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Published September 2014 by:

Martin Horton

Rivington Accounts Limited

4 Babylon Lane

Adlington

Chorley

Lancashire

PR6 9NN

Design by: Noir

Edited by: Rupert Waddington | www.texteffect.co.uk

www.rivingtonaccounts.co.uk

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Foreword

What is online bookkeeping?

Is it safe?

What are the benefits?

Bank transactions

Invoicing

Credit control

Reports

Accountant login

Budgeting

KPIs

Additional benefits from online bookkeeping

Get in touch

About the author

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I am Martin Horton and I qualified as a Chartered Management Accountant in 1994. I became a Fellow of the institute in 2007 and a Member in Practice in 2008 when I started my own Accountancy Practice.

I have enjoyed a progressive career path (see ‘About the author’) that has helped me not just to learn volumes about the different industries that I worked in but also gain the very particular insight needed to work effectively with owner-managed businesses.

I am in a unique position to observe just how much time and effort every successful business puts into their reporting, reviewing and forecasting; and I see how much time they save by having their bookkeeping data imported into their cloud-based online systems rather than having to be put in manually. This brings other benefits too:

• Without the risk of human error, the records are more accurate • Records (sales, purchases, bank transactions, etc.) are available

immediately and hence more useful than a manually created report that takes a few months to prepare

• Real time records are much better for measuring KPIs and budget variances

• Data can be accessed from anywhere with an internet link and even by mobile phone.

It’s no surprise that I am a great fan of online bookkeeping but I hope this short eBook will convince you too of the merits of cloud-computing. It’s safe and versatile, fast and accessible – it’s good for you and good for your business.

“I worked with Martin for a number of years and always found him to be intellectually strong with an extremely good understanding of how to turn raw data into valuable business insight. He has a huge amount of experience operating in complex environments and was extensively involved in both historical reporting, financial planning and forecasting as well as business analysis and evaluation. His input across any of these areas has always been first class and would be of real benefit to any business.” Rob Parker – Finance Director, Topps Tiles Plc

Foreword

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Online bookkeeping harnesses the best of the internet and the newer cloud-based facilities to record all your bank transactions, VAT reports, invoices and other key records in one very secure place. Data input is much faster and more reliable than with manual bookkeeping, and the data can be accessed from anywhere that has an internet connection – but only by you and those you have authorized. And all the data is backed up as well for maximum peace of mind.

What is online bookkeeping?

“Data input

is much faster and more

reliable than with manual

bookkeeping”

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Many people believe that online software is insecure. It isn’t, not if you use the right system and in the right way. And the best solution lies in the cloud. Yes, it’s true that computer crashes are more common than ever and potentially devastating if you store your data on your desktop or laptop computer. But if instead you store it in a secure cloud-based server and simply use your computer or smartphone to access it, it’s much safer. This type of bookkeeping system makes it impossible for someone to hack in, make payments or take money from your bank account.

Is it safe?

“This type of bookkeeping

system makes it impossible for

someone to hack in, make payments or take

money from your bank account”

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There are several reasons why going online makes complete sense, some of which I touch on towards the end (see ‘Additional benefits from Online Bookkeeping’). But the most compelling reason is that you will save valuable time and money. And it’s not just time and money saved by doing a task itself more efficiently; there is all the knock-on benefit of improving the whole access and management of records and data to streamline all aspects of your business. So let’s get straight on and look at how this happens.

How you will become richer and have more time…

Listed below are the seven chief advantages which no business can afford to overlook. At the end of each item you can see an estimate of the time and/or money that a typical small business, probably VAT registered, can expect to save.

What are the benefits?

benefit 1

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When you are preparing your accounts, one of the most important documents – and the cause of most headaches relating to paper systems and spreadsheets – is the bank statement.

So, imagine how much easier for your accountant to be able to know exactly which transactions have just gone through your account. And there are other benefits to real-time access to your bank records.

You no longer have to wait until the end of the month or, even worse, half way through the next month to examine your statements. You can also use your smartphone to take a quick look anytime to match payments to invoices.

You even save time when accessing records. A cloud-based system’s security saves you the time you normally spend going through the ever-increasing number of online security levels before you access your information.

