Cloud accounting software is far and away the best option for new and existing businesses to maintain their financial records. If you are considering using a spreadsheet to record your business finances, please, don’t even go there. Maintaining financial records on a spreadsheet is destined to go the way of the dinosaurs. Once HMRC has fully implemented MTD (making tax digital), all businesses will be required to use tax compliant accounting software.
Cloud based accounting software helps businesses streamline their financial processes and management. It saves time, money and vastly improves the accuracy of financial records. We’ll cover some of the reasons why you should use cloud based accounting software in this article.
Accuracy
Accounting software aids and improves the accuracy of your financial records and reporting. We can illustrate this by using the example of an invoice emailed to a business. Some software packages can read received emailed invoices and automatically populate the invoice transaction fields within the software. These fields are generally the invoice number, date, amount and description. Software helps avoid duplicate recording and payment of supplier invoices, by flagging any invoice numbers that have already been posted to the software. Checking the supplier record and invoices within the software will determine if the invoice has indeed already been processed.
Reporting
Most software packages will have a certain number of financial reports included as standard functionality. This allows you to easily generate a profit and loss statement and balance sheet for your business. Some packages come with report writers providing the facility to design bespoke reports for the business. You can also generate reports detailing what you owe your various suppliers and what your customers owe you. VAT registered businesses can generate VAT returns and submit them to HMTRC using accounts software. Some software packages include cash flow forecasting, self assessment and corporation tax reporting as standard reports.
Flexibility
Cloud accounting software offers the flexibility to access your financial software records when you are out and about. If you need to check something you can simply log on with your phone and check your records. If you do a lot of business travel, consider using a software package that offers the functionality to photograph and upload expense receipts on the go, reducing and streamlining expenses administration.
Scalability
As your business grows the last thing you want to be worrying about is upgrading your software (or spreadsheet) to keep up with your financial recording and reporting requirements. Most cloud accounting offer scalability with varying levels of functionality at different price points. You can easily upgrade the software for more features as your business grows.
Time and cost savings
As automation increases, software reduces time spent on manual tasks and data entry by using features such as automatic transaction field population. It also enhances reporting speed and ease. Cloud software operates on a cost-effective monthly subscription basis, allowing you to select the functionality level that fits your budget and needs.
Your Accountant
Your accountant will be able to easily access your financial records and prepare the annual financial statements and returns. You should be able to set up your accountant as a user in most packages, allowing them direct access to your records. This makes it easier for them to assist and provide advice whilst speeding up the year end reporting.
Automatic bank feeds
Modern accounting software allows direct bank feeds or downloads, pulling the transactions from your bank account into the software. The bank transactions are then easily allocated to the relevant accounts in the software. These can be customer, supplier, expense or income accounts. Again, this functionality reduces errors and assists with reconciling the bank account, which is a vital control process within bookkeeping.
Other factors to consider when choosing an accounting software package
There are other factors you need to consider before deciding on a particular software package. Take a look at our article about accounting software for more insights and guidance.
