Finance: Hilary Dyson explains how new software can revolutionise your business
The change that has taken place in accounting software over the last 10 years has been nothing if not seismic, as innovative cloud-based solutions have transformed how people work.
It’s not just about the benefits of being able to work anywhere and on any device. There are literally hundreds of apps which, when linked with your accounting app, will revolutionise not just how information is collected and entered, but, maybe even more importantly, the insights that can be gained which then inform the decision-making process.
But, with so many options and apps available, the choice can be bewildering, and often the last thing any business wants to change is the accounting system. After all, it’s probably been running quite happily in the background for years.
The accounts team are busy, entering the information from all those bits of paper which they’ve had to track down, but the reports are produced (eventually), the VAT return gets filed on time and the bank is happy.
It’s a bit annoying to have to download information into spreadsheets and then analyse it because it’s not readily available in the format that gives the necessary insights – but it’s been working that way for years, so why change?
It’s a fact that any change is going to be disruptive, but moving your accounts to the cloud can make a profound difference to your business and, if the transition is planned and well executed, the benefits will outweigh the short-term disruption.
Let’s have a look at a typical scenario and compare how changes to processes through the adoption of cloud technology could transform your business.
You’re running a sales business, with a team on the road, following up leads, meeting customers, generating sales, incurring expenses; information is sent back to the accounts office for processing – sales invoice production, stock allocation, expense claims, credit card receipts.
The accounts teams collect all this information, along with bills which have arrived in the post and by email from suppliers.
Everything is then entered onto the system, and the paperwork filed for future reference.
The bank account is reconciled – weekly or monthly, depending on time.
There’s always a peak in activity around the month end, with the payroll being processed once all timesheets and expense claims have been received and approved.
Statements are sent to customers once a month, after the receipts have all been posted, and then credit control call customers with overdue balances.
You’re not sure how much profit you’ve made this year – you thought you were doing OK but the bank balance isn’t as healthy as you’d expect.
The reports don’t really give much information, but to find out the detail you have to go through all the files to track down documents.
What are the problems here?
- Sales invoices are not going out to customers on a timely basis, thus delaying receipt of monies owed.
- Stock levels are not up to date or easily accessible by the sales team, running the risk of committing to orders which can’t be fulfilled or holding too much stock.
- The bank balance on the accounting software doesn’t match what’s at the bank, so cash availability can’t be determined easily.
- The accounts team are spending time chasing receipts from overdue customers.
- The level of manual processing is time-consuming, and at busy times is more likely to lead to errors.
- Time is spent filing paperwork – and then going through it to find information when queries arise.
- Reporting is late and not detailed enough to give real insights for informed decision-making.
By using a combination of apps as described in the box below, all the information required by the team will be accessible by them from wherever they are; the accounts team will benefit from efficient working processes and management will have up-to-date real-time information at their fingertips.
Most of the types of apps listed above can be used by any business, whatever the nature. But if you have industry-specific requirements, those needs too can be met.
Whatever your needs – e-commerce, retail, property rental, hospitality, professional services, time recording, construction, manufacturing, tourism, not-for-profit – the list goes on – there’s an app for that.
Using a combination of apps, all talking to each other and exchanging information, can result in a system closer in nature to some of the full enterprise resource systems available, but at a fraction of the cost.
Scalability can be achieved by adding functionality as and when required, and of course you can remove it as well, should your business needs change.
And you get the other benefits of working in the cloud – for example, there is no need for expensive hardware upgrades and the business will always be working on the most up-to-date version of the software.
It’s important to understand that cloud software is not about taking what you do now and just entering data into a different software package.
It’s about both gaining efficiencies by adapting your business processes to the new improved technology and gaining real-time insights to help you and your advisers grow your business.
Yes, change can be daunting – but the long-term benefits will far outweigh any short-term issues.
Hilary Dyson is cloud accounting manager at Anderson Anderson & Brown
MAKING TAX DIGITAL FOR VAT
It’s a bit like GDPR – everyone’s suddenly talking about Making Tax Digital for VAT (MTD) but many businesses don’t know what it means, let alone what they might have to do, writes Steve Mitchell.