“You can also use

your smartphone to take a quick

look anytime to match payments

to invoices”

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benefit 2

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Paper invoices sent by post don’t just bring bad news about bills that need paying; they also generate work for someone who has to enter them into the system and ensure they are properly recorded and paid (or not paid if they get lost along the way).

With an online system, invoices can be raised and emailed in seconds. If you charge the same amount each month you can also generate repeating invoices rather than having to enter the same information again and again each month.

By contrast, desktop systems or spreadsheets require you to type in the customer, date, invoice number, VAT etc. then put a letterhead in the printer, print it, put it in an envelope, put a stamp on it and take it to the post office…

Madness!

“With an online

system, invoices can be raised

and emailed in seconds”

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benefit 3

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It is not worth doing anything in business unless you get paid for it. And that’s why there is another problem with paper invoices sent through the post – you can’t be sure the client has received it unless you phone them up.

Using your online system to email invoices means that you can also use the technology to be alerted when the customer has seen the invoice – saving the need for a phone call.

Another wonderful benefit means that a customer can click on your invoice from within an email and pay it there and then without even logging into their bank. In fact, research conducted by Xero (one of the leading accounting software developers) for the 12 months to June 2014 shows that online bookkeeping systems reduced Aged Debtors from an average of 59 days to 36 days, and this figure will keep reducing as more businesses adopt online accounting.

So, if you turnover £100k per year, this 23 day or 3.15 week reduction means that you would have an extra £6,300 in your bank – or, to look at it another way, it is £6,300 you’re no longer loaning to your customers.

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benefit 4

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How do you know, at a glance, how well your business is doing, how much VAT is due and who owes you money if you just write everything in a book?

Many businesses can only guess at their profit and their tax payable figure until nine or ten months after their year-end. After so long, not surprisingly, they often find themselves without the funds to pay the tax as well.

With online bookkeeping you don’t just keep your records in the cloud; you have live data which you can access and interrogate at any time to see your profit and loss, VAT due or owing, and your current debtors.

You can even have your monthly management accounts ready within 24 hours if your accountant is good enough.

“With online bookkeeping

you can see your profit and loss,

VAT due or owing, and your current

debtors at any time”

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benefit 5

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Ok, so you are not an accountant, not really interested in your numbers and would much rather get on with marketing, selling and doing what you do best.

That is absolutely fine and makes perfect sense. However, to do this you need your accountant to be able to keep all your records and transactions in good shape on your behalf.

With online bookkeeping your accountant will have live access to your data and can keep an eye on everything for you. You can raise and email your invoices and then leave it to your accountant or another 3rd party to monitor payment or chase the money.

You can even send your accountant a question through the software, saving you a phone call or email.

“You can raise and email

your invoices and then leave it

to your accountant or another 3rd

party to monitor payment”

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benefit 6

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Now you have up to date information and more money in the bank you can start to look forward rather than back.

You can start to think about what you would like from your business - for example a certain level of profit, more flexible working hours, selling for £X million in 3 years’ time.

Once you have decided upon your goal you should put a budget in place, this can be entered into your online system and then you have a yardstick to measure your actual performance on a monthly basis.

Now you can get your business working for you rather than the other way round.

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benefit 7

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People talk of accounting as being just like driving; checking the figures is the equivalent of glancing down at the dashboard. You read the dials to obtain accurate information on how the vehicle is performing, and in business it is the KPIs (key performance indicators) that you’re checking.

When we’re driving, we need real time information, not news that our car overheated 50 miles ago! And it’s the same for your business – your information must be current and up to date.

Using cloud computing gives you access to this information. And as I said at the start, the benefits of online bookkeeping are not just the time and money savings. The impact can felt across all aspects of running your business.

And to finish here are just a few more reasons why you should consider moving your system to the cloud.

“The benefits of online

bookkeeping are not just the

time and money savings. The impact can

felt across all aspects of running

your business”

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1. Boost growth – less time spent on bookkeeping = more time to grow your business.

If you’re a start-up, serious about going into business, you should get your financial side sorted out as quickly as possible to free up your time to grow your business. Cloud accounting, with automated systems and the ability to see at a glance your entire bank feeds, sales data and invoices, allows start-up operators to strategically grow their business from the outset.

