How to create a successful cloud accounting model

 

Cloud accounting should be considered as a way to improve and run your business in a more cost effective and efficient way, especially in an environment where online technology can be used for pretty much anything.

Taking each of the major accounting feeds in turn, we explain how they can be used effectively with any cloud software application:

Cloud accounting inputs

1)      A Purchase Order represents the intent to buy a product or service and can be a useful process confirming authorisation of purchases, especially where your Finance Department is not in the same physical location.  Specific access can be granted in Xero for authorised employees to create a Purchase Order or alternatively these can be generated using specialised Xero addons, e.g. Unleashed, an inventory solution.

2)      A Purchase Invoice is the bill received from your supplier, this can be ‘matched’ to a Purchase Order if these are used, reducing the amount of data input, entered directly onto Xero within ‘Purchases’ or by using Xero Addons like Receipt Bank.  We ensure the Contact (supplier) details are correct, and also upload the Purchase Invoice onto Xero against the appropriate nominal code (e.g. stationary).  This enables the business owners and advisors to view the invoice directly wherever they are, providing an extremely useful audit trail.

3)      Employee Expensesare processed via the ‘Expense Claims’ module, receipts can easily be uploaded onto a Claim via the Xero Apps for Iphone/IPad or equivalent for android devices in preparation for authorisation.  Your Finance Department can then check the coding and ensure VAT can be recovered where appropriate as well as actioning payment once authorised.

4)      A Sales Order is the equivalent of a Purchase Order but on the Sales side.  These can be directly entered by your Sales team or via Xero addons like Unleashed or Salesforce.

5)      A Sales Invoice is what you send your Customers as proof of purchase.  These can be created within Xero (via Word) in a format of your choice, including Company logo’s or once again via Xero Addons (e.g. Vend) which either integrate directly with Xero, or with pdf/scanned invoices uploaded alongside the transaction by your Finance Department.

6)      Payroll can be calculated directly on Xero via the ‘Pay Run’ function, although this is not as developed as more established payroll solutions such as Sage Payroll or Brightpay, and currently requires work arounds for the £2,000 Employers Allowance.  Our preferred route is calculate via Brightpay, whether weekly, bi-weekly, four weekly or monthly payroll, emailing payslips to the employees and then entering a manual journal to the control accounts which is reconciled on a monthly basis.

7)      Entering Bank Transactions is where Cloud Accounting really stands out.  Automatic bank feeds by the majority of UK banks enables transactions to be uploaded daily without the risk of manual error.  Rules can also be created to ‘suggest’ payments/receipts using payee details, to be coded to certain nominal codes, e.g. British Telecom to Telephone expenses.  If invoices are added (Sales or Purchases) and are of the same amount, Xero suggests they might be matched against the receipt/payment.

8)      Manual Journals are the last piece of the jigsaw to enable to view the complete financial picture and should be completed by a qualified bookkeeper/accountant.  These can include adjustments for revenue if sales invoices are raised before/after shipment ensure sales are aligned with costs, depreciation, stock adjustments, accruals, prepayments etc. and should only be completed once all invoices have been entered onto Xero.

Once the journals have been completed, the Business owner can either review their financials direct on Xero, ask their Finance Department to forward the relevant reports for review, or utilise Xero Addons which provide tailored user friendly reports such as Spotlight Reporting.

All of the above need to be entered accurately to ensure meaningful financials, but with ‘real-time’ accounting now available to SME’s, should also be entered in a timely manner.  With the majority of UK banks providing automatic bank feeds (Barclays being the noticeable exception), the challenge is receiving the purchase and sales information from the relevant departments.

Each of our clients are different in terms of resource, location and industry, and we will work together with you to review your current systems and processes to ensure the most effective route of inputting and storing the data in Xero.  If your processes are not broken, we will not try to fix them, but we will try and improve them for you!

 

Thinking of moving to the cloud?  Here’s some advice on which package may suit you.

 

 

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Cloud accounting is the new buzz word – but which package should I use?

Cloud cropAccounting software has moved beyond spreadsheets into the world of cloud-based computing.  Cloud technology is so much more accessible nowadays and gives you access to your data from anywhere, providing a real time view of your financial position whenever you need it. Your data can now not only be accessed on your computer, but also from any mobile device, providing there is internet access. As you upload and create more data on your mobile/tablet, it will be viewable immediately on any other device or computer, and vice versa.

Keeping up to date bookkeeping records for your business can be time consuming – especially if they are not updated on a regular basis. However, many accounting packages can now speed up the process and offer electronic invoicing, as well as automated bank reconciliations and reporting.

Thinking outside the box: cloud computing

Picking the right cloud based software solution for your business depends on your needs and how easy you find each application to navigate.  There are many more cloud-based accounting solutions on the market, and it could be advisable to have someone with strong accounting skills to help you pick which is best.

