In this episode, we explore the world of modern finance as we talk about the remarkable advantages of cloud accounting. Unlike traditional methods involving spreadsheets or desk-based systems, cloud accounting is a contemporary approach to managing your financial data. It leverages online platforms like Xero, QuickBooks, FreshBooks, Sage, and many more. The cloud enables secure storage of financial information accessible to you and your team, anytime, anywhere.

The Benefits of Cloud Accounting

Now, let's look at the numerous benefits of cloud accounting. We believe that understanding these advantages is crucial before making any transition.

Efficient Receipt Management

Say goodbye to shoeboxes filled with receipts. With cloud accounting, you can effortlessly scan and digitize your receipts for hassle-free record-keeping.

Real-time Financial Insights

Gone are the days of waiting for year-end financial statements. Cloud accounting puts financial information at your fingertips, allowing you to assess your business's profitability and cost structure in real-time.

Integration with Third-party Systems

Cloud accounting systems, like Xero, seamlessly connect with other platforms, allowing you to consolidate data from various sources. This integration simplifies tasks such as tracking inventory and sales.

The Cost-saving Aspect

While there are initial setup costs, cloud accounting offers substantial long-term savings. By automating data entry and eliminating administrative burdens, you can save valuable time and resources. Moreover, maintenance and system admin costs become a thing of the past.

Security and Collaboration

With data encryption, two-factor authentication, and automatic backups, security is a top priority in the cloud. Additionally, cloud accounting promotes collaboration, making it suitable for the modern, remote-working world.

Planning for the Future

Planning is the key to success. Cloud accounting empowers you to integrate financial data into forecasts and roadmaps effortlessly. It's not just about compliance; it's about driving your business forward with informed decisions.

Conclusion

In conclusion, cloud accounting is a game-changer for businesses of all sizes. We encourage you to explore the possibilities it offers. It's cost-effective, secure, and provides invaluable real-time insights. So, whether you're a startup or an established enterprise, cloud accounting is a powerful ally that can help your business thrive.

If you'd like more information, check out our free guide, "Release the Power of You," which covers cloud accounting migration. Additionally, explore the Numbers Know How platform for a deeper dive into planning and financial analysis.

Join us in the next episode, where we will discuss the practical steps to transition to cloud accounting. Until then, keep your head in the cloud and stay sanguine.

Hello everybody and welcome to today's I Hate Numbers podcast, the power of cloud accounting for your business. In today's episode, episode 185, I'm going to be diving into the world of cloud accounting, looking at what the cloud actually is. And more importantly, how cloud accounting is not only a powerful ally in your business, but it's going to move your business dial forward.

And who wouldn't want that?

You are listening to the I Hate Numbers Podcast with Mahmood Reza. The I Hate Numbers podcast mission is to help your business survive and thrive by you better understanding and connecting with your numbers. Number love and care is what it's about. Tune in every week. Now, here's your host, Mahmood Reza.

Let's start off with the notion of what actually is the cloud. And I'm not talking geographically, I'm not talking about meteorologically, but what is the cloud in the context of cloud accounting? Now, the actual term cloud, originated back in the 1990s, when techies, have got to love them, were trying to draw diagrams of technology systems.

When it came to the bit where stuff was sent out to remote servers, not physically in one's office, computers via landlines, anyone remember those or through the internet, they used a drawing of a simple cloud to illustrate that multiple computers were connected to multiple other computers all over the world.

What started off as a simple tech diagram, is now entrenched in our vocabulary. So with that in mind, cloud accounting, as the term implies, is a modern approach, and by modern we're talking about the last 20-30 years, to managing your financial data using online platforms such as Xero, QuickBooks, FreshBooks, Sage, there are many others out there.

And I express no bias, except to say, in my personal opinion, Xero is a very powerful tool. But this podcast is not just about which one you should use, whether it's Xero or anything else. I'm just expressing a personal bias opinion here. Now, instead of using traditional methods to record your accounts, whether that's spreadsheets or desk-based systems, financial data is secured in the cloud, allowing you and other users in your team easy access

and collaboration. So having established the idea of what the cloud and specifically what cloud accounting is, why is it so important and what makes it so good? You know, what are the benefits? And we've got to know what the benefits are before we can embark investing time, energy, and resources into adopting a new system.

Now, the benefits of cloud accounting that I've seen, not only for my clients, but other people that I've seen connected to the cloud are many and varied. It enables you especially if you've got a very small team, a finance team, to record your receipts You can scan them in you don't need to put them into a box file. You don't need to record them into the glove compartment of your car. Your receipts can get scanned in, things such as reconciling the bank transactions, the money that comes in, the money goes out.

It's easy to verify. You can do it electronically. You can send invoices out to your clients electronically. And I've found personally, since I personally switched my businesses to the cloud that clients tend to pay much more quickly. It's much easier to monitor that credit control. You can send out statements.

You can send out reminders. You can send out quotes and proposals to clients. And if they are happy with them, once they accept them, they convert into invoices straight away. You will get productivity and efficiency gains. All the data entry, which might've been done manually before. can be digitised, the heavy lifting is removed, there are systems, there are rules, procedures that you can embed into your accounting system to make that data entry, which is really critical for information for your business, less tedious, saving time and saving energy.

