From Brick and Mortar to the Cloud
Traditionally, firms tended to opt for local accountants, usually within driving distance, who came highly recommended by friends and family. Data tended to be stored in on-site hard drives, before being driven down to the tax accountants for the annual ‘data dump’. Fast forward to today, and we have witnessed a transformation of the accountancy sector.
What is Cloud Accounting?
Cloud accounting typically involves switching from the on-site storage and management of data to SaaS-based accounting software. Rather than firms with little experience or knowledge overseeing their data management, expert cloud providers take on this burden in exchange for a monthly fee.
Though a gloomy year for most of us, 2020 has been the cloud’s year to shine. Cloud accountant services have enabled many businesses to continue operations throughout a global pandemic with around 65% of small UK businesses now using some form of cloud accounting; that figure is expected to continue to increase.
Benefits of Cloud Accounting
According to Xero, cloud-based accounting firms add up to five times the amount of clients of traditional firms. The benefits promised of cloud accounting are almost infinite (see Anadea’s persuasive list as an example) through accessibility, efficiency, and reporting capabilities are often cited as the top prizes of switching to the cloud.
Cloud data can be accessed anywhere, anytime by multiple users simultaneously requiring only an internet connection. Online access means increased collaboration and productivity, with businesses, partners, and clients able to share information with the click of a button whilst working together in real-time.
Wave goodbye to the days of endless data entry and number crunching, and say hello to your new best friend, automation. Cloud accounting software means such tasks can be handled automatically, reducing the risk of human error in bookkeeping, and improving transaction and reconciliation capabilities.
Arguably the key advantage of cloud accounting software lies in its reporting potential. Automatic reporting is now commonplace in most software and continues to grow in sophistication. These reports offer businesses an assessment of their financial performance and any exploitable trends or potential issues; invaluable information when creating future budgets. Statistics and analysis which, would have been either impossible or required significant manpower and time previously is now readily available and included in a monthly subscription.
Major players in the game
Quickbooks, Xero, Sage and Freshbooks represent the dominant cloud accounting software providers for UK businesses. A quick Google search brings a wealth of useful analyses (see Capterra, PC Mag, and Finances Online). Cloud Pro, in particular, provide a comprehensive and eloquent comparison of Xero, Sage, and QuickBooks, with packages starting from less than £10/month, and plenty of free trials available, even the smallest and newest of enterprises can afford to reap the benefits.
So, now the requirement to hire local accountants is fast becoming obsolete, how do you find an online accountant who is well versed in the latest cloud accounting software? This will be the focus of our next article. Stay tuned!