by Steven Cohen, managing director Pastel Accounting
Technology, like most things, operates in cycles; there are times when the changes taking place don’t really affect you and then there are times when so much is happening that it’s very difficult to grasp what can really benefit you.
And today, we find ourselves in one of those cycles where a fortune is happening and it’s all related to the internet, web, cloud, or whatever you want to call it.
With so much tech-activity, there’s a real possibility that you’ve chosen to shut out the noise and ignore it all but currently there are a number of trends that would benefit you and you’re probably missing out and starting to lag in you work environment.
I try and stay as current as I can. It’s easy for me because technology is one of my passions. So, what I’m going to do in this article is cut through the noise and tell you about some new technology I’ve been using that I think could be of benefit to you too.
It’s all in the cloud
Accountants are clever people, but I recently realised that the term ‘cloud computing’ is not as broadly understood as I had assumed. In some research that we conducted amongst professional accountants towards the end of last year it emerged that 77% of respondents have no understanding of what accounting in the cloud is but 53% said they would recommend an online accounting product to their clients. So, there’s obviously confusion out there because cloud computing and working with an online application is exactly the same thing.
Cloud computing 101
When we refer to the cloud we’re talking about where the program is hosted, or stored, and the answer is that it lives on the web and not your computer. It’s the same as your Facebook account where all your information is stored ‘somewhere on the internet’.
Facebook (although I am not an avid user) is a great example. When you’re using it, I guarantee that you don’t think about whether it’s the latest version or if the information you see is the most current. You just know that the answer is yes and that somebody clever ‘out there’ is taking care of everything!!
Well the ‘out there’ is the cloud! Perfectionists will criticise me for this – but the heart of the argument is that the cloud refers to the web or the internet – they’re basically the same thing.
Online accounting systems
Being a chartered accountant gives me a decent understanding of how accounting in the cloud can make life easier for everyone: clients and accounting practices.
I remember the early days when we would have to go to clients to perform the audit function, test samples, review source documentation, etc. Sometimes we would back up the client’s data, take it back to the office to work with it and then once complete, process our adjusting journal entries on the client’s live data.
So, imagine an accounting system where you can perform a material amount of audit work on your client’s live data from your offices – while the client is working on the accounting system at the same time. By simply logging onto your client’s system from anywhere you could perform any task, and imagine; no more time in the traffic!
Think of the time saved by preparing provisional tax estimates and producing an income statement from your office. Or being able to produce management accounts whenever you choose and simply emailing them to your clients. And when it’s convenient for you, reconciling live bank accounts and producing VAT returns while your client processes invoices concurrently.
I remember when our client accounting department would receive documentation from our clients whereupon we would enter all of their transactions on our own internal client accounting systems. In the internet world, this is no longer necessary.
Depending on the client’s size and skills, the accountant (who in most cases is offsite doing the books) could do all the accounting work while the client produces customer invoices, concentrates on stock control, collecting money, etc . And you will all be transacting real time on the same live system.
Because all the information for all of your clients would be in the cloud you would be able to take a bird’s eye view of multiple clients at the same time.
What this means is: no more year-end or month end procedures – ever – so you would be able to produce financials at any point in time no matter how far back you wanted to go. And because the data resides in the cloud, you could work from anywhere at any time that was convenient for you.
Another huge plus factor is that no software needs to be installed on your computer; you simply login through your browser. So it makes no difference whether you choose to work on your computer at work, or your computer at home, or a computer at an internet café or airport.
Consider the difference this could make to your life, your practice and your client’s life.
And best of all, everyone would be on the same version of the software all the time. It’s the same as internet banking. When you logon to your bank’s internet site, you’re always logging onto the current version.
Ok, so that’s accounting in the cloud.
Money or the box
Another extremely useful tool that I use is called Dropbox; a data keeper in the cloud.
People often get confused with Dropbox because the concept is a bit weird – but once you understand it, then the possibilities appear.
Imagine carrying a briefcase of documents around with you wherever you go. What’s good about it is you know that the document you are looking at is the same – because it comes out of the same briefcase. Dropbox allows you to do this, but without having to carry the briefcase.
Pretend you have an expense schedule spreadsheet called Expense.xls on your work computer. As you save it, Dropbox will send a copy of it to your personalised Dropbox in the cloud. It will then make a copy of it to all your other devices (even your mobile phone or iPad or Samsung tablet) where you have Dropbox installed.
So effectively, on whichever device you choose to look at the Expense.xls spreadsheet, you will always be looking at the same version of the file.
If you are at the airport and update the spreadsheet to add a few new rows of expenses, as you save the file on your laptop, so it will be updated on all your other devices.
That’s the basic functionality of Dropbox, but it goes much further.
Let’s say you have 20 folders on your computer, but you want to share one particular folder with your associates. You can do this by making that folder a shared folder. And whenever you add or change a document in that folder, the people with whom you’ve shared it will be notified that the document has been added or changed. And vice versa.
So you could setup a folder for each client and they can put documents in the folder which updates the folder on your computer.
The benefit of Dropbox is that your data is always up to date and can be accessed from anywhere, so your data is guaranteed current and safe!