Why would I bother to change to a bookkeeping software?
If you have been doing your bookkeeping on a spreadsheet for a long period of time and you are happy with it and your accountant is happy with it then you may be wondering why so many people are advocating using a bookkeeping software. Or maybe your accountant has told that you really should be using a software or perhaps one of your business contacts has been raving about Xero, Kashflow or Quickbooks online and keeps telling you to have a look at it.
So I thought I would tell you from our experience as bookkeepers, how we see our clients benefiting from moving away from the spreadsheet and onto a cloud based bookkeeping software and you can then decide for yourself.
Firstly, I should start by saying that there are lots of cloud based bookkeeping softwares on the market – Xero, Quickbooks, Freeagent, Kashflow are some of the most popular ones. Depending on what you need, the costs start are somewhere between £5 and £25 per month depending on what you need and which provider you go with. The one we rate the highest is Xero but you may well find that one of the others suit you better. If you are already thinking, ‘but I don’t have to pay for Excel and this is an additional cost’, I would urge you to read on and find out what the financial benefits are of moving to a cloud based software which I’m sure will more than outweigh the cost of the software.
So here are 7 benefits that we see of businesses moving from a spreadsheet to a bookkeeping software.
Convenience to you
You can access cloud based softwares from anywhere so if you have a business where you are very mobile and not in the office very often, you can login from your phone, tablet or laptop at any time in your working day. So if you want, you can be sending quotes and invoices to clients and reconciling your bank account between your appointments and other commitments from your car, coffee shop or other location. You do not have to be sitting in your office at a computer to do your bookkeeping. By making the change to a cloud based software, one of our clients gained his Saturdays back as he was able to do his invoicing during his Monday to Friday working days.
Time Saving
By using a good bookkeeping software, this should save you valuable time which you can then put back into other aspects of your business or perhaps give yourself a little bit more personal time back.
The softwares are designed to automate as much as possible for you and to save you time. Here are a couple of examples of parts of the software which will help to save you time.
- Softwares usually have an app or third party app which allow you to photograph receipts and bills as you spend in your business and to send these into the software. As well as saving you time entering the information when you are doing your bookkeeping, it allows you to spend less time searching for receipts and invoices.
- If you are doing your bookkeeping on a spreadsheet, you will need to download your bank statement and then cross reference this with what you have entered on your spreadsheet. However, in a bookkeeping software, you can import or have a bank feed in your software which enables you to then reconcile your bank account and create transactions in your software much more efficiently.
- Many people we meet who are using a spreadsheet for their bookkeeping, are creating sales invoices for their customers using Word or Excel. By raising invoices in your software, you can save a lot of time as it is quicker and easier. You can also set up repeating invoices and convert quotes to invoices which saves huge amounts of time.
Better information and control of your finances
By using a bookkeeping software properly, you are forced to undertake your bookkeeping in a more thorough and robust way which means that you will have better information going in and therefore coming out of your system.
You can easily produce reports, including profit & loss reports, which show you exactly how your business is doing and it allows you to make more informed business decisions and also to address any issues arising in your business that your financial information is telling you.
The softwares allow you to keep your bookkeeping completely up to date as you can process an reconcile on a daily or weekly basis if you wish. You can therefore use it to keep a track of customers you need to chase for payment and the suppliers that you are due to pay.
All of these elements lead to better financial control in your business.
You will be ready for Making Tax Digital
Making Tax Digital (known as MTD) is a Government initiative aimed at simplifying the way businesses report their income, expenditure and taxes. The idea is that businesses will submit quarterly tax information to the HMRC instead of one annual tax return.
From April 2019, all businesses who are VAT registered and with a turnover of above the VAT threshold (currently £85,000) will need to start to submit quarterly returns through an accounting software that is Making Tax Digital compliant. It is then anticipated that this programme will be subsequently extended after this date to affect other businesses.
So if you are currently using a spreadsheet, then it is likely that you will not be able to use your spreadsheet to submit your quarterly tax return to the HMRC and you will need to find a bookkeeping software that is Making Tax Digital compliant. The softwares I have mentioned earlier are all working towards ensuring their software is compliant and will enable you to submit your quarterly returns.
You can get rid of the files and paper
Some of us like the satisfaction of having our invoices and other financial paperwork in a structured filing system in our office where we can get our hands on it. However, others welcome the benefit that cloud based sofwares have of providing an online place for us to store all of our paperwork so that we can access it from wherever we are.
In Xero for example, as well as being able to attach copies or pictures of invoices or receipts to transactions within the software, there is also a filing system at the front where we can store all sorts of other documents e.g. copies of bank statements, lease agreements, payroll repots etc.
So if you wanted to go for a truly paperless office, then these softwares will help you to do this.
Get more value from your accountant
If you are currently providing your financial information to your accountant in the form of an excel spreadsheet rather than in a software – either to do your VAT return or to do your year end accounts and tax returns – it requires a lot more of their time and resource to do the compliance work for you. If you provide your bookkeeping via a bookkeeping software and you have done this well, your accountant may consider lower fees or they can spend more time instead with you advising you more strategically on your business than chasing you for lots of information and recreating your bookkeeping for you. So it’s worth talking to your accountant to find out what software they would recommend and how moving to a cloud based bookkeeping software would help you.
So these are just some of the benefits we have seen our clients getting from moving away from the spreadsheet. Of course it may seem like a big change or a hassle to get changed over and trained to use a software but we think the benefits are worth it and I have often heard our customers say ‘I wish I had done this years ago’.
If you have any comments or questions on this blog or if you would like an informal chat or to join one of our free webinars where we demonstrate Xero bookkeeping software, please do not hesitate to contact us on lynne@thebookkeepingdepartment.co.uk or Tel: 01462 455455.