Here’s a case study that freelance journalist Gillian Law wrote last year on how we use cloud based accounting software for the benefit of our clients and our business. The interest in Xero and Freeagent just goes up and up so we thought that we’d publish the case study again.
‘Cloud accountancy’- it sounds like something illegal, something that might get you sent to prison for a few years! In fact, accountancy on the cloud is transforming the financial management of many small companies and sole traders across the UK.
An assortment of online financial packages have sprung up in the past few years, all promising to take pain out of managing your balance sheet. And in a move that confirms they are heading in the right direction, accountancy firms are starting to encourage their clients to use them.
FreeAgent, also Edinburgh based, has been created specifically for sole traders, contractors and small businesses, while New Zealand – based Xero suits slightly larger SMEs. Using these has transformed the way One Accounting’s clients approach their own finances, say director Chris Thomas.
The Old Way
In the past, clients would just hand all of their information to their accountants to process. If they did try to use systems like Sage or Quick Books, many would flounder and give up, bewildered by the terminology.
“Accountants loved the systems that were available – because they speak our language. They have trial balances and balance sheets and debit and credits…but put a business owner in front of that, someone who has an hour at the end of the week to deal with this, and there are all these unfamiliar terms” Thomas says.
There was also little return for the client – they could enter the figures but they didn’t gain anything from it – it was much easier to hand it over to the experts. Now, online real time systems give them feedback about the health of their business that they’ve never had access to before. Both client and accountant can keep day to day track of what is going on.
The New Way
“There is a dashboard to tell you what your bank balance is , what your sales were this month, and who owes you money – the key things for a business are all there in front of you” Thomas says.
And usefully for the accountants, they do not have to provide all this themselves by tapping into a SaaS platform provided externally. They benefit as well as their clients.
Benefits Of the Cloud
In fact, One Accounting has been set up from the beginning as a remote – working business, taking advantage cloud – based tools and other technologies that allow staff to work from wherever they are.
“From the outset, when we started five years ago, we had staff that worked from home and people who had children and needed flexibility and so we set up very much as a paper free office to let people work from home. Client documentation is all scanned in, and as much as possible is available on screen, rather than having to physically go and get the files.”
One Accounting does retain one in-house server that hosts all of these files but it might consider moving to cloud – based storage for this in future.
Internally, One Accounting relies on salesforce.com to monitor prospects and leads, and to communicate with clients, and uses skype for inter office calls. “Pretty much any tool that we think is useful; we’ll add to the set” says Marketing manager Jenni Maley.
The use of cloud accountancy services doesn’t reduce the work done for each client, but it does shift the emphasis, Maley says. It has changed what we do. There’s still a lot of training involved in making sure clients do things properly – we’re still analysing their data to make sure everything is entered correctly. So it’s shifted our work into different dynamic, one that we think is more helpful for clients.”
Clients are strongly encouraged to use the systems. There are still some “carrier bag” clients who just want to drop off bags of paperwork and leave accountants to it, but One Accounting will simply set up an online account for them and add a small charge for entering the data.
One Accounting run regular webinars and on one on one training sessions for clients, to make sure they are confident in what they need to enter” because it is still a bit daunting, especially for a business owner who has precious few minutes each week to deal with this,” says Maley.
“So we do a lot of on-going training. The goal is to have useful, relevant information throughout the year, not just to throw a bunch of stuff in there and still have a huge clean up job at the end of the year”, she says
In fact, One Accounting certainly isn’t saving time or effort by getting clients to do the work, or certainly not yet.
“In theory, it should – but we haven’t had enough clients on it, for enough years, that they deliver us a polished final product. We’re still getting actively involved. But we’re providing a better service – and we want to be using our time in actively being business advisors to our clients, and helping them identify areas of tax savings and tax strategies”, Maley says.
As for security, Thomas says most clients are now comfortable with online services.
“We’ve done our research into the two systems we’re working with. Their downtime is low, and we know they have back up servers available on different continents, so the back up servers can kick in if there’s an incident. We encourage users to change passwords regularly, and we can also set up various monitors in the sites ourselves, to see a significant change to a bank balance for instance”
Cloud use is just becoming the norm, he says. “In five years we won’t even be discussing the cloud as a way to do things.”
It has transformed the service that One Accounting can offer to clients, allowing it to remain competitive in a tough market
“Just producing tax returns and accounts becomes a bit of a commodity. Competitors have their prices up on their sites, so if you need a year-end accountant then within ten minutes you can have ten prices. And companies will increasingly be able to be able to prepare and file their own accounts; the software will exist for them to do that. So the challenge for us is to pack more value into the fee we charge – we can give better value, and more of a niche service tailored to the client.”