated into the accounts.

Issue:

  • No link between accounting system and email or post records.
  • Duplication of entry between systems


Credit Control

Reports are downloaded monthly or weekly, after bookkeeping has been done. Client contact information must be cross referenced to emails before contacting the client with a bespoke chase via email or the phone.

Issue:

  • No path or escalation process
  • Messages are not consistent as they are not template driven
  • Not A/B tested for performance on getting cash in
  • Directors can’t easily see an audit trail of chasing

 

Purchase Invoices

Received via the post or emails. Emails are printed and filed before being copied by hand into the accounts. Payment of purchase invoices are conducted by running a report, printing and manually paying each supplier using bank details stored in the system.

Issue:

  • Time consuming
  • Costs money to process
  • Risk of human error
  • Directors have no real-time visibility on what’s come in

 

Receipts & Expense Claims

Receipts are kept printed in another file. Paper copies need to be manually totalled each month end and submitted to the accounts.

Approval would mean looking through all the paper receipts to check they were in line with policies before signing the top sheet and giving back to the bookkeeper to process as an approved purchase invoice for payment.

Issue:

  • Losing receipts is common
  • Procrastination over filing expense claims
  • Approvals process is time consuming
  • Processing costs time and money

 

Bookkeeping

Bank statement data is manually imported to the accounts by having to manipulate a CSV Excel file or just having to type the data in. This can be done daily, weekly or monthly.   There is no way to see the current bank balance until this import has happened and the statement is reconciled to the bank.

Issue:

  • Clunkiness of software often results in errors
  • Time consuming
  • Can’t be automated
  • No cloud access to accounts for Directors

 

Performance Reporting

Limited to a standard P&L, Balance Sheet, Aged Receivables and Payables. No way to run a live cash flow forecast. No insight or KPIs. No tracking of budget variance or other metrics.

Any meaningful performance reporting is done in excel. This required actual results to be manually copied over to an excel sheet and any graphs or charts to be created by hand each month.

Issue:

  • No clear reporting except P&L from accounts
  • Excels are painstakingly produced, taking time
  • Risk of error on cash flow having a big negative impact
  • Time spent producing reports could be spent discussing actions

 

Cash Flow Forecasting

This is done in excel, a daily cash flow would require the daily bank balance and transactions to be manually added to an excel sheet at a set time each day, to then analyse what was due to come in each day over the next week and plan for it in the spreadsheet. Longer term views can be created to plan cash flow based on targets and past performance.

Issue:

  • Time consuming
  • Prone to error
  • Usually only the creator knows how to update the sheet
  • Hard to delegate
  • Complex procedure
  • Doesn’t speak to Debtors or Creditors easily
  • Does not react in real time

 

The New Way – Cloud Accounting Systems used by accountant and Directors, cloud access, full transparency on cash flow, automated workflows to reduce time input.

 

Sales

This is raised in an online accounting system, via ipad or iphone with a few clicks. Then, it is emailed to the client from the same screen with read receipts and auto chasing.

Advantages:

  • Easier, quicker and cheaper
  • Can be done anywhere with internet
  • Consistent layout
  • Read receipts
  • Auto chasing

 

Purchase Invoices

Automatically sent to the accounts via an add on app (OCR scanner). Setup an accounts @ email address to auto forward anything that comes in with an attachment.

Advantages:

  • Automates the whole process saving time and money
  • Real time data now in accounting system
  • Easy to see what is due to be paid and when
  • No storage required and paperless office is easy

 

Receipts & Expense Claims

Simply snap a picture on your phone and throw them in the bin! No more storage space required!

Advantages:

  • More expenses claimed
  • Real time P&L data (no missing large expense claims)
  • Automated process so quicker and cheaper

Read How to Manage Receipts as a Small Business Owner for more information.

 

Performance Reporting

Your accountant can auto run these reports at month end giving them much more time to add commentary and prepare meaningful agenda points for your board meetings.

Advantages:

  • Meaningful actionable insight regularly
  • Quicker turnaround of reports
  • Easy to customise with no manual spreadsheet entry

 

Cash Flow Forecasting

Run in real time in the cloud, automatically speaks to your bank statement and your accounting system to allow you to pop in your pipeline numbers, adjust for any future expenditure as it’s planned and watch the system automatically predict your future cash flow, daily, weekly, monthly or annually.

Advantages:

  • Real time cash flow visibility!
  • Directors have cash information at their fingertips
  • No complex spreadsheets

If you’d like to read more about how you can improve your cash flow, read The Importance of Cash Flow Forecasting and The Importance of Budgeting and Forecasting.

 

For further information and advice to help grow your business, get your free copy of SRK’s Business Finance Guide by clicking the download button below.

As always, SRK is proud to offer a free consultation to anyone that gets in touch with us. No sales, just simple advice. So, take advantage and book in for yours.

FREE CONSULTATION

 


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