14 June 2017

Cloud accounting: your key questions answered

We explain exactly what is meant by cloud accounting, why we recommend you use Xero and outline some of our favourite add-on apps.

You’ll have no doubt heard about the ‘Cloud’, but what exactly is it and what does it mean for businesses? Our cloud-accounting expert, Anna Cathro, answers this very question, recommending a cloud-based accounting system and some of our favourite add-on apps.  

What is the Cloud?

The Cloud is an internet-based solution that enables you to store and process data via your computer and other devices on demand. The data is stored in privately-owned or third party data centres located across the world. This allows companies to avoid upfront infrastructure costs and to access the information anywhere that has an internet connection.

Just like other businesses, those within accounting have had to adapt to the changing age of technology. We no longer sit working out your accounts with abacuses, but have embraced cloud-based accounting.

What cloud-based system should I use?

In line with the introduction of Making Tax Digital, businesses will soon be required to use accounting and bookkeeping software that is compatible with HMRC’s online system. There are lots of compatible packages currently available in the market but, at Scott-Moncrieff, we love Xero.

Why Xero?

At the core, Xero is an online cloud-based bookkeeping system, but it’s also so much more. With a Xero package, you have the ability to provide access to as many users as necessary, so they can work on the same file at the same time at no extra cost. This includes your advisors, meaning you don’t need to manually send us numerous reports and invoices. Xero is also a very affordable solution, with nothing to pay upfront for the software. Packages range from £9 to £27.50 a month – less than a round of coffees at Starbucks for your staff! You can also choose a package that either limits you to a few transactions a month, or permits almost unlimited transactions and incorporates foreign currencies as well.

Since you don’t need to install any software on your device, you also don’t need to run any updates – Xero does this all for you.

Xero is very easy to use and was set-up for people who aren’t accountants. The software is designed to enable business owners to take back ownership of their company’s finances, allowing them to have up-to-date information so they can make informed and timely decisions. To make things even simpler, the intuitive system also learns with you and prompts you to process items based on what you have entered previously.

Xero also has links to many banks in the UK, which means you don’t need to manually enter bank transactions. Instead, this is done for you automatically on a daily basis, so you can rest assured that your bookkeeping is up-to-date and accurate. Waiting weeks or months to get reports that help you structure the future of your business becomes a thing of the past.

It’s not only limited to bookkeeping, but also allows you to store documents. This means you can attach copies of invoices, giving you a paperless system. It also helps when it comes to the annual accounts process, as your advisors will be able to easily access all the information they need exactly when they need it.

What Xero add-ons should I look out for?

Xero has an add-on marketplace, making it easy for you to integrate your bookkeeping with lots of other available tools. With over 500 different apps, you really can create your very own financial control centre. We’ve tried a few of these apps ourselves, and have some personal favourites:

Receipt Bank:

Receipt Bank takes an electronic version of an invoice or receipt, pulls out all the key information using optical character recognition software, and posts it directly into Xero. Invoices can be uploaded electronically in a number of different ways, or hard copies can be sent directly to Receipt Bank in a free post envelope for them to upload it on your behalf.

Nowadays, in the case of an investigation, HMRC will accept electronic copies of invoices as evidence, so, once they are uploaded to Xero, there is no longer a requirement to keep paper copies.

When it comes to bookkeeping, apps such as Receipt Bank can help to significantly reduce the amount of time spent processing every single invoice, giving you or your bookkeeper more time to focus on the actual results.

Float:

Cash and cash flow is crucial to businesses big or small. Keeping track of cash and knowing what might tip you below that dreaded line can be complicated, time consuming and cumbersome. This is where the next exciting Xero add-on, Float, comes in.

Float can accurately predict what your cash position will be over the coming months based on past information and the current data within Xero. It also allows you to perform scenario analysis to look at what would happen if you were to delay or bring forward the payment of an individual invoice. Gone are the days of faffing around in spreadsheets or adjusting your bookkeeping system.

What if I want to manage my stock?

When it comes to stock, there are loads of different apps that can help you manage this, but which one to choose depends entirely on your business and how you operate. If you would like us to recommend a specific one for your business, we would be happy to do so following a review of your current system and your needs.

And when it comes to reporting?

Within Xero, you can run a variety of different reports, from looking at payables and receivables, to the trial balance used to prepare your accounts. If you want more than that, there are lots of additional reporting packages that connect to Xero. Our Xero experts at Scott-Moncrieff can tailor a report pack specific for your business, so you get only the information you need and want. Using these tools allows us to report for you on a much more regular basis, as long as your Xero file is fully up-to-date.

I’m still not sure about Xero and cloud-based accounting…

Using Xero and its add-ons can help save you time, money and allow you to be more up to date than ever with your bookkeeping. This will give you, as a business owner, more time to make decisions that enhance and develop your business.

If you’re not already using Xero, and you’re considering moving to a cloud-based system, we have a number of Xero specialists at Scott-Moncrieff who can help you get the most out of the system. They will be able to provide training, assistance with conversions, and ongoing support throughout your transition to, and onward journey within, Xero.

If you would like to discuss moving your bookkeeping across to Xero, please speak to Anna Cathro or your usual contact at Scott-Moncrieff, who can put you in touch with a member of our Xero team to get you started.

Bookmark and Share