Cloud accounting is undeniably transforming the way businesses manage their finances. Whether you're running a small business or a large enterprise, this technology offers a smarter, more efficient way to stay on top of your financials. Accordingly, in this week's episode of the I Hate Numbers podcast, we explore the essential benefits of adopting cloud accounting.

The Costs of Cloud Accounting

Typically, cloud accounting operates on a subscription basis, making it more accessible and manageable for businesses of all sizes. Instead of large upfront costs, we can spread expenses more easily, ensuring better cash flow. Additionally, traditional systems often come with higher initial costs, including software licenses and hardware, which can burden companies. By contrast, cloud accounting ensures flexibility and predictability for ongoing financial commitments.

Scalability and Growth

One of the key advantages of cloud-based systems is scalability. As businesses grow, their accounting needs change, and cloud solutions allow us to add features and users as required. Consequently, this makes it an ideal choice for companies looking to expand without being weighed down by outdated systems. Also, it empowers businesses to prepare for growth before they are too busy to implement new solutions.

Efficiency and Time Savings

Cloud accounting offers automation and integration with other business systems, such as payroll and inventory management. This reduces manual data entry and errors, saving time and resources. Moreover, it allows us to focus on value-added activities, leading to increased productivity. Furthermore, these systems are designed to handle multiple business functions simultaneously, ensuring smooth operations.

Real-Time Reporting and Monitoring

A significant benefit of cloud accounting is real-time financial reporting. Businesses can access up-to-date insights, allowing us to monitor cash flow and financial health effectively. Equally important, these systems enable us to manage our business finances from anywhere in the world, thanks to the flexibility of mobile access.

Call to Action

In conclusion, cloud accounting provides numerous advantages, including scalability, real-time reporting, and efficiency. It empowers us to monitor our financial health more effectively and make informed decisions for our businesses. Furthermore, we recommend exploring Xero for a user-friendly cloud accounting experience. For those looking to transition to cloud accounting, we have a helpful guide to assist you in your journey.

We encourage you to listen to the "I Hate Numbers" podcast for more insights into optimising your accounting practices.

It's undeniable that technology has had a massive impact on how we run our businesses and how it's reshaped them. And in the area of accounting and dealing with our numbers, we find that area is not immune. One of the key decisions facing businesses of all shapes and sizes across the profit and not-for-profit sectors is whether to embrace cloud accounting or stick with more traditional methods.

In this week's I Hate Numbers podcast, I'm going to be looking at the world of cloud accounting, known as digital accounting in some circles, looking at the costs, the scalability, the efficiency that will be gained, reporting, and how we can monitor our business more actively. By the end of this podcast, you'll have an appreciation of why cloud accounting is increasingly becoming the smarter choice and the no-brainer for businesses.

Let's crack on.

As far as the cost is concerned, with respect to cloud accounting, it typically works on a subscription basis where fees are paid on a monthly or sometimes yearly basis, and that fee will cover the whole suite of features you're going to be embracing, the updates, the security provided, the customer support.

That allows a much better cash flow, better planning. We can spread those costs much more easily across the financial year, which means that cloud accounting becomes much more accessible for businesses of any size, where historically you may have had to invest large sums of money to get your accounting function up and running.

Traditional accounting, whether that's desk-based or in some extreme circles using spreadsheets, on the other hand, involves higher upfront costs. You will need to buy software licenses, the hardware to run that, potentially, depending on the scale you are, pay for installation services as well. Now these systems are often based within the office environment on-site, meaning that you will be responsible for maintaining those servers,

paying for future upgrades, which can add to the burden of costs. If you require new features, you need to add new users, then you may need to invest in upgrades and additional purchases, both on software and hardware. The subscription model of cloud accounting provides that flexibility and gives you that level of predictability in terms of your ongoing commitments.

Let's talk in terms of scalability. Now, my belief is that businesses should always have the systems at the beginning as though they were actually much larger businesses as time goes on. Prepare for that growth, as opposed to having systems once you're too busy to actually focus on getting those systems in-house. Every business should have an ambition to grow, not for growth’s sake, because if you don't have ambitions to grow, whatever that level of growth is, you will effectively going backwards. Your accounting system,

your financial system needs to be able to grow in line with that. Cloud accounting is very scalable. It's much easier. It's easier to add those users, add new features as you wish them. It's not unusual for when we advise clients to start off with a basic plan, like a starter plan, so they can get into the habits, they get used to the features that are required to run an effective accounting system, to give them that information, to give them all they need.

