Cloud Accounting Applications – Introduction
John Burns, Managing Director of Fariones Cloud Services Ltd, worked as a Finance Manager some years ago. His employer was a multinational organization in the supply chain sector. John led a project to implement a monthly EPC report, on behalf of the Finance Director. This project was successful for a number of reasons. Firstly, he worked with a team of accountants, who understood the contracts they were responsible for. Secondly, the underlying accounting processes were robust. Thirdly, the monthly management accounts reflected ongoing business activity. You may ask what has this to do with cloud accounting applications within SME’s?
Cloud Accounting Applications Within SME’s
SME business owners are able to choose from a variety of cloud accounting solutions. Firstly, there is Surf Accounts. Secondly, there is the Big Red Cloud. Thirdly, there is Sage. Fourthly, there is Xero. Another alternative is Bullet HQ. Each of these solutions does the basics of accounting well. By that we mean, generating sales invoices, posting supplier invoices, bank reconciliations, and VAT returns. Which package you select, will depend on the activity within your business. Another consideration is the need to connect with third-party apps.
Another key feature of a cloud accounting application is the reports module. All cloud accounting packages are able to generate a profit & loss account, and balance sheet. However, the quality of the profit & loss account, and balance sheet will be dependent on the accuracy of the accounting records maintained.
Unfortunately, this is where many SME’s owners come unstuck with a cloud accounting application. Examples of inaccurate accounting records include the following. Firstly, posting the net wages to the profit & loss account. Secondly, allocating a significant amount of costs to “general expenses”. Thirdly, ignoring a potential bad debt on the balance sheet. Finally, poor stock control, leading to a significant write down of the value of stock on the balance sheet.
What is the impact of the above inaccurate accounting records? It is difficult to see the wood from the trees when analyzing the profit & loss account. Actual profit could be far less than expected. Worse still the business could make a loss.
Cloud Accounting Applications – Client Benefits
What are the client benefits of a cloud accounting application that runs smoothly? Firstly, an accurate set of monthly management accounts. Secondly, an understanding of the activities that drive cost within the business. More importantly, the business owner can take a more strategic view of their business. This will lead to customers who will value your product or service. If you would like to make better use of your accounting processes and systems, please contact us. We look forward to hearing from you.