Recently, whenever a particular advert has come on, Iâ€™ve found myself with a very strong inclination to reach for my remoteâ€¦ and throw it at the TV.
Now, what could possibly upset a placid individual like me so much? Is it the twirly-moustached tenor of Go Compare fame? Or the so MoneySuperMarket twerking businessman?
No, it is in fact an ad for QuickBooks Online, an undoubtedly excellent piece of cloud accounting software.
But if, as a layman with no experience in business accounting, you saw this advert, youâ€™d believe there was no longer any real need to retain an accountant for compliance purposes. According to the ad, this new world of cloud accounting – and QuickBooks in particular – deals with all your accounts and taxes in an instant. No worries, no hassle. What utopia!
However, as Iâ€™ve previously written, cloud accounting software will not solve all your problems.
Itâ€™s a fantastic tool, allowing business owners to streamline operations, ensure accounting administration is carried out more efficiently, and meaningful management reports can be extracted. But it is just a tool.
Additionally, it can be confusing as to what is being sold to you. For instance, there are cloud applications out there which include an accounting function as a sideline, but theyâ€™re not full accounting systems.
This is why the introduction of a cloud accounting system requires careful planning, meticulous data entry, and – above all else – the experience to make the most of it. Otherwise problems can and do arise.
Here are just three examples* Iâ€™ve encountered:
1. The Financial Consultant
By day, Mr Brown works as an employee of a large training company. And in his spare time, he runs a limited company providing consultancy services.
The income from the consultancy is not insubstantial, and way over the VAT threshold. We suggested at an early stage that a cloud accounting system should be utilised, even going so far as to undertake some basic training with him.
But after a short while, he insisted he was quite up to the job and able to handle everything by himself. Instead, he told us that at the end of the year he would look to us to prepare statutory accounts, etc. The offer of a free quarterly review was rejected out of hand.
When the year end rolled around and we looked at the books, it was hardly a surprise that they were a complete mess. While sales had been recorded well, expenditure had been double counted. In fact, the position was so bad that we almost had to start from scratch.
The problem here was that Mr Brown thought it was a doddle. And it would be, if you had the time and the proper level of training. But completing your books at the end of a busy day in an ad hoc manner – and not remembering what had been previously entered – just wonâ€™t work.
2. The Niche Retail Store
When Mr and Mrs Fraser were opening their niche retail store, they were referred to us by one of our existing clients. It had been suggested to them that it might be worthwhile getting an accountantâ€™s input into the business, as up until that point their advice had come from a business coach.
The new owners were rather reluctant to meet with me, as they were aware we offered business development services and that was what their coach was providing. As far as they were concerned, accountancy was a side issue.
While they had purchased some truly marvellous electronic point of sale (EPOS) software, the lack of involvement from an accountant – or indeed anyone with real financial knowledge – meant they believed this software would meet all their accounting requirements.
Of course, it could only capture sales data, and they were left without an adequate accounting system for their new business.
3. The Landlord
Mr Brush, a buy-to-let landlord, decided that he needed to move with the times and sign up for a fancy new cloud accounting platform. However, he was sold software unsuited to his business needs and that complicated matters no end.
When he came to us, we were able to resolve the problem for him, but the poor advice he received prior to this only served to set him back. By entrusting a big operational move to a less-than-qualified professional advisor, he took an unnecessary risk with the financial management of his business.
It might seem obvious, but itâ€™s always better to speak with someone with the right level of experience when it comes to cloud accounting.
A Note on â€˜Making Tax Digitalâ€™
Thereâ€™s little doubt that the considerable interest shown in cloud accounting software has been generated in large part by the â€˜Making Tax Digitalâ€™ push.
Many of us within the profession – and business people in general – were sceptical as to the ability of HMRC to meet the deadlines set for the introduction of the scheme. And we breathed a huge sigh of relief when it was announced that most of the changes will now not come in until 2020.
However, this should not derail individual organisations from going digital, not because of HMRC requirements, but because of the greater power that cloud accounting systems can bring to a business.
The Key to Cloud Accounting Success: Planning
While my three stories may sound somewhat extreme, these are very common mistakes and challenges that many business people are encountering.
Cloud accounting and the various apps on the market today will not solve your problems unless theyâ€™re underpinned by proper planning.
With that in mind, speak to an accountant. Or even better, speak to me! Get in touch today and take the first step towards a cloud accounting solution that works.
*Names have been changed.