Cloud accounting: read about it and you’ll be told that you’ve struck the digital nirvana, the solution to all your business problems. Install a cloud-based accounting system and you will have created the ultimate solution for all the problems that your business has ever encountered. Can it really be true?
To really understand, you will need to consider what you’re trying to achieve from your management information system – because that’s what it is. It’s a way to get relevant, reliable and sufficient information to your management team, so that they can make decisions based on evidence. That’s what we, at Thomas Westcott, look for as auditors when reviewing your accounts. It’s also what your team needs from a business accounting system.
Moving your accounting system to the cloud
So, how does moving your accounting system to the cloud help with this process?
Firstly, it brings together third party information without you having to enter it. For example, your bank transactions can flow directly into your accounting system. That means there is no need to re-key or import bank statements with the potential inaccuracy issues. Your purchase invoices can be uploaded into your purchase ledger from an emailed invoice, photo or scan of a paper document. The system can also adapt to post transactions from what it sees others doing in their systems. You can also create, send, chase and collect cash for sales invoices seamlessly, making it possible to accelerate cashflow into the business.
Dealing with the basics
None of these functions make a difference if you don’t deal with the fundamental issues of business accounting first. By that I mean, for example, although the system may upload your bank transactions, you still have to match them to the correct invoice or entry. To do that you need to ensure that you have uploaded all your purchase and sales invoices to the system. You should also make sure your stock or inventory is accurate, so that you know what you can sell, or what you need to order, so that you don’t run out of product.
What we know is that, unless you process the information accurately and correctly, decisions made on the back of the outputs from the system could be wrong. Cloud accounting systems are not immune to many of the pitfalls that come from other accounting system, if they are operated poorly. Data does not become information until it is processed in a way that adds value and tests accuracy. Poor information leads to poor interpretation, or inappropriate decision-making. That is risky in any environment, let alone in the current circumstances we have faced due to the ongoing Covid-19 pandemic.
How can we use cloud accounting to help you?
One of the benefits that cloud-based systems offer to us, as accountants, is visibility over the information you are producing. On our dashboards, we can see whether a business has unprocessed bank transactions, what bank balances are and how they change, and when VAT returns have not been processed. This enables us to support you when you are unsure and to ‘top and tail’ the tricky bits of monthly accounting remotely. It also allows us to offer solutions that you may not have thought of, because we have experience of how other businesses are operating. We can suggest add-ons and apps, which can help to streamline your processes, and review your management information so that you can apply your business skills and use accurate information to improve your business.
Here at Thomas Westcott, we have a number of tools and techniques that can help you monitor the efficiency of your systems. Please get in contact and let us help you make your monthly accounts a better tool for your business.