So, let’s ask a few questions:
- What is MTD for VAT?
Put simply, from April 2019, if you are VAT registered with turnover greater than £85,000 you will no longer be able to log onto the Government Gateway and submit your VAT return.
- How will I submit my VAT return then?
You will have to do this through “functional compatible software”.
- What does that mean?
Old versions of accounting software may need to be upgraded; manual systems will have to be changed to digital.
- I’m using software already – won’t it work next year?
HMRC is working with software providers and the list of compatible software is now available – and being added to regularly. But we do know that older versions of some software will not be updated.
- So how do I know what to do?
Ask yourself one more question: how do I currently file my VAT return? There are two possible answers and, whichever it is, you will need to do something.
- You get the figures from your accounting system, log on to HMRC Gateway and submit the return – from April 2019 this option will no longer be available to you.
- You submit the VAT return from within your accounting software – you need to check with your software provider whether this will still be possible.
But you will have options and it is a great opportunity to evaluate moving to a newer platforms – perhaps cloud-based – and benefiting from the associated features.
Once you get your head around Making Tax Digital for VAT, you will understand how you can get the most out of it.
Steve Mitchell is a partner at Anderson Anderson & Brown
ON THE APP AND APP
The cloud-based apps available that really make a difference include:
- Accounting – linked to your online banking, updated in real time with the information integrated with other apps listed below. Unlimited users have access rights dependent on business requirements. They can work anywhere, on any device, at any time. Credit control is automated within the accounting app to send out reminders and chasing emails.
- Inventory – stock levels tracked in real time; sales invoices raised by the sales team on the road, which feed into the accounting app.
- Expenses – photographs taken of receipts as the expense is incurred, added automatically to expense claims which can then be approved as required.
- Timesheets – filled in throughout the month and authorised so that any variances can be reflected in the payroll.
- Bills – automated data entry for supplier bills, including automatic download of bills from online portals such as utilities, mobile phones etc. Copies of all paperwork are attached to the online transaction for ease of viewing should queries arise.
- Reporting – synced to your accounting data to produce up-to-date customised reports, including cashflow forecasts.
A good fit for all sizes of company
Comment: Mairi MacIver on how to gain from financial outsourcing
With the availability of advanced financial automation solution
cloud-based accounting systems, all types of businesses from start-ups to large companies can take advantage and reap the short and long-term benefits of outsourcing their accounting function.
First, it saves money and time. Back end accounting such as invoice processing and cash collection can be
labour-intensive, so by outsourcing the business’s accounting operations this can free up a business owner’s valuable time to focus on growing the business.
It also helps businesses save on technology costs. By outsourcing, there is no need for the business to invest in additional accounting hardware and software.
A provider will have access to the leading cloud accounting software and, importantly, have the knowhow and experience to use the software to its full potential.
Outsourcing provides a perfect opportunity to upgrade and improve a business’s financial accounting processes.
By working with the outsourced provider and instilling best practices and controls, this will help to improve internal efficiency and timeliness of data in the business.
Implementing effective accounting procedures can also help improve in-house operational efficiencies, reduce overhead costs and, importantly, look to create better cashflows for the business.
Another benefit is scalability. Rather than having internal resources that are too busy at peak times and slow at others, businesses can instead hand those concerns over to the provider.
Whether looking to grow the business or cut down on spending, having a reliable outsourcing provider will go towards helping the business achieve its goals.
Today’s cloud-based accounting applications allow businesses to access their financial data and records online in real time, giving them up-to-date visibility and access to their financial information.
Having access to financial data any time and anywhere … this would have been unthinkable just a few years ago.
With timely accounting records and reporting, businesses can achieve total visibility of the financial health of their business, giving greater peace of mind to make more accurate and informed decisions.
Outsourcing can give a business the required assurance and security that their financial operations are in order and regulatory and compliance obligations are being met.
So, there really isn’t any bad time to consider outsourcing, is there?
No matter the size of the business, outsourcing can make good business sense. It can be the perfect solution for start-ups, small and mid-size businesses at any stage of their growth journey.
Mairi MacIver is accounting services senior manager at Anderson Anderson & Brown
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