In the last decade, the world around us has changed immeasurably. Almost 25% of non-food retail items are now purchased online. While once we used to write cheques, we now pay for items with a touch of a smart watch, or a swipe on a smart phone. Entire libraries can now be stored on devices which fit into a pocket. The way we communicate with each other has changed, with the increasing ubiquity of social media giving individuals the ability to reach out to thousands. Business administration has also changed in this period, and at the heart of this change has been cloud accounting apps.
The main benefit brought about by cloud accounting is instant collaboration. A sales team can raise invoices; employees can use a telephone app to take pictures of their travel expenses and include these on expense claims for approval by managers; a credit controller can chase late payers; a business owner can consult with an accountant on the month’s figures – all working off a single, unified data set. Previous generations of software required files to be emailed or shared on USB sticks and CD drives – often the data was obsolete before it arrived, and any adjustments made by one user could not readily be integrated with another.
In addition the new generation of apps take advantage of Open Banking to automatically pull in data on bank transactions into the accounting system. This allows businesses to track which customers have paid their invoices as the cash is received, and to capture expenditure data promptly and fully. A whole “ecosystem” of specialist add on apps and systems have built up which extend upon data on accountancy apps has sprung up, offering, for example, payroll and HR management, timesheets, customer relationship management, inventory management and industry specific features. Many systems will store images and documents, enabling a business to become “paperless”.
Yet, these new systems are not without their drawbacks. Businesses now keep a remarkable amount of information – some of it personal information pertaining to employees and staff on one online system on trust. Businesses need to be responsible with how they safeguard and use this data, and business users would be well advised to thoroughly interrogate these firms’ credentials before entrusting them with it. Under the new GDPR regulations, cloud accountancy apps are likely to be “sub-processors” and there are specific requirements arising from this. The app’s financial security is also important to consider. Some of the cloud accountancy companies and add-ons, despite having glossy and beautiful websites, are relatively small and unestablished. If a cloud accounting company ceased trading, it would mean that the entire business records for all their customers would cease to be available, which could be utterly crippling. Many of these products allow you to take snapshots or back-ups of data. I strongly recommend you keep control.
Notwithstanding all this, I believe that cloud accounting will become increasingly ubiquitous over the next decade. We will start to see a lot of “artificial intelligence” automating support and data entry business tasks, and enabling the humans to focus on wider executive and strategic issues, but the output of these algorithms must be adequately supervised to prevent them going awry. The fundamentals of business – the need to understand the workings of all areas of your business – will not. Innovations offer fantastic opportunities for efficiency and scale, but ultimately the business is dependent on the enthusiasm and talent of the people who work there.