Cloud accounting: time to switch?
How can cloud accounting help your business?
The way we do business continues to change. Being flexible and agile are arguably more important than ever. Plus, Making Tax Digital (MTD) has now been a part of some businesses lives for over a year. So, is it time to switch to cloud accounting if you haven’t already?
The existing benefits of cloud accounting haven’t disappeared. In fact, many of the benefits could now be more important to businesses. Whether you need to restructure your business, repair your business, adapt or grow, cloud accounting can help.
Cloud accounting can improve cashflow
Being able to invoice quickly and manage cash flow is vital. With cloud accounting software, such as Xero and FreeAgent, you can collect payments more quickly. Customers can send payments instantly in fact. It enables you to send invoices online, so no more paper invoices to get lost in the post or on someone’s desk.
You can set automatic reminder notes to go to clients if they haven’t paid by a set date. This can not only improve your cash flow but can improve your client relationships too.
Embracing flexible and remote working
Offices became empty of their inhabitants during lockdown, so circulating paperwork among team members was tricky. Many offices are still empty now. And the desire to work from home and spend less time in the office looks likely to rise.
If you’re less likely to be in the same location as your finance team or bookkeeper, then it could be an advantage to have cloud accounting. You can give team members access to your invoices, timesheets and reporting software, so at any time, you have a true understanding of cash flow and profit and loss.
With some cloud accounting software, you’ll also be able to create project files online. Staff can then add time and work to it as a project develops. This makes the task of invoicing the client a lot easier and quicker.
MTD goes hand in hand with cloud accounting
One of the major reasons for the push to cloud accounting software is MTD. In April 2019, VAT-registered businesses with a taxable turnover above £85,000 began following the MTD guidelines.
The aim is that MTD will make it easier for us to pay our tax and make less mistakes in the process. Businesses must keep digital records and use approved software to submit their tax returns more regularly, rather than in the annual tax return.
Cloud accounting software makes completing these returns quicker and easier. Using software such as FreeAgent or Xero, you can complete the returns online, from your laptop, phone or tablet, whatever time of day suits you best.
From April 2022, HMRC will roll out the scheme to all VAT-registered businesses, which will have to report digitally. Then, from April 2023, Making Tax Digital will be applied to anyone filing self-assessment tax returns for business or property income of £10,000 or more. This second change will cover most self-employed people and buy-to-let landlords. Our recent blog outlines all the recent changes to MTD.
Track your financial performance
If you need to budget for extra resources to meet new COVID requirements, it’s important to have a good understanding of your business finances. Perhaps you want to grow your business or invest in a new product.
Cloud accounting software allows you to check your cash flow and outstanding payments in real time. Your accountant can also view this information and offer advice when you need it.
Which cloud accounting software should I choose?
Are all cloud accounting software options made equal? Well there are a number of options available that will allow you to do what you need. At THP, we’ve chosen FreeAgent and Xero as our two preferred accounting software solutions for our small business, freelance and contractor clients.
Cloud accounting: time to switch?
Find more reasons why we believe using Xero and FreeAgent can help to grow your business.
Whichever software you choose, now could be a great time to switch. Remember it can:
- give you real time access to your financial performance,
- make it easier to follow MTD guidelines,
- aid teams who are working remotely, and
- can improve your businesses cash flow.
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About Kirsty Demeza
With a portfolio that ranges from startups to companies with a £10 million turnover, Kirsty’s talent for working closely with her clients ensures her services remain in strong demand.
“The most rewarding part of my role is seeing clients succeed,” she says. “When you help a new business and watch it expand into new premises and secure big contracts, it’s a great feeling.” Kirsty never finds two days are the same.
As well as providing accounting services that range from self-assessment tax planning and VAT to audit and accounts, she’s part of THP’s sales team and closely involved in helping our trainees to develop their skills.