Every cloud has a silver lining

In a world where nearly everybody has a vast amount of information available at their fingertips (be it via smart phones, tablets, or laptops), it is concerning how many business owners cannot say the same for their financial information. 

This became even more apparent during the Covid lockdown period when business owners, financial controllers, and bookkeepers either had difficulties accessing their financial information, or could not access it at all, as their accounting software was based on physical machines or servers with no remote access.

It is understandable that people are often too busy running their businesses to deal with the “necessary evil” of bookkeeping, VAT returns, PAYE returns etc. However, the importance of accurate and timely financial management information should not be overlooked, particularly when attempting to gauge the impacts of a pandemic.

Many business owners only see their financial results after they have had their annual accounts prepared by their accountant. These accounts can sometimes be prepared nine or ten months after the financial year end – almost at the end of the following financial year.

Management accounts

Management accounts on the other hand contain a wealth of information, depending on how detailed and accurate they are. The more regularly they are prepared, the more useful they will be. 

The figures allow owners to check key variances to their budgets so that corrective actions can be taken in a timely manner, as well as giving them a better understanding of the financial health of their business.

Having access to current figures allows more informed decisions to be made and the possible financial consequences understood. Without those up-to-date figures, important decisions risk being deferred or taken in the dark.

Basing any decisions about the future just on the annual accounts prepared ten months after the year end risk being disastrous. None of us drive our cars by permanently looking in the rear view mirror.

Cloud accounting

With the advances in technology and the advent of the “cloud”, moving to cloud-based accounting provides even greater flexibility and freedom for business owners, giving them access to figures wherever and whenever required, from a computer, tablet, or mobile phone.

Being able to update and check those figures on the move liberates the business owner from the office.

Cloud-based systems can also link to the business bank account so that bank transactions automatically feed through to management accounts, saving time and ensuring nothing is overlooked. 

On top of this, the popularity of cloud-based accounting software has attracted the attention of software developers in other areas, targeting specific sectors and needs through the development of “apps” that integrate with accounting software. 

There are apps covering all aspects of manufacturing businesses, including: stock and inventory control; time tracking, Customer Relationship Management, payroll and point of sale data.

Agile working has become a key phrase of late, and if nothing else the Coronavirus pandemic has highlighted how much easier it is to manage a business with the right software and technology at your disposal.

If you would like to discuss how to make the move to cloud-based accounting to improve your agility to manage your business, please contact your Bishop Fleming adviser.