Cloud Accounting Insights
Making Tax Digital for VAT (MTD for VAT) is set to come into effect from 1 April 2019 for businesses which have a taxable turnover above the VAT registration threshold (currently £85,000). Under MTD, businesses will be required to maintain digital records and submit VAT returns using their accounting software.
These days, a lot of cheeky providers make clever use of the general confusion in the market about what is and is not cloud software. They ‘disguise’ their on-premise, desktop or hosted business software as bona fide 'cloud' software. They do this by stamping a 'cloud' label on itand offering it in neatly packaged (monthly) subscriptions. In the best case scenario this is actually hosted, single-tenant software.
If you want your organisation to work smarter, cloud accounting could be the way to go. Working in the cloud will give you a solution that grows with your needs and delivers results in an intuitive and easy way providing you with a better overview of your finances and your organisation.
So what is the cloud?
Think about when you use internet banking. Every time you access your bank through your browser or mobile app you’re using the cloud.
There are some tasks that keep getting put off, they’re not urgent and don’t seem important so they stay on the job list. Then, eventually, many job lists later and when it has become urgent and is beginning to annoy; it’s time to work on it. Half an hour later and, ‘voila’, it wasn’t that difficult to do, it all seemed to make sense and was relatively easy. It turns out that the really hard part was just getting started!
So many options…
- Store in Google docs, except that when you really need to access it, there’s no internet!
- Save space – reduce manual filing, files and cabinets
- Save time – search and retrieve fast on specific criteria
- Understand what is currently happening. Describe the current systems and draw out the processes.
- Identify and clarify your objectives & constraints. Can they measured? Is there a value to achieving the objective? What do you want? Perhaps survey staff to identify their wants and concerns and get buy-in. If possible, pull together a guiding team who can help you look for improvements.
- Generate options. There may be some quick wins along with medium and longer term options.
- Evaluate the options. Test them. Pilot them. Embrace the unknown and learn from it.
- Put together a vision and a strategy / plan of how you are going to get there. Refine the plan. Clarify how to make the future a reality. Make sure others understand and accept the vision and the strategy.
- Implement.
- Review. Did you do what you said you would do?
Making a start is the important bit as once we have started we tend to get immersed.
- Tell me and I'll forget
- Show me and I'll remember
- Involve me and I'll understand
Allow 10 minutes. Sit down with another user (and a coffee). Watch what they do. Learn from it. If they do something in a different way to you, you may have a suggestion.
Fear of the truth, fear of exposing a weakness, fear of wasting time, fear of spending money?
Why not face the truth, build a strength, save time and save money?
Finding solutions is about coming up with an idea. The idea may solve a problem in one area but in all likelihood may create a perceived problem in another.
- Trial it
- Test it
- Assess it
- Evaluate it
- Pilot it
- Use it
- Learn it
If you like it, keep it.
If you know what you want out of a cloud accounting system, if that is clearly defined, then it is clear what needs to be done to set it up and what needs to be entered in from the outset.
It’s not uncommon to download a trial balance into Excel and then make adjustments within Excel to produce the desired set of management reports. Problem is; that we’re back to using Excel and Excel, as good as it is, is notorious for allowing us humans to make mistakes.
Read more: Use Excel for ‘reporting’ rather than ‘inputting’
Browser based accounting software will probably have ‘Dashboards’. Dashboards show top level summary views of information often in a graphical form.
One of the key benefits of accounting period control is the ability to close off each ledger once entering transactions for the period has been completed. This prevents users from changing information in a period where management reports have already been produced.
- True browser based cloud solution
- Accounting period control
What’s the difference between a browser based cloud application and the others?
Is there ever a good time to make a change? Probably not.
Is there ever a good time to start investigating whether to make a change? Yes – Now!
Times have changed; banking for most is now online and immediate. Gone are the days of writing out cheques for suppliers, paying in cheques from customers and waiting for the bank statement to arrive in the post.
Planning or, to put it another way, having a strategy will help smooth out the negative attributes that creep in when implementing. Taking the time to create a well thought out implementation plan might have the following benefits:
Read more: Thinking of making a change to your processes or systems?
How many times do you here this? I hear it quite a lot but then I ask the question “Why do you do it that way?”
No one has ever said to me, “Well, we looked at the options recently and decided that this way would work best for now”. Perhaps the way it’s being done is fine, it’s easy, you’re used to it and it seemingly works.
What is it that we are trying to achieve and which aims do the objectives sit under? The objective to me is like a mini vision of the future or an element of the vision, a small but important part of it.
Stop, think – don’t rush.
Think about where you want to get to. Just like planning a route or setting the SatNav, it is better to do it before you set off.
Read more: Is it worth spending a little extra time upfront?
Why is this important if you want to make improvements?
It’s a starting point. It clarifies the current processes and describes how things currently work. Writing out procedures, drawing diagrams, discussing them so that they are clearly understood is a key step.
Read more: Understanding the status quo; the current situation.
Not for too long, just enough time to understand a few key concerns so we can look at a way of making the concern a little less of a concern.
Sometimes we struggle through without realising that if we learned the underlying principles, we would be a lot more able.