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Will my small business benefit by implementing cloud accounting?

Overview

Cloud accounting applications are no longer a concept.  Small businesses are the biggest beneficiaries of cloud accounting and they are now moving to embrace this new technology and migrate their accounting systems onto these platforms.

Not all small businesses have an accounting system but many still use MS Excel as an alternative.  This type of small business with manually intensive bookkeeping systems and small businesses with traditional desktop accounting software can gain real benefit from implementing a cloud accounting system.

What are the benefits?

As a small business owner you have probably heard of cloud accounting systems but are not aware of how they can benefit your business.  Some of the key benefits include:

  • Anywhere and anytime availability.
  • Integration with banks (you can set up daily bank feeds into your cloud accounting applications).
  • Integration with other cloud software (add-ons).
  • Software is constantly updated by the vendor (no downloading of upgrades or bug fixes).
  • Higher levels of data security (yes – a lot safer than your desktop!).
  • It allows the small business owner to easily track cashflow, invoice payment, profit and loss, tax and VAT.
  • Your accountant will have access to your accounting data through a dashboard.  This increases collaboration, will reduce data handling and should theoretically reduce accountancy fees.
  • Cloud accounting applications are available on low cost monthly payment plans.

 

Key features

When looking at the number of small businesses who are using cloud accounting systems, it is clear that this market is still a new frontier (it is estimated that only 14% of small businesses in the UK use cloud accounting systems).  There have been a lot of recent entrants (pioneers) into the online accounting market.  However, not all cloud accounting applications have been created equally and there is a lot of variation in functionality, ease of use, pricing and add-ons.  Areas of functionality to consider are:

  • Available add-ons
  • Bank account feeds
  • Bank reconciliations
  • Cash flow management
  • Electronic sales and purchase invoices (e-commerce)
  • Estimates
  • Fast cash coding
  • Fixed assets
  • Management reporting
  • Multicurrency
  • Payroll
  • Project control
  • Purchase order processing
  • Time recording
  • Self assessment
  • Stock management
  • Users (number)
  • VAT (cash accounting, invoice accounting and flat rate scheme)

 

What is my choice of cloud accounting packages?

The number of bookkeeping and accounting systems online is growing.  For small businesses, some of the key providers are:

  • Xero
  • FreeAgent
  • QuickBooks online
  • Kashflow
  • Sage One

How much do they cost?

Cloud accounting systems can vary from £7 per month up to £30 per month.

Should I invest in a cloud accounting system?

There are significant benefits in using a cloud accounting system.  They are steadily growing in popularity for an ever increasingly mobile small business owner.  However, you need to ensure the cloud accounting system you select is a match for your business (both size and functionality).

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