Ease-of-use with which small business owners manage their finances has evolved a great deal since the early days.
I’m going to make a very bold statement, one which you may initially disbelieve but by the end of this article, I’ll aim to convince you of this: “online accounting is fundamentally re-shaping the way that small businesses operate”.
Big talk? Well thanks to the new generation of online accounting software, the sophistication and ease-of-use with which small business owners now manage their finances, has evolved a great deal since the early days.
The clunky systems of yesterday that were hard to use and often just got in the way are being pushed aside by a whole new breed of sleeker systems with easier-to-use interfaces, more flexible access and smarter features.
Let’s start with cloud computing, which unless you’ve been living under a rock for the past few years, you’ll know is where users access software applications that exist on the Internet rather than on their computers.
Its phenomenal rise is not surprising, given the benefits: no need to download software, no need to buy expensive file servers or network equipment, no expensive software licenses and upgrade charges, no tortuous contracts, no maintenance (because all that’s taken care of by the service provider).
This brings me neatly on to the advent of mobile accounting. We’re now seeing a new generation of new apps for the ubiquitous iPhone and its rivals, including devices running Google’s Android system.
If you are out on the road a lot, with little access to a computer, then the ability to check transactions, upload expenses and even issue invoices ‘on the hoof’ has several benefits, as Chris Hawes, proprietor of Bristol-based provider of web solutions Auxillio, describes:
"It means I am managing my cash flow more efficiently, because invoices are issued as soon as a job is finished, rather than being left to the end of the month. I’m not having to spend my down-time dealing with my accounts, so it adds to my quality of life. The ability to issue invoices using Xero promptly also adds to my ‘brand’ because it makes our website look like a more professional company.
"Now, when I leave a client, I am doing the invoice then and there. The other week, I was visiting an insurance company client. As I was leaving, the client contact asked me to make sure I issued my invoice promptly. A few minutes later, I had emailed it to her from my mobile: on seeing me generate and email a professional looking PDF invoice on my iPhone, her jaw dropped!"
Live bank feeds
Another innovation is live bank feeds, which mean that incoming funds in or out of the bank account are automatically visible and reconciled within the online accounting system. This description may lack ‘wow factor’, but its implications are pretty major for many small businesses, most of whom do not know in real-time what is their exact cash position.
It can also save them substantial amounts of time manually importing bank data and then carrying out reconciliations. We know of one charity that is saving an estimated 1.5 hours per day using live bank feeds, but even companies with relatively small volumes of transactions can benefit.
Tom Perkins is Creative Director of Custom Studio, a Hampshire-based design company set up in 2007. "I use the HSBC live bank feed and it works like clockwork. It means that there needs to be very little communication between me and my book-keeper – we both know the current situation, it saves us both time and I don’t need to pay her to input bank data.
"Day to day, I can go into the system, see my latest transactions, as well as the current balance and what invoices have been paid."
Hopefully I’ve demonstrated that online accounting can, in its own way, make a big contribution to running a small business. I’d advise anyone who took a look at online accounting in its earlier days and dismissed it to take another look.
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