I remember when I first started working as an accountant during my university degree and would spend hours manually entering each line of a client’s bank statement into an accounting software package. These clients were mature, well established businesses, so there were pages and pages of bank statements and information I would have to process. The accounting software was stored on the firm’s server (yes, we’re going back a number of years here :)) and these clients would often ask what would happen if the server crashed and their information could not be recovered.
Fast forward a few years, and online accounting enters the industry. Hello Xero, MYOB Live Accounts and other cloud-based accounting software. For many mature businesses, cloud based accounting is all they’ve known. With no reference point to traditional accounting based methods, it’s hard to visualise the benefits of having your accounting in the cloud and how this improves the financial function and management of your business.
Often our clients ask us ‘Why do you use Xero to do my accounting? Why is my business finance function in the cloud’? Is this the right way to do things? We have outlined below some of the key benefits of managing the finances for your business in the cloud
1. Real-time information
Your bank data feeds into your cloud based accounting system daily. This means that if you access your Xero account, you can see a live feed of your bank transactions. This means no more manually entering lines of bank statements into your accounting software. A massive time and cost saving. There is also no-cut off period for how far the bank information dates back. So, if you have been using Xero for the last 10 years, you would have ten years of bank history.
2. Improves Relationships
Cloud-based software helps improve relationships with customers and suppliers. If a supplier calls to ask about payment of an invoice, regardless of who they speak to from your team anyone can log-in to Xero and look at the status of the invoice. The same applies for customers. This improves relationships with customers and suppliers, and also your business looks better organised. As a mature business, many of these relationships have been developed over a number of years so it is important to show that all of your team is on top of this.
3. Integrated Payments
Using Xero and many other cloud-based accounting software, customers can pay your invoices directly through the electronic invoice itself. This improves debtor collection and on-time payment of invoices. Even though you have been in business for a long time, debtors is always a worry for any business owner. This tool helps manage debtors and is another great benefit for cash-flow for your business.
4. Easy communication between you and us
Anyone who has access to your Xero account, has access to your business information in Xero using their login details. This means that when we do work in your Xero file, such as your monthly processing, you can see exactly what we have done using your login. This means no more emailing back and forth with updated files. Again, another big time and cost saving.
5. No Manual updates
Traditional non-cloud based accounting software requires regular updates. The reason for this is that as regulations and rates change, such as Employee tax rates (PAYG withholding), you need to install (and pay for) updates to reflect these changes. Using Xero, the updates are automatic and there is no stress when it comes to installation and upgrades.
6. Superannuation compliance is a breeze
Using Xero, the software automatically remits employee superannuation payments to your employee’s superannuation fund once processed. Another big time saving.
7. Employees have their own self-service portal
Often your employees will need to change their address details, ask for a copy of previous payslips if they are applying for a loan or they want apply for annual leave. Xero provides employees with access to their own self-service portal where they can view information relating to their pay, access payslips, apply for leave and view their leave balances. This information dates back to when the employee data was entered, so if your employee has been with you for ten years, then they will be able to access ten years of information.
8. Access your accountants from any device
Last month, a flight I was on was delayed for a few hours. I wanted to look at my financial accounts on my laptop, however as luck would have it I had forgotten my laptop power cord. That was fine. I accessed a computer in the airport lounge, and was able to access my Xero accounts easily using my log-in. If my accounts were not cloud-based, I would not have been able to do this. With two factor authentication also, I was more than comfortable that my data was not going to be accessed by the next person to use the computer.
9. No backups required
Using trusted cloud-based accounting software, you do not need to worry about backing up your accounting files onto a server or a USB stick. This means no worrying about losing data. A big relief.
When we’ve been using the cloud for so long, it’s easy to sometimes forget about all the benefits that using a cloud based system brings. Having good financial management systems in place is so important for a mature business, and using trusted cloud based accounting software is a big part of this.
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