The rapid rise of technology over the past two decades has affected pretty much every industry on the planet in some way or another. Many companies who haven’t embraced technology have seen their respective sector pass them by and ultimately have fallen behind in not just sales but also credibility and accessibility. Arguably, every company should have some form of digital footprint, whether that be social media, website or an app, in order to have a chance of penetrating their market or achieve growth.
This is none more than apparent than in accounting, where the ideology of a small office of accountants doing everything manually is effectively non-existent anymore. Many accounting practices have grasped the influx of new technology, software and apps and have found ways to integrate these new methods to not just benefit their company but also their clients.
We spoke to Norden’s Head of Cloud Accounting, Hollie Watson, about the rise of cloud accounting platforms, how integral they are in the accounting industry today and what they offer for businesses and individuals of all shapes and sizes.
Just how important are cloud accounting platforms such as Xero to clients and also to accountants?
Most importantly, cloud accounting increases the internal efficiency for clients. What this means, is those age-old mundane tasks such as uploading bank statements and VAT receipts are no longer needed. No one in this day and age should be manually uploading these kind of things as automating these mundane processes allows you to save so much time. It also provides analytical information that is so useful for not just clients but also accountants as this enables forecasting and planning for future scenarios which is always recommended no matter how big you or your business are.
Xero, which is possibly the most-well known and popular cloud accounting software, paired with Dext (a data extraction app) work so well together. This is where you can really automate the manual entry, having your bank feed live data through the platform and software whilst typing up your expenditure. All you need to do is focus on taking images as you spend. There are also so many other really useful addons such as Fluidly, which seamlessly does cashflow forecasting for you based on real time information (RTI). This gives you the tools within the palm of your hand to make decisions for your business which can take it to the next level.
For accountants, having the access to the software at the same time you do decreases the need to hassle the client, whilst also being able to pull off management reports, tax planning, filing VAT returns and a whole host of other services without directly contacting the customer. It also helps us to offer more improved advisory services with more up to date information that is tailored to your specific preferences.
Has cloud accounting evolved, in not just popularity but also in accessibility, during the pandemic where numerous industries and sectors have digitalised in order to survive?
Admittedly, accounting software used to be more aimed at bigger businesses and clients, however more recently an increasing number of platforms are now available for smaller traders. It’s now always recommended for every business to have some form of software in place and with the constant development of apps that are specific to particular industries, such as Approval Max which has been amazing for our construction clients, popularity is only going to go one way. Many established apps and software also provide more bespoke customisation for different industries, which can be adapted and digitalised with flexibility for the client and their specific needs and requirements. Before, accounting software was more geared towards helping the accountant, whereas now the accessibility, personalisation and general low cost puts the end user firmly at the forefront of proceedings.
How can platforms like Xero not just aid clients in terms of accounting/bookkeeping, but in other aspects/integrations of their business and finances?
As stated, a lot of digital platforms don’t just necessarily focus on standard bookkeeping or accounting anymore. For example, people who have needed additional financing during COVID have used certain platforms to access this which has been a lot quicker with information coming straight from the bank. This means because these platforms are integrated and verified with the banking system, safety is never in question. Using online tools for forecasting, as well as the vast increase of remote working, has spurred on the digital revolution which has of course broken down restrictions and evolved many industries by a number of years.
How does working with an actual person in cloud accounting also benefit the client?
Many people do cloud accounting, whether that be for their own personal accounts or their business accounts. However, if you don’t necessarily fully understand the system of cloud accounting, or also even worse the information you input to be wrong, then it could be even more detrimental and damaging than not doing cloud accounting at all. Talking to someone in cloud accounting allows you to gain information and insight into the processes, giving you the confidence and security to undergo the digital development.
Outsourcing everything to a cloud accounting department takes away all the mundane aspects of your job and gives you a final report for you to use where you wish. It will enable to you to correctly reclaim VAT, apply for support schemes or additional funding and most predominantly increases the transparency between the accountant, HMRC and the client, making everyone’s job easier, secure and more efficient.
What do you think the next steps of evolving are for accounting, can you see the process of accounting and bookkeeping becoming even more technology influenced?
With the new MTD (Making Tax Digital) regulation coming into effect in April 2022 for VAT-registered businesses with a taxable turnover less than the VAT threshold of £85,000, it seems highly likely that everyone eventually will have to go digital. Apps are growing by the day, in terms of functionality and popularity and this shows no signs of letting up anytime soon.
As well as this, banks are increasingly partnering with apps and software, providing a centralised hub that is clear, transparent and easy to use for everyone. For example, Natwest have partnered with Xero for invoice financing (Natwest Rapid Cash), so everything in your business will effectively soon become digitalised and processes streamlined.
Soon there will be a case that admin staff just won’t be needed. It’s all about making life as easy as possible for all parties, and as technology grows the reliance on physical processes slowly diminishes.
We hope this has outlined to you the ways in which cloud accounting can benefit clients and businesses of all sizes. If you require any more information on cloud accounting, going digital or anything accounting related for that matter, please don’t hesitate to get in contact with us at Nordens where one of our trusted advisors would be happy talking you through your query.
We’re now offering FREE strategic consultation sessions up to 30th June 2021. Please contact Nordens’ Director of Strategic Consultancy Joe Sword at firstname.lastname@example.org or 020 8530 0720.