The technology itself also promotes business growth. For example, there is a trend in business at the moment to move to subscription payment services and a cloud accounting system can do this without you even thinking about it. Ensuring repeat payments this way creates more reliable recurring income for your business.

2. Add-ons and report features

There are hundreds of useful ‘Add-ons’ (other software that interacts with data from your system) to choose from such as debt-tracking options, KPI reporting, payroll and job tracking software, all giving you even better information at the touch of a button (or click of a mouse / tap of a touchscreen).

You can monitor how many and what value of invoices you’re doing a month or a week. This will enable you to stay focused on constantly pushing up the average value of the total invoices, rather than aiming for more invoices which just means more work and may not be the best way to grow your business.

3. Your system – your way

Cloud systems are flexible, and you can configure yours exactly the way you

Additional benefits from online bookkeeping

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need it to best serve your business. In fact, there is a good chance that the way your system works and is set up will be unique to you.

It’s worth noting that the earlier a start-up sets up a cloud accounting system the better, as it becomes more complicated and costly to adapt a long-established off-line system later on.

4. Take responsibility for the financial management of your business

There’s a difference between wanting to offload the detailed bookkeeping and wanting to ignore the financial details of the business. Many small business owners may want to outsource their books to an accountant but, while it may appear to make life easier for a few years, this approach holds businesses back from reaching their full potential.

Approach online bookkeeping as an opportunity to learn how to use all that valuable data efficiently to better manage and grow the business. It takes time, but that’s time you would have put into manual bookkeeping anyway, and it will always pay off. Look at Richard Branson; he doesn’t do his own tax but you can bet that he understands the numbers. Don’t abdicate that responsibility.

“Cloud systems are flexible,

and you can configure yours

exactly the way you need it to best

serve your business”

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I’m available to help explain the benefits and dispel whatever fears you may have. Some people, those who instinctively resist modernisation and change, argue that even the best computer can never replace the human brain. But that’s not what we’re talking about with cloud computing and online bookkeeping. We’re after the best of both worlds.

Using an online system means getting computers to do what they do best by managing our routine business information far more effectively than we ever can; and that means we then have the time and energy to harness this info and use our remarkable brains to do amazing things with our businesses.

So that’s the choice – spend time painstakingly updating the books, or have more time, more money and more fun. What will you choose?

To take your first step towards online bookkeeping, please feel free to give me a call on 01257 429252 or email me martin@rivingtonaccounts.co.uk . I will be happy to arrange a free half hour consultation where I will recommend the benefits of the right system for you.

So – what are you waiting for? Get in touch!

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During the 20-plus years that preceded my own business I worked in the accounts departments of ten companies in the manufacturing, wholesale and retail sectors. The smallest of these employed 20 people and the largest, for which I was the Financial Controller, was a FTSE 250 company.

While most businesses need to innovate to stay ahead, accountants are known for being slow to introduce change. This is why coming from this background is an advantage; I am free of the baggage that holds back an industry that has remained largely unchanged for many years. I can see beyond the trees in the wood!

When I started my accountancy practice in 2008, one of the first things that struck me was how much time small business owners spent on their bookkeeping. And if I had to do their books for them, it was just as time-consuming for me. This was not why I became an accountant. My aim has always been to work with my clients to improve their business, not to waste their time and money performing a task that can be easily and better handled by clever technology.

So, I quickly started to look at better ways of doing a task that is essential but also monotonous and time consuming. And while there are hundreds of bookkeeping packages available, it is the online systems that have really come into prominence in the last couple of years, and are continuing to improve even further. Because I have tracked and tested these systems as they have evolved, I can guide you to the best solution for your own business needs.

About the author

Martin Horton

GET IN TOUCHenquiries@rivingtonaccounts.co.uk

01257 429252

rivingtonaccounts.co.uk

Learn how to save thousands of pounds and hundreds of hours of your time by putting your bookkeeping online. You will have more financial control, more time and more money when you

switch to a cloud-based bookkeeping system.

Copyright © 2014 Martin Horton