As with anything in life, technology is evolving with time, trying (and in most cases succeeding) to make life better and easier. My mother would complain to me about these changes in life as she hates change in the way we live and do things, but as soon as you accept it you will reap the rewards. Cellular phones didn’t exist, and nobody ever complained about this ‘need’ that they have that can’t be satisfied. However, today we can’t think of a time without cellular phones. Cellular phones brought our friends and family closer to us, changed the way and the speed with which we do business. Banking seems to be quick and easy via an application on your mobile phone.
The same applies to accounting and the software we use. Bookkeeping and accounting evolved from a time where every transaction was manually entered into a cashbook (with a pencil to be able to rectify your mistakes), to electronic capturing on an excel spreadsheet to the now famous electronic accounting versions that is cloud based.
So, what is the benefits of cloud accounting?
Time and accuracy
Cloud software like QuickBooks Online has a build in bank feed. This allows you to connect your cloud software to your bank and download transactions directly into your accounting software. Within the software you then just allocate and classify every transaction to the correct account. This takes away the time you spend on capturing each transaction with the additional benefit that it is accurate as the human interaction is kept to a minimum. This update from your bank can be done as many times as you want in a day to make sure your accounting data is up to date any time its needed.
With cloud software like Receipt Bank, you can save additional time as you can upload your supplier invoices to Receipt Bank, set some rules for the allocation of these expenses and publish the data to your cloud software. No additional data capturing needed. Data capturing will be automated by the correct use of these different applications.
QuickBooks Online has the additional function to attach a copy of the invoice or receipt to the transaction captured in the software. This can be done by attaching the document to the transaction the same way you would attach something to an email, or you can use the photo function on the mobile application. Receipt Bank also allows you to include the document as an attachment when it published data to the accounting software.
This makes your filing very easy as you have a copy of the document with the transaction in your accounting software. If you need the document, you can search for the transaction in the accounting software and open the attachment. You also have the option to download the attachment again.
Reporting in accounting is like baking a cake. You can be an award-winning baker, but if no one eats that cake it’s all for nothing! If you don’t report and evaluate the result in that report, you might as well have not captured the data.
Reporting is the single most important aspect of accounting and it is here where the biggest benefit of accounting software resides. In no manual accounting system or excel based system will you be able to draw the kind of reports an electronic accounting system can give you and in the time it takes an electronic accounting system.
Tax reporting is not the only reason for reporting. The main reason for reporting is you and your business. You must be able to make sure your business is healthy and that you make profit on each project you complete. You must be able to single out the reasons if you haven’t made any profit and learn from your mistakes. You must be able to use the actual information to improve profit on your next job. You must be able to clarify where is your cashflow and how can you improve that. You won’t be able to do this without sufficient information you get from the correct reporting supplied by any reputable electronic accounting system.
Correct and timeously reporting is the fundamental base for management decisions!
It is estimated that an average of 20% of deductible expenses are not claimed for tax purposes, due to a lack of accurate filing and a lack of a reconcilable accounting system. The ease of use of an accounting system like QuickBooks Online reduces this issue drastically, thus decreasing your tax bill.
Furthermore, an electronic accounting system can assist you with the processing and reporting of VAT payable.
While I am in practise and uses accounting software each day, I can only see the benefits of indulging the evolving technology relating to accounting software. It is my goal to reduce the amount of money and time a client spends on data capturing and normal bookkeeping and rather use that money to get professional advice and assistance in interpreting the information supplied by an accounting system.
Louis Aucamp, Professional Accountant.