What does cloud computing mean for accountancy?
Most of us use it daily – whether watching box sets, accessing email or storing information. But what does cloud computing mean for the accountancy profession?
How is cloud technology – software applications that run online rather than on customers’ premises - changing how accountants work?
And how can firms ensure that the technology is an opportunity and not a threat?
Nearly seven out of ten UK SMEs use cloud-based software, according to a survey published last year by the British Chambers of Commerce.
And all indications suggest that the global market for cloud-based services is set to grow as more businesses adopt a digital strategy.
Transforming data collection
With accountancy, Richard Sergeant, managing director at Principle Point, a consultancy that advises accounting firms, says: “It’s a real mixed picture, though on the whole [cloud computing is] about transforming the way client data is collected and then what impact that has on building efficient back-office systems.”
An increasing number of accounting and business planning applications are run in the cloud.
Accountants don’t have to get bogged down in the data anymore.
This includes software from Edinburgh’s FreeAgent. FreeAgent’s software is built for freelancers, small business owners and their accountants. Customers can upload pictures of their receipts using their mobile phone, for example, and details of bank transactions can be automatically transferred to the accounting software.
At the other end of the scale, Sage, the UK’s biggest maker of accounting software, has introduced cloud technology gradually. Its online accounting and payroll software is called Sage One.
Real-time analysis of results
There are many advantages to cloud computing over having all the accountancy software based in the office. This includes the ability to increase capacity and update the software easily.
Cloud computing can make it much easier to collect financial data - for example, scanning their expenses and uploading them rather than handing over a carrier bag of receipts at the end of the tax year.
“The ‘real time’ nature of accounting in the cloud means that accountants don’t have to get bogged down in the data anymore,” says Nick Goode, executive vice-president, product management, at Sage. “Bank feeds mean that accountants no longer have to struggle waiting for financial data from their clients too. They now have insight, in real time, into what is happening in their client’s business.”
Of course, this gives rise to concerns that cloud accounting could make much of accountants’ work redundant.
Making accountants redundant?
“The reality is that some SMEs and home-office clients don’t need accountants anymore,” says Daniel Richards, head of sales, at MyFirmsApp, which makes mobile apps for accountants.
However, business owners will still need professional accounting advice, especially for complex tax matters. Daniel adds: “The fact that top firms like KPMG are using the cloud and partnering with large software firms like Xero to proactively target the SME sector clearly demonstrates that this market still has huge potential and that there is money to be made.”
Our audit product allows accountancy practices to spend less time on file building and administration and more time on more valuable revenue generation activities.
Cloud service suppliers reckon their software can reduce repetitive tasks, such as data entry. “Freeing accountants from data entry and the laborious chasing up of documents and the admin that entails, means they are able to do what they’re trained to do: to explain and work with the figures, and to allow them specifically to address the issue of business growth,” says Sumit Agarwal, managing director at Nomisma, which makes cloud accounting software.
Cloud software can also speed up audits and financial reporting. “Our audit product allows accountancy practices to spend less time on file building and administration and more time on more valuable revenue generation activities,” says Rich Neal, CEO of MyWorkpapers which makes cloud software for audit.
Finding new opportunities
If cloud accounting software isn’t going to mean more accountants on the dole, can it provide them with new opportunities?
Colin Abercrombie, partner at French Duncan, a CA firm based in Glasgow, believes cloud applications put much more power into the hands of individual business owners.
“Thanks to the cloud we now have the ability to instantly access any level of detail on a client’s financial records and it has really transformed the way accountancy practices work,” he explains.
And he believes that an entrepreneur or SME is more likely to maintain their finances via mobile banking uploads, and automated payroll systems than asking an accountant to do this for them.
Working more flexibly
“The role of the external adviser is becoming much more that of the interpreter, rather than preparer or administrator,” he adds.
Kevin McCallum, business development director at FreeAgent, says that having a single, more accurate version of client data that accountants and clients can view and amend in real time enables better collaboration.
What we should be seeing are accountants who turn up at their client’s office, tablet in hand, pulling up apps and collaborative software.
And data that is available anywhere with an internet connection allows for more flexible working for accountants and their clients.
Colin, from French Duncan, believes cloud services are a “tremendous asset” for the profession.
Slow on the uptake?
Before cloud computing, a bank fundraise would have required, for example, preparation of forecasts, preparation of narrative content and subsequent distribution, he says. “Now, thanks to the cloud, these can all be rendered redundant.”
But despite cloud technology’s apparent benefits, the accountancy and legal professions have been “somewhat slower in exploiting the opportunity”, says Paul Grant, director at Cofficient, a Glasgow-based IT consultancy which advises businesses on cloud-based business software.
Mike Francis, owner of Practice Engine, which makes practice management software, agrees. “A lot of it is to do with where the data sits and security and, I think, also a degree of reticence, dare I say it, from some of the senior people in the firm’s IT area, whose role becomes questionable if you move to a very cloud-based approach,” he says.
Daniel of MyFirmsApp says: “What we should be seeing are accountants who turn up at their client’s office, tablet in hand, pulling up apps and collaborative software, examining the data in real time, and interpreting it to give best advice.
Plan for the cloud
“These automated processes are happening, but it’s not second nature as yet.”
French Duncan, one of the early adopters of cloud in accountancy, uses software such as CrunchBoards and Fathom for interpreting financial information.
They find that clients like using cloud tools, which summarise information in online “dashboards”, and prefer them to traditional Excel spreadsheets. The firm creates dashboards in real time, so that clients can always see how their business is performing.
Frank Cooper, founder of Cooper Software, predicts that more small to medium-sized accountancy firms will partner with IT experts so they can provide a ‘one-stop-shop’ for accountancy and “business process outsourcing” services. “Smaller accountancy practices in particular are losing out to the Big Four who are targeting their SME clients with attractive cloud offerings,” he says.
If your firm doesn’t have a plan for cloud technology, it’s probably time to start working on one.
In association with Sage.