Small business owners are busy people – but we probably don’t need to tell you that.
When you have a lot on your plate, the last thing you want to worry about is accounting and bookkeeping.
Fortunately, that’s where accounting software comes in handy.
Cloud accounting software can automate many of the tasks that are associated with bookkeeping and accounting, which means less stress and more free time.
Let’s take a look at seven major reasons why accounting software is a lifesaver for small business owners.
What Does Cloud Accounting Software Do?
Cloud accounting software automates many accounting and bookkeeping tasks. It can be accessed from any device that has an internet connection, and it’s also subscription-based, so you only pay for the features you need.
Some of the most useful features include:
- Automated invoicing, with a dashboard to keep track of who has and hasn’t paid
- Automated bank feeds that keep track of your finances and help you avoid manual data entry
- Automatic categorization of expenses, so you can see where your money is going
- Integrated payroll features, for tracking employee hours and pay checks
Benefit #1 – Seamless Collaboration
One of the biggest benefits of cloud accounting software is that it allows for seamless collaboration.
Multiple users can access the same account and make changes simultaneously, which makes team bookkeeping a breeze. This is a major advantage for small businesses with several employees.
You can also have the mobile phone version downloaded on your phone, and send quotes, invoices on the go, reconcile the bank on the go if you wish to, and it all links instantly to the cloud and updates your account in seconds to whether you are logged in in multiple locations, or multiple members have access to your software everyone is working from the same data.
Benefit #2 – Increased Efficiency
Cloud accounting software increases efficiency by automating many tasks that would otherwise have to be done manually.
This includes tasks like invoicing, tracking payments, and categorizing expenses. Not only does this free up time for small business owners, but it also ensures that the books are always kept up-to-date.
With Bank feeds pulling the data straight from the bank statements, and bank rules being set up to automatically code items to set account codes and tax rate codes. The Bank can be kept reconciled a lot easier than in manual days and ideally be fully reconciled up at least once a month if not more often.
Benefit #3 – Greater Clarity
Cloud accounting software centralises your data so that you get a better picture of your company’s financial health. You can see where your money is coming from and going to, which makes it easier to make informed decisions about the future of your business. It’s even possible to create charts and graphics so that you can visualise your data and see trends in the numbers.
The Dashboards can show key information you want to see whenever you log in. Such as invoices overdue, Month to date figures on certain account codes and whether you have gone over budget. This is great if your data is kept up to date as meaningful data can be gained from just logging in the software.
You can get clarity on your debtor balances but also the Bills/Invoices that your business has to pay and which are over the due date.
You can set up the Codes and accounts that suit your business and not have to use the standard chart of accounts. The Benefits to this is
Benefit #4 – Cost Savings
Cloud accounting software is often cheaper than desktop-based solutions, especially when you consider that there’s no upfront cost for expensive hardware or installation fees. You also don’t have to worry about maintaining the software or paying a professional IT team to manage it, which can save you a lot of money in the long run.
Xero prices start from £12 per month plus vat for a basic package, and the standard package is charged our at £26 per month plus vat. You also get a free Hubdoc account with Xero software so all your purchase invoices and receipts can either be emailed, scanned or photographed on the Hubdoc app, which is downloaded onto your phone.
Benefit #5 – Cybersecurity
Cloud accounting software is hosted on a remote server, so it’s more secure than storing your data locally. This means that you don’t have to worry about hackers or viruses corrupting the data because all of the information is backed up and encrypted on another server. It also comes with built-in cybersecurity features like compulsory two-factor authentication and password protection.
It also has Xero Verify (to download on phone) to confirm its you logging in, which can be set for every time you log in or remember me for 30 days, and will always ask if logging in, in a new location, different device, so you can be fully happy your data is secure.
Benefit #6 – Greater Accuracy
Cloud accounting software is more accurate than manual bookkeeping, because there’s very little room for human error. This means that you can trust the numbers that are displayed in your account and make better decisions about your business based on real data.
Locked dates need to be put in place, so no entries can be made before a date selected. This makes sure no data can be mis-typed into a prior year to the one you are currently working in. and previous can’t be changed in error and should agree back to your financial statements.
Data entry errors and miscalculations can lead to mistakes on your tax form, which in turn may result in a hefty fine from the authorities. Cloud accounting software eliminates the risk of human error, so you can be confident that your finances are always in order.
Here at SLW Accountancy we use an additional feature to add on to our client online software which alerts you to any potential error s entries posted in the software. It also produces a health score so we ensure our clients data is in the best possible shape, this gives our clients the confidence of the accuracy and reliability of the data produced.
Benefit #7 – Peace of Mind
Last but not least, one of the biggest benefits of using cloud accounting software is peace of mind. Knowing that your finances are taken care of and that you have up-to-date records gives small business owners the freedom to focus on what they do best – running their businesses.
If you are not using cloud software, or using cloud software but not using the features available to you, not understanding how easy it is to set up automation on many functions, or not using it to gain insight and understanding of your business, please get in touch to see how we can help you.