BIT asked cloud accounting vendors and experts for their top tips - and here they are.
BEFORE YOU SIGN UP
Is It True Cloud Accounting?
If you want an accounting solution that is totally web-browser based, then you need to select the right software. For example, MYOB AccountRight Live has to be installed on the different devices that are going to access it, even though the data is accessed via the web. On the other hand, if the internet goes down, MYOB AccountRight Live is usable. MYOB Advanced, MYOB Essentials, QuickBooks OnLine and Xero are all popular 100% browser-based cloud accounting systems.
Ensure Your Internet Access Is Up To Scratch
You need reliable internet access to use cloud accounting. If your connection goes down, totally cloud based accounts will be inaccessible. You don't want staff sitting idle or having to record sales on paper because they can't log in.
Check The Functionality You Need Is Included Or Available
Your business may need inventory control, job costing, payroll, customer relationship management, rostering or some other combination of capabilities. It is a mistake to assume every cloud accounting offering comes with everything you need. Sometimes you have to pay more than the minimum subscription, sometimes it's a matter of paying for an add-on (see below), and sometimes a feature is simply not available. For example, payroll is typically an extra-cost feature.
Find Out Whether Any Add-Ons Are Required Do The Job You Need
Add ons are extra pieces of software that extend the functionality of the cloud accounting system. For example if your accounting software doesn't cover job costing, you may be able to subscribe to an add-on that integrates with the cloud accounting software to provide that function. Take care to check how well integrated the two products are - you want to avoid having to enter the same data (eg, new customer details or new stock codes) in two or more systems - and ask for customer references before making a decision. (See also 22 types of clever accounting add-ons for running your business)
Check The Actual Price
You pay for cloud accounting software by the month or year. While prices are usually prominently displayed on the companies' websites, the minimum price that is prominently displayed may only cover a very limited number of transactions per month, or exclude features you need such as payroll. So determine what you will actually have to pay early in your research. You might save money by opting for a more expensive accounting system that provides everything you need rather than starting with a cheaper one and adding pricy extras.
Don't Go With Little Known Brands
Make sure that your cloud accounting provider is a solid business with a good reputation. You don't want a provider who may go out of business and leave you struggling to access your data, especially as many of the cloud accounting programs do not allow you to take usable backups of your data.
Consider What Happens If You Change Your Mind
Find out what happens if you stop paying your accounting subscription. How long will your data remain available? Can you convert it to other formats? Is your data exportable or can you take a backup of the data? Can you cancel the subscription at any time, or are you locked in for a set period?
(All the above suggested by Pam Pitt, a director of consulting and bookkeeping firm 2Peas.)
Take The Training
Investigate the training and support services (including webinars, videos, live chat with support staff and access to expert advisors) offered by the providers you're considering, and take advantage of them once you've made your choice. Otherwise there's a risk of wasting time doing things the hard way or missing out on features that could be a boon for your business. (Suggested by Intuit)
Ensure You Own Your Data
Even if you engage an accounting or bookkeeping practice to do most of the work, set up your own subscription to the cloud accounting service and give the practitioner access. That way there can be no arguments about ownership of the data in the event of a dispute between you and the practice. If you really do want the accountant or bookkeeper to look after the subscription on your behalf, ensure you have a written agreement that your business is the owner of the data being stored - that should help in the event of a messy 'divorce.' (Suggested by Reckon)
Integrate, Integrate, Integrate
If you already use a POS system, an ecommerce platform or some other core business system, make sure it can be integrated with the cloud accounting systems under consideration. You really don't want the extra work of manually transferring data from one system to the other - if you sell a widget, that transaction should automatically show up in your accounts. (See also Bigcommerce plugs into Xero, QuickBooks now has an iPad POS system and Looking for a point-of-sale system that's tightly integrated with MYOB?)
Take Advantage Of Bank Feeds
Bank feeds can be a big timesaver - up to 30 hours a month for many businesses, according to Debra Anderson of Anderson Tax & Consulting. Transactions on your bank and card accounts are fed into your accounts, drastically reducing the amount of data entry unless you have a small number of transactions each month. For example, all payments to Cabcharge can be automatically allocated as taxi fares, or payments to Vodafone as mobile phone expenses. As Reckon pointed out, it's not so simple if you have different types of expense with one supplier, eg Telstra might be your phone and internet provider, but Anderson observed that this can be overcome to some extent making the most of the parameters available in your chosen system. This doesn't help with cash expenses, but...
Snap That Receipt
A growing number of systems - sometimes with the aid of add-ons - simplify the recording of cash transactions by letting you take a photo of the receipt with your mobile phone. The image is then processed (perhaps with human intervention to ensure greater accuracy) to extract the information and generate the corresponding transaction in your accounts, possibly linking that record to the image for easy retrieval if substantiation is required. (See also Essential tips: 9 methods for reducing that pile of receipts)
Don't Mix Business And Personal Transactions
Even if you are a sole trader, it makes sense to maintain separate bank and card accounts for your business and personal transactions. Business accounts can be quite inexpensive, and the separation makes it much easier to use bank feeds and automatic allocation. Rather than paying personal items from a business account or vice versa, draw on the business by making regular transfers to your personal account. (Suggested by MYOB and Reckon)
Use Bulk Data Uploads
When initially setting up the system, implementing an additional feature, or making large-scale changes (eg, if you start selling a range of goods from a new supplier), entering the data manually might not be the most efficient approach. Instead, look for ways to export the data from other systems (perhaps your old accounting program or a supplier's web site) in a format such as CSV that can be uploaded to the cloud accounting system. (Suggested by Xero)
Keep A List Of Services
Some systems explicitly cater for services-based companies by providing a mechanism for storing a list of services offered, eg Piano Tuning, $200; Consultancy (per hour), $250. Sometimes the mechanism is hidden: Xero doesn't directly address services, but its untracked inventory feature can be used for this purpose. (Suggested by Xero)
Invoice And Collect On The Go
Especially for services businesses, it's unusual for clients to pay before you invoice them. So take advantage of mobile access to cloud accounting systems to send then invoice promptly - perhaps while you are still with the client - rather than batching them up for processing at the end of the month. Where appropriate, use a mobile payment system that lets you collect the account on the spot, with the transaction automatically flowing into your books. (Suggested by Anderson and MYOB.)
Offer Online Invoice Payment
Sending invoices electronically is faster and cheaper than on paper. Increasingly, electronic invoices can include links to supported online payment services so customers can pay easily and hopefully more quickly. (Suggested by Xero.)
Send Automatic Invoice Reminders
Cashflow can be a problem. To reduce the need for personally chasing overdue invoices, cloud accounting systems and their add-ons increasingly provide support for reminder emails. You might send a "just wanted to remind you..." message a couple of days before an invoice falls due, and an increasingly stern series of emails as it gets more and more overdue. (Suggested by Xero.)
A core feature of cloud accounting is that you and your bookkeeper and/or accountant have simultaneous access to the same data and therefore have an up-to-date view of the business. Everyone is on the same page, and decisions can be made on the basis of the most current information. Some systems include a facility for the secure transmission of digitally signed documents, avoiding postal and courier delays and letting you work on such documents from practically anywhere. (Suggested by Anderson and MYOB.)
Don't Waste Those Moments
Waiting in a queue? Sitting on the train or in a taxi? Need a break from a complex task? Take advantage of the ability to access cloud accounting from your mobile phone or other device and clear some of those pending tasks such as allocating transactions. Intuit's research suggests using mobile devices can save as much as nine weeks per year through being able to work anywhere, any time. (Suggested by Anderson and Intuit.)