Everyone likes a ‘BIG CLAIM’ to start off with, so let’s roll:
Decent ‘cloud’ book-keeping will help earn you money, increase your income or give you back time if money is not your goal.
Not a bad claim right?
Let us first start with, The ‘Cloud’ is.
So you’ve read the word ‘Cloud’ and may have thought of Apple’s ‘iCloud’ or come to the conclusion you don’t really know what it is.
Let us get this out the way early – in the context of ‘cloud services’ this really just means ‘is stored on the internet somewhere safe’, rather than on your own single laptop or computer. This means no software to install or update. In most cases you can also have multiple people using it at the same time.
For some people, the thought of their data being held ‘on the internet’ can sound scary. In reality it isn’t, and is arguably more secure.
If we were a software company we would show you….
…. a snazzy video of a stereotypical ‘millennial’ (think 25 ish, tight jeans, beard, big glasses, festival bands on his wrists) with an Apple Mac, sitting in a sunny coffee shop with nothing else but his phone, snapping receipts and magically all the book-keeping is done before his eyes. Some of this is possible, but it’s not as simple as that unfortunately. You still need the traditional humans!
There have been some really fantastic advances over the last few years in accounting & book-keeping software that has led to the ability to do some amazingly cool things (as cool as book-keeping can be for the non-geeks). This is helped by the fact that other software firms are now making tools that can ‘plug into’ the market leading software, which means you really can build a system that will save you time and help you earn money.
For example you can hook up something like PayPal, or GoCardless to your invoicing to get paid from a clickable link on your bill.
Depending on the type of business you operate, you would still need some manual input, but the tools do save significant time. Below are some of our highlights from the benefits of Cloud technology.
- Automated bank feeds
Previous you would have had to enter all of your bank transactions into the software (or your accountant would), but now the bank can transmit data to cloud software, saving the time of entering, dates, names etc.
THE FULL PICTURE: you still need to match these with receipts you have, or tell the software what you spend that money on in Waitrose.
Some of this can be automated, so you can teach the software to recognise your bank charges, or regular payments to someone. The software calls this ‘bank rules’.
- Receipt Scanning Tech (Apps)
You can use an app which allows you to take a picture of a receipt. The app will upload it to the cloud, where it reads names, dates, amounts, VAT etc.
If it’s a simple receipt and it’s the same type of expense every time, you can set up automation so that you don’t need to do anything more, other than tell the software how you paid for it.
THE FULL PICTURE: If it’s not simple like that, you will need to go through each receipt and tell the program what the expenditure was (i.e. Stationary, travel etc).
Either way, you will save time on data entry (or the accountant will, reducing your fee to them), and more importantly in many cases, you will ensure you have captured all of your expenses. It is so easy to lose a receipt to the wind, or more often the washing machine! You will be throwing away money in tax deductions and/or VAT reclaims if you are losing receipts.
- Email Cloud Invoicing
If you are reading this and still invoice from a Microsoft Word template – have a ‘word’ with yourself! There really is no reason for this anymore.
You can set very efficient templates up inside the software to quickly raise an invoice, even on the go. You can then email directly from the software at the click of a button.
Many of our construction clients love this feature as they can bill before leaving site.
You also will not have the issue that we see all the time, where you’ve overtyped the invoice, saved over an old one etc.
The cloud system can then be used to track who owes you want. Depending on who you bank with, you can see your transactions every morning inside the software and match it to your invoicing. That way you always have a record of who owes you money.
Many of our clients who don’t like paperwork/book-keeping in any sense will have us do this, at least once a quarter, so they still get to know if they’ve missed chasing up some money!
THE FULL PICTURE: the one downside is yes, you will need an internet connection to do this. So if you are on site in the middle of a forest, you may not be able to do this until you get back into civilisation. In our experience many clients just invoiced in the evenings and weekends anyway, so being able to sit in your van or workshop with a coffee, and ping off a few invoices is an improvement either way.
- Digital help, real-world advice and support
In some businesses it can be a struggle and will need a mix of both digital and manual.
For example, if your business is very cash based (such as retail, hairdressing etc) some clients prefer to keep manual income records and transfer them to the software once a day/week.
This is all fine, and we look to create bespoke ‘systems’ for our clients to make this work for them.
5. Your accountants use it too.
Yes – we run our business off of it. Years ago, before we even entertained this as a solution for our clients, we did the move to Cloud ourselves and have never looked back.
- It helps you and your accountant, but doesn’t replace them
I know, we would say that, but we believe you still need professionals.
Whilst it is possible to use the software (especially if you are a self-employed sole trader, not a limited company) to submit some returns and keep great records, in reality many of the same problems exist as before:
- You may not like paperwork or it not be a skill you have.
- You may be (and arguably already are) spending too much time on book-keeping and not enough time on the things that generate you income.
- With UK tax law in excess of 22,000 pages, how do you know what you are doing is legal, or that you are capturing all the reliefs you could be? Is your VAT correct?
- If you are a Limited Company you will still need year end accounts, prepared in full financial reporting standard format, tagged with ‘iXBRL’ (a special electronic label), to submit to HM Revenue & Customs and Companies House. We are yet to see a small business do this, as there is not any free software yet provided by HM Revenue & Customs.
- If you are a Limited Company, you will need to comply with company and tax law regarding how to extract your money.
7. But my current system works, why should I change?
A great question we get asked a lot. The number one reason if you need the push would be HM Revenue & Customs’ ‘Making Tax Digital’ programme.
From April next year, if you are VAT registered you will need to keep your transaction information digitally and transmit this to HMRC. Initially they had planned to make this a requirement for all businesses, starting with the smallest from April 2019. They met with fierce resistance from the accounting community and this has been delayed for a few years, but it is not going away.
The time to act is now, even if you are not VAT registered.
As you’ve hopefully seen, the time efficiency provided by Cloud Software can really add income by either giving you more time to earn it, reducing the cost of a book-keeper or accountant or by putting you in control of your finances (more ‘real time’ cost info, who owes you money etc).
At this stage it isn’t a miracle solution, but it is certainly something special. HM Revenue & Customs are on a digital mission. So this is an area you cannot and should not avoid. Act now, get the benefits and be ahead of the game.
If you would love to discuss this further, please call our team today on 02392 240040.