How cloud accounting software transforms your small business finances

29 January 2018

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Accounting software has evolved significantly over the past decade – and one key change has been the move to cloud accounting. But how does cloud differ from a traditional desktop system? And what are the advantages for your business and your advisers?

We sat down with Senol Ozcan, our Operations Lead and Finance Business Partner, to find out how accounting technology has changed in the ten years he’s been practising as an accountant – and how the benefits of online working have transformed the speed, flexibility and access to quality accounting for small businesses.

What technology did you use when first started practising as an accountant – and how has it changed over time?

“When I first started practising, the firm I worked for had a very 1980s style of system. This was 10 years ago, and it was very much a desktop system which only had one function, and that was recording your transactions.

You couldn’t do bank reconciliation, you couldn’t import your transactions. It was basically a database with a very simple interface where you could see various items of accounting information, and everything else had to be downloaded into an Excel spreadsheet to fill out your forms – so there was no bank reconciliation function and no bank feeds function.

The system kind of sat on its own and all the other functions floated around that, with the only medium for collecting that information being to download it into Excel. That’s why Excel was such a popular system, and still is for some accounting purposes. Because of these historic desktop systems, people are used to using Excel and don’t trust software systems completely.

So my initial training was to download everything to Excel and to then turn that into the required information. Even in big corporate organisations, where they may have a Microsoft Dynamics accounting system that has a lot of reporting functions and flexibility, you have to do a lot of control work in Excel to be able to use that system effectively.

How has using Xero online accounting helped you overcome the limitations of desktop software and downloading to Excel?

Excel was a useful tool and is still very much part of everyday accounting. But now we have a system like Xero online accounting at FD Works, and that covers about 80% of what Excel used to do.

You can do your stock reports in Xero, there’s a great dashboard, it produces really nicely formatted reports and it’s consistent every time you use it.

When I used Excel for reports, I’d download my trial balance and would need to spend 30-45 minutes making sure everything was in the right format. That was a real faff, and now with cloud accounting my reports are always in the same format and the same layout.

All the reporting apps that we use allow you to create bespoke reports, aligned with the information in Xero through the open source connection. With previous desktop systems, you needed a developer who really knew what they were doing to create any kind of bespoke reporting.

With Xero having an open API, you can very easily find someone to create custom reporting that will work really well, whereas beforehand you’d need to spend thousands on a developer just for five or six reports. You can produce bespoke reports in Xero with minimal training and development.”

Xero is FD Works’ central accounting platform, but what other apps, cloud solutions and tools do you use when working with clients?

“As a firm, we’re a Xero partner and that’s our core accounting platform for working with clients.

But in addition to Xero, we use Receipt Bank’s automated bookkeeping solution – that allows us to keep track of customers’ paper receipts and gives us all the client data we need to import transactions from the bank feeds and do their bank recs etc. We can even download things like PayPal transactions, where they’re digital transactions, and match those with the invoices.

GoCardless is another great payment app for both accountancy practices and small businesses. It allows us to set up lots of Direct Debits for client invoices and collect our cash automatically at month-end. And for businesses with a monthly revenue type, it’s really a no-brainer to implement GoCardless and to get your fees paid within the invoice terms.

We also suggest that clients use Chaser, which automates the chasing of debts by sending out automatic credit control chaser emails as soon as the invoice due date is reached. And WorkflowMax is a great project management tool for keeping track of time, workflows and progress on production and projects.

Receipt Bank, GoCardless and Chaser all automate some of the financial admin, and that saves us a lot of time. They’re the main apps that help us, alongside Xero.

What changes in technology have had the biggest impact on how businesses and accountants can manage small business finances?

“For me, there are two main changes that have changed the way we do accounting in 2018, and the flexibility that business owners have when working with their numbers.

Firstly, there are the changes in the user interface you have in your accounting software as a business owner or accountant.

Before, with older desktop systems, the interface was based around the database limitations, where you had to work around the system and drill down into each menu section and sub-section. With Xero, the user interface is more intuitive – the most frequently used functions get pushed to the top and you can just click through to the information you need.

So, you can literally raise an online invoice in five minutes, whereas beforehand you’d need to find the sales ledger, drill down into that and raise the bill that way. Now you can have your favourites saved in the software and your invoicing is one click away, rather than having to fight with the system.

Secondly, the other positive change is accounting systems moving over to open-source cloud accounting software, and all the benefit that brings.

With cloud accounting, anywhere you have your laptop becomes your office. If you want to work from home one day, you have every single function of your accounting system available to you over Wi-Fi. You could work from the top of a mountain using Xero and your laptop, as long as you had a broadband connection! That’s a massive benefit for the business user and for us as accountants.

When you’re using cloud software, the interface and functionality are always consistent, you’re always up and running fast, you don’t have to do data back-ups or think about disaster recovery plans – all those elements are taken care of with an online system. Even if your laptop breaks, you can carry on working using your smartphone or tablet. It brings real value to how you manage your finances.

Also, with online software like Xero there’s so much scope for customisation. You can raise your invoice and link that to a custom payment gateway through your website, or include a PayPal or GoCardless payment button in the electronic invoice. Because of the open API and the open source structure, you can very easily create custom integrations. You’re only really limited by your imagination, and that’s quite exciting!”

Get your business ready for the cloud

Accounting software, business apps and financial technology (fintech) tools are evolving at amazing speed.

So if your business is still basing it’s financial management around a traditional desktop system, 2018 is the definitely the year to make the switch to Xero and the world of cloud accounting software.

Make the switch to Xero online accounting

If you’re still struggling with desktop accounting software, we’ll move you over to the cloud

Get in touch to find out more
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Senol Ozcan is Operations Lead and a Finance Business Partner at FD Works, Xero accountants and business advisers.