To know which is right for your business, you need a clear picture of what you’re wanting: are you tracking direct and staff costs, or time on projects? Do you have stock or inventory that needs managing, and are there operational costs that can be built in?

Here are some examples of the best cloud accounting packages on the market:

  1. Xero hails from New Zealand, and kindly offers a free trial with price plans starting from £9/month. Unique amongst the accounting solutions investigated, Xero doesn’t additionally charge you for new users. It has a similar feel to QuickBooks, and also has an import feature for businesses wanting to give it a trial.
  2. Clearbooks – Make bookkeeping a quick and easy task. Create and edit customers, suppliers, invoices and quotes; use multicurrency functions; support for CIS; save data offline and sync with your account later.
  3. Quickbooks – Enjoy the ability to work anywhere. Create and email professional invoices; record sales; create and manage expenses by attaching receipt photos; receive overdue invoice notifications; produce Profit & Loss reports.  It’s a crisp and minimalist looking software package, with intuitive designs and professional-looking document templates.
  4. Saasu – Create professional invoices and quotes. Create, view and update business contacts; send quotes and invoices; keep up to date with inventory items; view your data offline; encrypted data keeps your records secure.

Quick switch over

What’s changed from previous software incarnations is the time and financial commitment it takes to switch.  Switching to cloud accounting can be pretty much instantaneous and with the help of a reputable accounting practice to help smooth out any blips, you will be up and running in no time.

Apps for ‘on the move’ accounting

There are also more than 1.2 billion apps are available on both Apple and Android devices amongst which there are some star apps for businesses.  Using a mobile-friendly design and layout, apps developed for a range of bookkeeping software now make it easy to manage your finances on the go.  Here’s an example:

Xero Touch – Track your finances and easily manage your cash flow on the go with this easy to use App.  View bank & credit card accounts, outstanding invoices & expense claims; reconcile bank statements; create & send invoices; upload receipts from photos; use multicurrency support; integrate with other popular apps; set up a pin for quick access.

Cloud accounting is here to stay so seriously think about getting your own systems updated and see the benefits almost immediately.

 

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It’s Bronze for England Rugby and Finance Dept

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Finance Department are made Bronze Xero partners, just as England look set to scoop Bronze in rugby

The Olympics has been left in the past now, but the UK still celebrated its best medal count in 104 years. Of a total 65 medals we won during the Olympics 3 years ago, 29 were gold, 17 silver and 19 bronze.

When Brazil hosts the 2016 Olympics, Rugby will be included as an Olympic sport for the first time since 1924. Historically, the US and France were recognised as leaders in the sport

Rugby this weekend saw a disappointing result for England, whilst Wales managed to beat France in the Six Nations game on Saturday.  Italy trumped Scotland the same day, meaning the UK have seen mixed results so far in the tournament.

At Finance Department, whilst not qualifying as Olympic rugby players exactly, they have proudly won a little bronze medal of their own.  Cementing their commitment to providing outstanding outsourced bookkeeping services, they have been awarded Xero Bronze Partner status.

What does Xero Bronze Partner status mean?

Finance Department will now be listed in the Xero Partners directory on their website, which validates their credentials as experts, via an official third-party source.

As Partners, they have signed up various clients to Xero, so that they may make use of the accounting software and save time on their own bookkeeping.  To receive the recognition, they have sometimes converted clients from other software, so it’s a symbiotic relationship.

Finance Department are accredited by Xero, so business owners can have faith in their expertise with Xero, and commitment to provide top class accounting and bookkeeping services to clients from all walks of life.

Like the home of world class rugby, Xero is New Zealand based, and can be accessed online to provide premium cloud bookkeeping tools at affordable costs.  Mike Watts, Managing Director of Finance Department, works with many businesses across the South West, to provide excellent Finance Director support.  He commented “From our work with SMEs we have found that there was a real need for a seamless and consistent approach to their accounting systems through the use of outsourced bookkeeping and management accounts in addition to Part Time FD level support.  Xero is our number one tool in making running the books as smooth as possible”.

Finance Department also uses other cloud based software, such as Dropbox to manage invoices, meaning they are environmentally friendly and super-efficient, whilst also saving money for businesses.

Finance Department want to salute all teams in the Six Nations tournament, and are excited to see how the teams shape up as it goes on.

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University of Plymouth Collaborative Project ‘Finance Department Promo Video’

 

We are delighted to finally see the results of a collaborative project with the University of Plymouth Media Department.  As part of their final year assessment, the students are required to work within industry on a media project.  Local companies are invited by the University to come along and pitch to the students in a bid to work with them on this project.

Simon Wood, a year 3 media student, chose the Finance Department as his collaborative partner after hearing Ellen Jenkins, Finance Department Marketing Director, deliver a pitch to 90 of its year 3 students. Simon’s decision to go with the Finance Department was based on wanting to work with a growth company and assist with creating a short promotional video that would appeal to the target market.

