Businesses are deciding to invest in online software to manage their cashflow because they want to spend more time focused on developing their business rather than preparing their accounts. Business owners want to invest in modern technology that has the ability to keep up with the growth of their business.
In 2014, 24% of enterprises in the UK used cloud applications in their business IT infrastructure. 51% of these enterprises used cloud applications for email while 25% used financial or accounting software applications, according to a report by Eurostat.
Effective tools to manage your accounts
There are several tools out there, including all-in-one platforms such as Xero or applications that specialise in just a few tasks. For example, Satago can’t manage your expenses and payroll but it is designed to manage and follow up late invoices for you. We have listed the most common tools known and used by business owners.
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Xero is popular with most small businesses and accountants because of its ease of use, ability to collaborate with team members and your accountant and reduces manual data entry required by users. However it fails to offer the functionality to automatically chase overdue invoices for you and it only allows you to send one invoice at a time rather than as batch. It could be an option to use Xero and Satago together to effectively manage your accounts and chase invoices efficiently but this could be costly, especially for startups with a limited budget.
Quickbooks offers customisable dashboards and feeds to instantly show you the health of your business and your next actions. You can also create invoices that are customised to your branding and layout with the option to add customisable fields. Quickbooks pulls data from your bank to save time and reduce data entry errors. However a disadvantage of using Quickbooks is the audit trail that means it is easy for users of the account to change financial information without leaving any sort of documentation. Another pitfall is the upgrade fees required to upgrade your software each year which could become costly for some small businesses.
Sage One is easy to use for someone who isn’t experienced with accounting software and has its own separate applications for accounting, payroll and an online cashbook – perfect for sole traders. However Sage One fails to create advanced reports to drill down on individual transactions and requires you to pay an extra £5 per month to use their payroll services for up to 15 employees.
FreeAgent is an all-in-one platform that boasts the same features as other accounting applications. It also offers live profit and loss data, a tax timeline to keep you in the loop with important dates and drag and drop customisation. It’s slightly more expensive each month than other platforms, costing an additional £9 per month compared to Xero.
Satago specialises in invoice chasing and integrates quickly and easily with most cloud accounting software packages. Its features include automated customisable invoice reminders, integrated Experian risk data about your customers and the ability to send physical payment demand letters, including printing and posting carried out by Satago, so you never have to visit a post box or lick a stamp again.
Clearbooks is an all-in-one accounting software package, similar to Xero and Quickbooks, that allows you to generate, store and submit your VAT returns directly to HMRC. The cloud tool easily integrates with PayPal, MailChimp, DueDil and other online applications to effectively manage your accounts and plan your next actions.
Kashflow allows you to manage invoicing, banking, quotes, credit control, purchases, payroll and other accounting tasks. The three package options are ‘Starter’, ‘Business’ and ‘Business + Payroll.’ This selection allows you to choose a bundle that is tailored to your type of organisation at an affordable price that varies depending on the number of features you require to manage your accounts.
Advantages of cloud tools for financial management
Some businesses are still unaware of the extensive list of benefits that cloud tools can offer. Here’s a few advantages:
- Manage your accounts on the move – You can access cloud accounting software anywhere with an internet connection and even on mobile for some well known packages including Xero.
- Everything is in one place when you need it – All of your accounts, invoices, expenses and more are stored in your application so there’s no worry of losing sheets of paper or receipts. This also means you can reduce the amount of paper you use if your accounts, invoices and payslips are stored and sent electronically.
- Flexible control of your accounts – Most accounting software packages enable you to grant access to staff or your accountant so they can either review the accounts, input expenses or even make changes to payroll if you desire. The flexibility of the application allows you to be more independent when managing your accounts although it is advisable to still use an accountant to review your accounts. This ensures that you are inputting the correct data and everything is carried out to the legal standard.
The challenges of cloud financial management tools
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Before investing in the latest cloud accounting software, it is important to weigh up the advantages and disadvantages of using an accounting package for your business.
- Security – Xero, Quickbooks and other cloud tools state that they have bank-level security in place to ensure that your information is always safe and secure. There is a risk of hacking when storing data remotely but these accounting tools are designed to have your security in mind.
- Unable to manage your accounts offline – The pitfall of cloud technology is the need for an internet connection to use them.
- Incorrect information – The accounting software is only valid as the data you put into it. Your financial data could be incorrect if not reviewed by an accounting professional.