5 Ways Cloud-Based Software Can Benefit SME Accounting
Written by: Addition
Cloud-based software might seem like a hot new trend – but it’s actually been around longer than you might think. In fact, it was originally invented in the 1960s, and has been quietly dominating spaces such as tech and entertainment ever since.
Its latest foray into Fintech (with tools like Xero) is what’s got a lot of people buzzing. A February 2021 report shows that 18% of UK accounting firms have 98% of their clients in the cloud. Globally, almost one-third (31%) of accounting companies have over 80% of their clients online.
But what makes cloud accounting different – and how can it benefit SMEs? In this article, we’ll list 5 key ways that cloud-based software is transforming accounting, and how using these tools can give your company a major edge on the competition!
1. Accurate and automatic
Traditional accounting involves a truckload of paperwork, boxes of receipts, and a laborious data input process. And let’s not forget the lack of room for human error. Even the slightest miscalculation could result in a chain of (possibly expensive) mistakes.
Accountants who use cloud software will sync it with your business bank account. Any sales made, as well as money flowing in or out, will automatically be recorded in your cloud.
This saves hours of time that would normally be spent documenting and submitting transactions. It also prevents discrepancies or mistakes – meaning your numbers are always accurate!
2. Real-time, anytime
Typically, if a business owner wants to check their current financial position (such as cashflow balance if you need to purchase something, or assets for a loan application), they’d need to call their accountant. The accountant would then ‘run the numbers’ and get back to them.
With cloud-based accounting, your data isn’t only stored – it’s sorted into categories, too. Depending on the tool, you should be able to instantly access your financial overview from your mobile phone or laptop, without having to wait on your accountant to hand over (or explain) the facts. You’ll be able to see exactly how things stand, any upcoming changes, and make informed decisions based on real-time information.
3. Teamwork = Dreamwork
It’s easier to run a business when everyone is on the same page (or spreadsheet). Cloud accounting allows you to add multiple users – from your accountant to your staff and team.
Permissions and accessibility issues are a thing of the past. This is a huge plus for entrepreneurs – especially if you’re a business owner who struggles to carve out time off to recharge! Knowing that your accountant and team can access all the business financial records independently means you can unplug when you need to.
4. Sharpest tools in the shed
Speaking of plugs, one of the biggest benefits of cloud-based accounting is its integration features. Xero is a hot favorite for this, and one of the reasons is its open API. This allows you to plug a growing number of other tools into your accounting software. For example, at Addition, we provide Dext access to all our clients. Dext (formerly ReceiptBox) lets you upload and store all our invoices and receipts straight into your accounting cloud. Other plug-in tools include the ability to automatically upload supplier invoices, generate reporting, and track KPIs.
5. Keeping up with the times
There are multiple options to choose from when it comes to bookkeeping software. However, if your accountant uses a cloud-based tool, this means issues like regular updates, sync-times and bugs are no longer a problem. All of your data is stored safely online and backed up automatically – meaning there’s no danger of the programme crashing and binning all your figures. The software will also keep itself up to date, eliminating the need for prolonged ‘updating’ wait times.
With cloud accounting, you and your accountant are always in sync. You’re both able to access financial information whenever you need to, and you’ll be confident that it’s in real time and up to date.
This strengthens the personal link between you and your accountant. Availability is no longer an issue – you’re already connected through your cloud. The categorization feature of tools like Xero breaks down the numbers for you, so that you can understand what they mean on your own. And when it’s time to scale up or launch something new, your accountant will be able to give you a much quicker projection – meaning you can give growth the green light faster than ever.