Cloud accounting – are you lost in the fog?
Cloud accounting is certainly trending at the moment with many new entrants as well as the PC stalwarts all offering software solutions in the ether. You may be keen to try the cloud, you may also be confused, so how do you see through the fog?
Let’s clear the cloud accounting fog
At Blue Dot we’re neither pro-cloud nor anti-cloud, we have clients that are cloud-based and clients that are not. But I think I’m seeing an over-reaction in the market which is heavily cloud-centric and I’m not sure that’s very helpful for business owners.
Universal accessibility is not new
The essence of a cloud-based solution is that your accounts can be accessed any time from anywhere by anyone who is authorised to see and work on the data.
Obviously a web-based software package will do this for you. But it’s not new functionality – we have been remotely accessing clients’ PC-based accounting software for years using Logmein.
The classic set-up is that the client does most of their own bookkeeping (a cost-effective, convenient solution) and we log in to do training, raise invoices, correct errors, produce management accounts etc.
So the first thing to bear in mind is that cloud accounting solutions are not the only way of creating universal accessibility.
This is important because it puts back in play all of the potential accounting packages on the market and this means you can make your choice using far more sensible criteria.
What might those criteria be?
The first, and it is first by a very, very long way, is to choose accounting software that will produce the management reports that your business needs and is likely to need in the future.
It doesn’t matter what you put in if you can’t get useful stuff out.
If you are not sure what those reports might be then take advice from another business owner or from an accountant (ideally one who has worked in a proper company, like yours).
Why not produce examples of the reports you would like to see in Excel and then ask whether the software you are interested in will produce them?
Be suspicious of any accounting software that has as its key sales message “ease of data entry” or “integrates with your bank statement online”.
These are not unimportant but they are a complete “so what?” compared to useful management reporting.
The less important criteria
These will include:
- cost (life cycle, not month one)
- ease of use
- facility to email sales invoices and statements to clients
- robust VAT accounting (more important than you might think)
- ease of recruiting people who can use the software
- easy import of transactional data from other software
- freedom to change (in practice, not just in theory)
Freedom to change is a big issue. You want to be sure that if the software isn’t doing the job, or you change accountant or you sell the business or a truly brilliant new software solution comes along, that it is easy for the business to carry on with its accounting without missing a beat or being charged an exorbitant amount of money to migrate systems.
Accountants and the cloud
There’s a lot of chatter in our world about adopting cloud accounting solutions, setting up cloud departments and being left behind if you don’t. It’s also certainly the case that the big cloud software suppliers are actively using accountants as a route to market – in the same way that PC-based software guys have been doing for the last thirty years.
But it’s easy to look at this the wrong way. And the right way is to discuss with the business:
- what their information needs are / will be
- what the sources of accounting data will be
- who needs access to the accounts system
From this discussion a sensible choice on accounting software can be made.
We know that strong accounting is the bedrock of every successful business and we know there a lot of decent solutions out there.
We want to help MDs and FDs make sensible software decisions that contribute to a profitable future.
So let’s keep our feet on the ground, even if we’re in the cloud!Michael @diaryofanomb
Got a view on the cloud? Please share.