The leading players in the accounting software market have all recognised that the future of accounting is in the clouds.
Globally accessible online accounting software utilising bank feeds, minimising data entry and maximising efficiency has arrived.
How does online accounting software work?
Cloud accounting software packages are available wherever you have access to the internet.
Online accounting packages utilise bank feeds to minimise data entry and processing time.
Hamish Edwards’ founder of Xero describes bank feeds as ‘the secret sauce of online accounting solutions’.
How do bank feeds work?
The online accounting product is linked to the businesses bank, credit card and PayPal accounts.
Transactions that happen within these bank accounts feed into the online accounting package either live or batched overnight depending on the financial institution.
Once the transaction has arrived in your software it needs to be coded.
However once a transaction has been coded future similar entries will recognise the coding rules and will be automatically coded.
For example, once you have allocated an account and tax code to a bank charge transaction all future bank charges will be coded the same way.
Of course if necessary the memorised coding can be overridden.
Cassandra Scott, director of Laurus Bookkeeping in Brisbane, is among those who have been using cloud accounting solutions.
“Cloud solutions allows for easy collaboration of a business’s financial information between business owner, accountant and bookkeeper, or any other parties that may require access,” Ms Scott said.
Other features of online software are the user never needs to back up the data or worry about upgrading software, it is done automatically.
Who offers online accounting packages?
Cloud accounting burst into my life in the form of a funky cyan dot and a company called Xero.
Other players in the online business accounting market include SAASU, QuickBooks Online and of course MYOB have a product called LiveAccounts.
Will my data be secure online?
Do you use internet banking?
Online accounting solutions will typically offer the same sort of security as internet banking.
Like your bank password, you need to be sensible about keeping your password to access your online accounting solution secure.
But the data itself is backed up online offsite and this in itself is probably more secure and reliable than many businesses current backup solution.
What do I need to get started with online accounting software?
For cloud accounting to work effectively the user needs to access a reasonably fast and reliable internet connection.
The mistake I see many micro businesses make is they mix up their personal and business spending in a single bank account.
I recommend to all clients that no matter what software solution they choose they need to have dedicated business bank and credit card account.
Whether or not you intend to use a cloud accounting solution, you will still benefit from focused and dedicated bank and credit card accounts; record keeping and reconciliations will be so much easier.
If you are a micro or small business I would encourage you to explore these cloud solutions. Have you used cloud accounting solutions? What has been your experience?
Heather Smith is the owner of ANISE Consulting, who works closely with small business owner's senior management and boards of directors, assisting them in developing management reports that they can use and understand.