Kevin Parsons, Managing Director of Cooper Associates Accountants, comments on the value of Cloud Accounting and Xero Software.
The introduction of cloud accounting is changing the role of accountants and the way we interact with our clients. We at Cooper Associates Accountants strongly believe in being involved in our client’s affairs and decision making throughout their financial year.
Cloud accounting and products such as Xero enable us to be more proactive in what we do as we can access our clients’ live data. This is very different from the ‘old fashioned’ approach to accounting, whereby clients would drop off a bag of records after their yearend meaning we could only comment on historic results.
By accessing our clients’ live data we’re able to review their existing position providing us with the opportunity to offer better support and guidance. For example, if there is a reduction in profitability it can be investigated immediately and action can be taken to resolve any problems that may be causing this. With the ‘old fashioned’ approach it could be some months until the extent of a problem such as a reduction in profitability is identified and the impact of this may result in significant losses and cash flow problems that could have been avoided. Conversely, if the businesses profitability improves then this can be identified and various tax planning opportunities can be explored.
Xero software, which is our preferred product (although we also use QuickBooks and Sage) can be accessed via a desktop PC, laptop, tablet or mobile phone device providing that there is an internet connection. The software enables our clients to manage their business with ease whenever and wherever. Many find the paperwork of invoices tedious and time consuming, however, with Xero you can complete your days’ work and then send invoices from the sofa, reconcile your bank whilst sat on the bus and get a clear report of your current financial position whilst away on business without having to sit at your desk for hours after a long day.
One of the first of my clients to switch to Xero has found many benefits. He works in a cold and damp workshop and completes his repair work during the day. He found that he would work until 5pm, then sit in the workshop and write up his invoices meaning he never made it home until after 6.30pm. He has a young family which meant he had very little time to see his children. Since he has switched to Xero, he now leaves his workshop at 5pm, drives home, sees his children and then completes his invoicing at 8.30 pm via the cloud software, while his wife (these are his words) watches the soaps all evening! Xero has therefore helped him to achieve the work/life balance that he desired and he can do his invoicing from the comfort of his own home!
We have many clients where we act as a virtual Financial Director, clients call us and with our remote login we can access their data and discuss their bookkeeping issues with them. This enables us to resolve them immediately, as well as look at the current monthly financial position and discuss creditors, debtors and overall profitability. Xero definitely helps us as accountants offer a more ‘hands on’ service to our clients.
This then gives successful business owners the opportunity to prioritise their time. They can focus on looking after their customers, improving profits and boosting sales and the cloud software will take care of their bookkeeping. Xero has the facility to connect directly to a bank account which means the bank transactions can be uploaded to the software by the click of the button.
The other key benefits for clients using Xero include:
- Up to date live data that can accessed anywhere there is an internet connection by multiple users.
- Time and cost savings of data input.
- Easy to read information and monthly reports.
- Monthly cost of approximately £22 plus VAT per month with no upfront costs.
- Any software updates are completed instantly with no discs or downloads.
- VAT returns can be automatically filed at HMRC from within Xero.
The cloud software will also be compliant for Making Tax Digital (MTD) whereby sole traders will have to report to HMRC on a quarterly basis. Although the government have deferred the introduction of MTD, it is inevitable that it will be introduced in the coming years so we are recommending that our clients are prepared for this by using a real-time cloud accounts system such as Xero so that the transition to MTD is more manageable in the future.
If you are considering using the cloud or Xero software then please visit www.xero.com and use the free trial facility or give us a call on 01823 218550 and we will arrange a free demonstration for you.