Are you ready for the cloud?

When I first met Jenni, she had been in business for about 3 years.  She offered a range of holistic services to her customers and her company was doing well.  She was growing her customer base and sales had increased every year.

Talking me through her trading history, Jenni told me that she had made a small profit in her first year, which was something she was very proud of, an even bigger one in her second year.  She felt she was well on the way to making her business a great success.

Everything she was doing was working, her customers were growing, she was beginning to make a name for herself, by the end of year 3 she was busier than ever.   However, when Jenni looked at her year end accounts she was very surprised to see that while her revenue had doubled her profit had not.  This did not seem right to her and she did not know what had happened.

So, what went wrong?

Well… probably nothing… actually.

As you take on more and more business, it can be very hard to keep an eye on your spending.  To keep your customers happy, you may spend more money in getting faster deliveries from your suppliers or, have spur of the moment purchases that eventually add up and eat into your profits.

The reality is that unless you plan and track of your spending – chances are that they will increase.

The good news is that this is a normal growth phase.

The not so good news is that unless you get to grips with this, you will eventually go out of business.

Your business has changed, has your accounting?

If you go back to when you started out, accounting was something that you did once a year.  It was something that you had to do. Once you submitted your tax form you didn’t think about it again until the next year.

In the beginning it was possible to do that, this no long works for your business.  Accounting is now something that you need to keep an eye on so that you can bring your profit back in line with your revenue.

More and more entrepreneurs and small business are turning to cloud accounting.  My question to you is: will cloud accounting work for you?

What is Cloud Accounting?

Cloud accounting is accounting using a system that’s accessed through the internet and hosted on secure remote servers rather than on a personal machine.  Cloud accounting follows the Software as a Service (SaaS) model, you pay a monthly subscription fee for the use of service.

The software can be operated anywhere on any internet enabled device.  This is a very important aspect of cloud accounting software – it frees you from physical premises where the traditional accounting software would have been installed.

This means you can do you accounting and bookkeeping when it suits you, rather than having to be in your office. Everything is available at the click of a button.

Whether to do your own bookkeeping or you outsource, cloud account lets you manage your invoicing, VAT and purchases easily from any location at a time that suits you. This gives the flexibility that really works for small businesses.

If you struggle with traditional bookkeeping, going into the cloud could be the answer you have been looking for.

Benefits to going into the cloud:

1. It alleviates the need for businesses to store and manage data, or maintain expensive computer hardware
2. In some cases, all you need is a mobile device with internet connectivity, making cloud accounting far cheaper than desktop-based solutions
3. The information can be updated and accessed from any computer anywhere in the world, offering true flexibility in a highly connected world
4. Ledger owners can interact with their accountants and bookkeepers in real time instead of having to collate information and send the data file manually on a regular basis
5. The software is automatically kept up to date by the provider, meaning you don’t need to download updates such as new tax rates where the payroll module is used
6. As the records are updated at regular intervals there is no yearend backlog that needs to be dealt with.
7. It alleviates the need to hold on to receipts and pdf copies hare kept with each transaction

However, cloud accounting is not without its disadvantages:

1. Like all SaaS app, if you do not have access to the internet, you will not have access to your accounts, which can be frustrating.
2. Bad or weak connections can also be a struggle.
3. Cloud security is always a concern, particularly, when there are such sensitive information in your cloud accounting system.
4. Most popular accounting packages fail short when it comes to deep dive analysis. Your accountant will still need to download into excel.
5. While the monthly subscription can be relatively cost effective, most of the systems require add-on applications that can add up to a hefty monthly charge.
6. All cloud systems are hosted by the software provider. Should your provider run into difficulties, it is uncertain what the immediate and short term effect would be.
7. Depending on which country the software was developed in, will effect how well they handle VAT for EU countries.

When I am looking at cloud accounting for my clients I look at their company goals, objectives and how ultimately want their businesses to develop.  I am affiliated with a number of cloud based solutions and I make sure I match the right system to the right company.

I believe going into the cloud is the future, the benefits far out way any concern you may have.  However, cloud accounting is not magic.  If you do not have a working manual system in your business, going into the cloud will not solve the problem.  In fact, as I have seen, it can exacerbate the situation.  I strongly advise you get expert help – It will save you time (and heartache) in the long run.

Thinking of going into the cloud be unsure of where to start?

Contact me here to get a free 30-minute consultation where you can find out how Cloud Accounting can help your business.