But even beyond that, having financial information at your fingertips is an incredible, powerful thing to have. Are you able to save yourself? How profitable your business is now, not waiting for the accounts to be produced for compliance reasons, but right now, do you know what things are costing you? Do you know where your money is going?

Do you know which products and services are making you money? Which ones are draining your resources? Now, if you're a fan of planning, which I am very much so, and I thoroughly recommend that for any businesses, then having the power of the cloud enables you to get that information and help plug it into a forecast, helps you produce your roadmap, your financial roadmap, literally at the press of a button.

From running an organisation, relying on financial statements that are produced once a year is not the way to proceed. It's a very dangerous method and you need what are called management reports. Those management reports that can report on things such as where the profit is lying, what things are costing, what you spend historically,

plugging into systems that can help you forecast the future financially are all done much more easily with the power of the cloud at your fingertips. Now applications such as Xero can easily plug into third-party applications. So if you've got a website, if you've got a checkout system on your website, if you've got data that lives elsewhere, then it's possible whether it’s inventory systems

or the like, to connect Xero, your accounting system to those online tills, to those banking systems, and all your data can be trawled and gathered together. And that is increasing with each day. Keeping on top of credit control, an absolute must for any business, is a really important thing to do, and it's made a ton easier when you've got cloud accounting at your fingertips.

I've seen the cost of the actual setup of a cloud accounting system repay itself much more quickly with the time that you're saving. If you imagine, if you save one hour of your time every week, and that's a very, very, very cautious conservative estimate. And now, over a year, it's 50 odd hours.

If you cautiously charge yourself at 20, 30 pounds an hour, very modest amount, that's equivalent to 1, 500 pounds a year that you've saved in terms of your own time or that of your staff's time. Avoiding being drowned under paperwork. Who loves that? It's made much more easy and therefore that's got to be another super benefit.

Now that's not all. There are costs certainly involved in establishing a cloud accounting system. But there are also cost savings. Now the immediate costs that you'll have, let's deal with that side of things, will be the investment in getting prepared, migrating into your new system. Training yourself, training your staff team, will need to be budgeted in, but this is not going to be a king's ransom.

Maintenance, version upgrade, system admin costs will be a thing of the past. They're all born by the supplier. As long as you've got an internet connection, that's pretty much all that you need. You don't need to invest upfront in major software or hardware. And something that used to be only accessible for medium to large organisations is now

easily within the reach of the humble freelancer up to the SME and beyond. Security is an added feature, an added extra. Data is encrypted. Two-factor authentication tends to be a standard now with most systems to access that data. You can tier who gets in, you can tier what they view as well. You don't have to worry about backups.

Backups are automatically done by the provider. And that's all part of the subscription cost. You get an immense amount of file storage. So all your business documents can be uploaded and stored online. Working with other third-party systems, it's possible to record a transaction. but also to record and capture the invoice that backs up that spend.

So if you ever want to view that for yourself or your accounting team need to view it, your external finance team function, then they can do that much more easily without having to travel to the office, inspect files and the like. Are there any more benefits? There certainly are. Collaboration is made much more easily, certainly in a modern world that we live in with hybrid working now being an established thing for many organisations.

It's possible for people to work from home, to work outside of the home, be abroad, be overseas, and as long as you've got an internet connection, you can actually process data, you can view data, you can interrogate data. Compliance is made much more easily, and there should be some degree of benefit for preparing your annual financial statements, your accounts, that once-a-year exercise.

And again, as long as the records are kept correctly, we can avoid that GIGO. And GIGO, as a reminder folks, is garbage in garbage out. Bookkeeping is still an essential skill that needs to be done, but it's again made much more easy with cloud accounting. If you do make mistakes, your external support, your finance team.

can access support and those problems that have occurred can be fixed much more easily. For myself personally, I love the power of cloud accounting because it gives us so much valuable information. We can blend financial data with other non-financial data and we can paint a complete picture of our organisation where we are now and where we're going forward.

Other benefits as well, as I've mentioned about plugging with third-party systems. So for example, we have a online planning portal, Numbers Knowhow. And not only can you put your plans looking forward for the next three to five years. You can also integrate it with Xero, so you can actually see what's going on, the reality against what you're planning, and that power to link those two facets is really, really useful.

So folks, wherever you are in your growth cycle, whether you're just starting up, whether you're growing, whether you're literally at the saturation point, it's really important that you have a reliable ecosystem. Cloud accounting for me cuts it. There is no excuse now. It's not price-prohibitive. If you're just taking into account the time that you're going to save, the extra information that you receive.

The ability to analyse the ability to reduce that heavy lifting of bookkeeping to me is a no brainer and it makes no sense not to do so. In the future when we introduce things in the UK like making tax digital for income tax is going to be pretty useful to have that plugged in already. Folks, if you'd like some more information we've got a wonderful, wonderful guide here and that word is free that I'm going to use called Release the Power of You. It talks about the cloud, it talks about how you migrate.

Check out the show notes for a link to get a copy of this guide. If you fancy exploring the world of planning and you want to check out the Numbers Knowhow platform by all means do please check it out. There's a link in the show notes as well. In next week's broadcast, I'm going to be talking about how you actually go about making that transition.

From thinking about, yes, I want to go to the cloud, to actual D Day, and beyond. And until next week, folks, keep your head in that cloud, and stay sanguine. 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.