Expenses

Making the move to cloud-based accounting

Published 23 July 2020

Cloud-based accounting is proving increasingly popular for GP practices for many reasons. The flexibility afforded by this type of software has been brought into sharp focus recently with many more practice staff being obliged to work remotely. 

Cloud-based accounting software is based in the ‘cloud’ rather than requiring a programme installed on your PC, meaning data is stored externally rather than internally.

The software works in the same way as a desktop software programme.

What are the benefits of cloud-based accounting?

  • Data can be accessed from anywhere with an internet connection, on any device. This gives those currently working from home access to the data without needing the office desktop.
  • A live bank feed can be set up, giving automatic access to all transactions feeding through the bank accounts, and real time information at your fingertips.
  • It is user friendly, making it as straightforward as possible to record all of the transactions feeding through the live bank feed.
  • It is intuitive, matching transactions to bills entered and remembering previous transactions to link to the correct code within the chart of accounts. This results in large time and cost savings within a practice.
  • Reporting is straightforward and, when used effectively, enables you to understand how the business is performing and make comparison with earlier periods.
  • It allows real time collaboration, meaning more than one person can be logged in at any given time working on the same project.
  • Your accountant will be able to log in and access the data, so if any assistance is required, they will be able to help without needing to access your screen.
  • The cloud will automatically back up the data, removing the need to take backups and keep physical storage devices.
  • It contains budgeting functions which allow practices to prepare projections of income and expenditure. This has proved particularly useful given the level of uncertainty as a result of the Covid pandemic.
  • Licences tend to be rolling monthly contracts and software is usually cheaper than the traditional desktop offerings. In addition to this many different users at a practice can have varying levels of access to the data.

Popular cloud-based accounting packages

There are currently two main packages:

  • QuickBooks Online (QBO)
  • Xero

Sage business cloud and IRIS Kashflow are probably also worth a mention at this stage, but there is no doubt that QBO and Xero are the market leaders in this area.

What to consider when switching to cloud-based accounting

The switch to cloud-based accounting is a quick and simple process. Depending on the software that you are transitioning from, a backup can be taken from the current software and all of the data can be imported into the new cloud-based package. However, many practices prefer a clean break and to leave the old data behind. Both options are possible.

We provide our clients with a bespoke chart of accounts, which can be imported to the cloud-based software. This can be tweaked as necessary to include additional income streams and expenditure codes to relate specifically to your practice.

It is also possible to import a list of customers or suppliers, meaning they won’t have to be entered manually, saving a considerable amount of time.

Invoices can be raised through the cloud-based software and certain users can have restricted access, meaning they would only be able to raise invoices and see the customers, and not have access to sensitive information such as staff salaries and bank account balances.

Links with Making Tax Digital (MTD)

As you will no doubt be aware, the way we submit our VAT returns and tax returns is changing, known as Making Tax Digital. MTD requires businesses to keep records digitally.

MTD came into play in April 2019 with the change of how to submit VAT returns. Previously, VAT returns were submitted using a portal on the HMRC website. Now they need to be submitted using a compliant software that allows you to link to your HMRC account.

Cloud-based accounting allows you to submit the VAT return directly to HMRC with simply a few clicks of a button. Any changes to your return will automatically be picked up by the software and submitted with the next return.

Over the coming years more and more communications with HMRC will need to be done through MTD and it is advisable for practices to be ahead of the curve on this.

Jade Parris ACCA is assistant manager of Moore Scarrott Healthcare, nationwide specialist medical accountants

Guide URL:
https://pulse-intelligence.co.uk/guide/making-the-move-to-cloud-based-accounting/
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