‘Simon was a joy to work with‘ says Ellen. ‘He picked up the brief immediately and came back with some creative ideas. Given that this student project meant Simon had to be creative with limited budget, I think he has produced an amazing video and believe he has a real future within this industry’.

Watch the video and see for yourself!

 

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What’s your attitude to risk? No, Know or Nose?

Blog by Mike Watts, Managing Director

 

Whilst I acknowledge that some extremely successful business owners seem to ‘smell’ success, the preferred approach, however, is to do your homework, thinking through the worst case, best case and expected scenarios, understanding the financial and practical implications of each, and not forgetting to compare with ‘do nothing’, i.e. what if your competitors take the risk and you don’t?

The recession has changed the SMEs attitude to risk, less risk is now acceptable by our stakeholders, with the banks in the SME space having gone through the complete cycle.  Initially Bank Managers were provided with flexibility to make local decisions using their local experience and their ‘nose’, then the banks just said ‘no’, de-risking their position completely to the detriment of small businesses, finally ending up with the logical focus on knowledge, albeit my personal experience is that the process takes far too long.

By design, there are very few entrepreneurial accountants, our first reaction is to say no, but the good ones can be persuaded by logic and a contingency.  If you can persuade us, we can help you persuade your other stakeholders giving the project a greater likelihood of success.

It’s best to be on top of risk and assess what is best for your business.

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Transitioning from Micro to SME

Starting up a business requires a lot of determination and a host of other skills. As an entrepreneurial person, at the startup stages, you’ll be busy all of the time: roadmapping, marketing, planning, meeting, sorting out accounts and many other things. This article discusses the crucial time of transitioning from a startup or micro business to an SME. Your revenue growth should be an indication of when it’s the right time to take this important step. This may happen organically, but as a business owner you can influence the decision as to whether to grow your business or keep it at its current steady rate.

#1 Don’t go it alone

Transitioning from micro to a small business or enterprise is a tricky balancing act; you need the income to drive you forward but not too quickly that you can’t expand staff at the same time. Outsourcing accountants, writers and even PAs can help bridge the gap as your business transitions from one phase to another: freeing you and your partner/team to complete regular tasks involved in your company.

#2 Team playing
You may need to consider recruiting someone for a new position within the team. This can be anything from a business development manager to a fully fledged marketer. Hiring a new member of the team will inevitably encourage and motivate the rest of you; since their job will likely alleviate you from some duties and help you to achieve your goals.

#3 Focus
At the startup stage and throughout, it’s important to set achievable goals and regularly review attainment and progression. Stay focused on your objectives, rather than growth: growth is a by-product of a successful business. Progressing from micro to SME shouldn’t change your company attitudes and values: these make you unique. Holding onto these an incorporating them as you develop your business will help you to continue as you wish to.

#4 Don’t sell yourself short
Often, at the very beginning all you want is the chance to build a portfolio and gain some regular clients. Referrals and endorsements are what it’s all about, right? It’s tempting to succumb to working for smaller fees in order to gain reputation. When you initiate the transformation which will expand your business, you must be sure to evaluate clients and their worth. Nobody can sustain working for free. You need to be consistent and not compromise on your quality of service. Weigh up your strengths and weaknesses, what you enjoy doing and ultimately what gives you the best return; then prioritise these core areas of strength to drive your business forward.

#5 Move with the times

Finally, never cease to innovate. You’re the boss, right? That’s one of the great things about being a small business owner: you can have an idea, and immediately put it into action. If things aren’t going how you’d hoped or there’s an area that seems more lucrative: try something new.

Now is a really productive time for small businesses and startups in the UK; with a reported 2.9 million businesses planning to expand over the next 3 months. With a focused roadmap, strong team and innovative approach, you will be guiding your startup to SME status and progressing with the times.

The facts:

  • In 2013, there were 4.9 million businesses in the UK.
  • 526,446 new businesses were registered with Companies House, beating the 484,224 businesses recorded in 2012, and 440,600 in 2011.
  • Over 99% of businesses are Small or Medium Sized businesses – employing 0-249 people
  • 4.7 million or 95% of businesses were micro-businesses – employing 0-9 people. Microbusinesses accounted for 32% of employment and 18% of turnover.
  • In London, there were 1,266 businesses per 10,000 resident adults.
  • In the North East there were 633 per 10,000 resident adults.
  • The service industries accounted for 72% of businesses, 78% of employment and 68% of turnover.
  • The manufacturing sector accounted for 6% of businesses, 11% of employment and 17% of turnover.
  • 18% of SMEs are female led, and 22% of FTSE100 board members are female.

Source: House of Commons Library, Economy Policy & Business Statistics PDF, July 2014 (www.parliament.uk/briefing-papers/sn06152.pdf)

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