The Cloud: A concept many of us are familiar with for things like storing personal photos, or allowing us to work remotely anytime, anywhere. Although the technology behind it might be sophisticated, the benefits are clear, yet many small business owners and sole traders are not using cloud accounting tools.
According to recent research commissioned by KashFlow, 37 per cent of sole traders and micro business owners have heard of cloud accounting but don’t use it, and over a quarter (27 per cent) don’t know what it is. This is in contrast to the 75 per cent who said they use the internet, cloud, apps or software for business banking.
Although those who do use cloud accounting are full of praise for its benefits, it’s clear that the ways it saves business owners and self- employed people time and hassle are perhaps not widely understood. Here, we’ve compiled a list of the key features, and the sometimes unexpected benefits.
Encouraging speedy payment
Recent figures from the FSB found that small businesses are owed on average £6,142, mostly due to larger firms not paying them for goods and services on time. Of course, Cloud accounting alone can’t eradicate this problem, but many tools include a feature which encourages clients to pay upon receipt of an invoice, through payment providers like WorldPay or Stripe.
The process has been designed to be deliberately simple so that customers can pay in just a few clicks. Credit control functionality also allows you to automatically chase late payments, sending emails which also include the ‘pay online’ function.
Avoiding unnecessary admin
It seems like a small thing, but if you’re a sole trader or small business owner that regularly sends quotes to customers, it can be time consuming to create them, using templates in Word, then have to open a separate email programme to send them – especially if you’re trying to do so on the go. Quotes created in this way don’t always look as professional as they could either. Using Cloud software can help.
For example, KashFlow allows you to create quotes and send them through the software, and these can quickly be converted to professional looking invoices once you have carried out the work. Because they’re created in the software, the details will be automatically logged so that you can keep track of anticipated payments and ensure you’re on top of what’s overdue too.
Managing your finances from any device
We use our Smartphones for everything from shopping to keeping fit, so the idea of being able to update or check in on your business finances in the same way is quite compelling. Many cloud accountancy tools now have apps, so you can do things like quickly create an invoice immediately after a meeting with a client whilst sitting in a coffee shop, or check on overdue payments whilst on the go.
For example, with KashFlow Go, you can view a dashboard via your Smartphone which tells you how much money is in your accounts, and what’s due in or out, in real time. Being able to log in securely (our software uses the same data encryption as online banking) from anywhere is a particularly handy feature in today’s working world, where very few business owners or self- employed people spend their days in the same place, sat in front of their PC.
Using cloud software which directly links with HMRC helps you to never miss things like your VAT deadline; as you can do the return via the software much more easily and receive reminders. The fines for missed deadlines can have a significant impact on sole traders and small businesses, and it can be hard to remember the various significant dates throughout the year. Cloud software helps you keep on top of those important dates more easily.
Avoiding nasty surprises
Many sole traders and small business owners will be familiar with the unpleasant feeling when you realise your business finances aren’t in as good shape as you thought, or indeed when you get a bill you weren’t expecting. It’s no surprise that this is a problem if your finances are recorded in a series of different places, perhaps some on spreadsheets, in a diary, a notebook, or in some cases, a shoebox full of receipts and notes scribbled on bits of scrap paper.
Even if you use just one of these methods, it’s difficult for the picture to be complete and up to date. While many sole traders and small business owners feel they’re doing a good job of managing their finances this way, it’s much easier to get a clearer, overall and most importantly, completely real- time view of your income and outgoings if you use Cloud software.
There are also forecasting tools within it which help you anticipate future peaks or troughs, and you can import transactions straight from your bank account for ease and accuracy.
KashFlow also has a health check tool, which tells you how your business fares against a number of measures and gives you a score out of 100, with advice on how to improve your score as required. All of this helps small business owners and sole traders feel in greater control, meaning they can concentrate on what they really like doing; running their business.
Natasha Chryssafi is product manager at KashFlow