And as time goes on, they can add more new features on there. Now, as you hire more staff or introduce new business activities, then you may decide to add more features to your cloud accounting package to meet your new needs. So, for those companies who, for example, deal with inventory, as time goes on, as the inventory range increases, they may find a more specific need to have an inventory module that can be tagged to their cloud accounting system.

Let's take a moment and think about the efficiency and the time savings, And for me, this is definitely one of the pluses of having a cloud accounting system. The system could do the heavy lifting of transactional data capture and efficiency, we should always be keeping an eye. It's not about cutting costs, by the way, it's not about going for the bare minimum, but it's about being efficient with the use of our resources, both in terms of staff and both in terms of cash.

The cloud accounting offers automation features that reduces the level of heavy lifting, the level of manual work. For example, automatic bank feeds, the ability to generate invoices for customers, real-time expense tracking, and these systems can also talk to and integrate with your other business systems, whether it's payroll,

CRM systems, your websites, your payment gateways, inventory management systems, and this integration gets rid of duplication of data entry, which not only is time-consuming but also potentially leads to errors. Those more traditional accounting systems that may be desk-based here require manual data entry.

Which again, any time a human being is involved in a process, and again, it's not saying that software is immune from this, potentially errors will creep in, and it's more time-consuming, and time does equate to money. Typically, it's not just the salary time that you're saving, but there's also associated costs with that time as well. Now if your system isn't integrated with your other business systems, your other business tools You're going to be juggling multiple platforms, and that's not only going to add to the time that's taken, But it's also going to add to the overwhelm as well. Operations will be hindered and slow down, and productivity and profitability will also be impacted.

Cloud accounting, if implemented correctly, will bring you those efficiency gains. You and your team can focus on providing activities that add value for clients and customers, you're more productive, you increase your capacity without necessarily having to recruit more staff. Another powerful benefit of cloud accounting is the extraction of the raw material, the data, to give better insights by way of information.

If your cloud accounting system is maintained, when it comes to finding out what's going on within your business, whether it's at a micro level in terms of at a product level, project level, customer level, or overall, you'll get real-time financial reporting. Data's pretty much going to be up to date as long as you maintain it.

This means you can access real-time financial reports and insights that help you monitor your cash flow. Understanding where you are today always gives you power for the future. And one litmus test is, could you say how much profit your business is making in the last month, today? Most business owners will not be able to answer that question.

And that's something that's not good. Being able to track your expenses, where you're performing well, where you're perhaps underperforming, is going to give you that power to move your business forward, make smart decisions, but actually before it's too late to rectify any problems that you're facing. As a sort of side note, folks here, when it comes to about a package, there are lots of packages on the marketplace,

we'll deal with that in a future podcast here. My personal preference for lots of reasons is Xero, x-e-r-o. It's one we normally recommend to clients to get into. And check out the show notes for the guide on how to migrate and get into cloud accounting itself. Let's continue. Monitoring. Monitoring, keeping an eye on against where you're expected to be.

Cloud accounting will give you that flexibility of accessing your data from anywhere in the world as long as you have an internet connection. Now this is going to be particularly powerful for businesses with remote teams, multiple locations, people who are often on the move. With cloud accounting, you can monitor your business's financial health in real time using one of the most powerful computers you carry, your mobile phone.

If you've got a more traditional accounting system set up, then that's going to be computer-specific. You typically need to be in the office. Yes, you can organise remote access, but it can be complicated, requiring things like virtual private networks, remote desktop solutions, which can be cumbersome, prone to security breaches.

And this limited access manifests itself in terms of limited information that you can extract, and it can also be frustrating. Now, for UK businesses moving towards cloud accounting, it's not just about embracing the future. It's about making a smart, informed choice that will benefit your business, both in terms of financial outcomes, in terms of time-saving outcomes, in terms of being in charge, being in the driving seat of your business, and not a backseat driver.

Cloud accounting offers that scalability, real-time reporting, efficiency, and the ability to monitor where you are. Now, if you harness that with Budgetwhizz, our wonderful financial planning platform, which is integrated with Xero, you can not only see what you're actually doing, but you can compare that to where you thought you would be.

Now cloud accounting will provide a modern, cost-effective, and flexible approach that will help you grow, help you succeed, help you thrive, let alone survive. Folks, I hope you found this podcast useful. If you found it of interest and you feel there are others in your network that would benefit, I'd love it

if you could share it, let me know your thoughts. And again, check out the show notes, by the way, for a link to our guide on cloud accounting and the next steps forward. We hope you enjoyed this episode and appreciate you taking the time to listen to the show. We hope you got some value. If you did, then we'd love it if you shared the episode

We look forward to you joining us next week for another I Hate Numbers episode.