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Digitalising for business growth

“I seriously hope nobody is using Excel to do their accounts. Yikes! Makes me cringe.” Daniele Poggio runs a Harley Street digestive health clinic called Aqualibria, and whilst today he’s proud of his operation, he soon admits to a dark secret. He used to do his company accounts on an old-fashioned accounts package, and it crippled his productivity.

“It was antiquated,” he admits. “Our bookkeeper needed to physically come into our office. I would hand over receipts and he would sit at the PC doing our accounts. And when he used the office computer, it meant I couldn’t use it.”

When you know precisely what cash you have, and what tax you owe, you can budget and make forecasts. You run your business better. It’s a no-brainer

When Poggio upgraded to a cloud-based accounts system, the impact was a revelation. “It’s faster. We now scan receipts in. Our bookkeeper, Gina, can log on when she needs, from anywhere. Tasks are so quick they take five minutes. And when you can do something in five minutes you do them. When they take an hour, you need to schedule time. You don’t, so an hour becomes, two, three, four hours, a day.”

The growth of Aqualibria has improved as a result of its more efficient accounting practices. “When you know precisely what cash you have, and what tax you owe, you can budget and make forecasts. You run your business better. It’s a no-brainer.”

Mr Poggio’s experience is typical. Switching to a cloud-based accounts system is more than a technical issue. It’s a gateway to a new way of doing business.

“You don’t need to rely on hunches any more,” says Will Farnell, an accountant with Farnell Clarke, and author of The Digital Firm, a book about how to improve company accounts. “A cloud accounting system gives you live data. This means the business owner can investigate issues such as how exchange rates are affecting the business, or compare current performance to the previous year. With old-fashioned accounting, your numbers could be six weeks old, making it impossible. You’d be guessing.”

Furthermore, the top accounting platforms have add-ons to help run the enterprise. “Xero has a huge ecosystem of 700 apps,” says Mr Farnell. “For example, we use an app called Deputy with our clients. It lets companies clock staff in and out each day. If someone calls in sick, Deputy lets you post a message telling staff a shift is available, so you don’t have to ring around. Then at the end you export time-sheets into Xero and do payroll.”

Xero’s app marketplace is teeming with productivity enhancers. Soldo is one of the newest. It offers pre-paid Mastercards for field agents. They buy lunch, coffee and stationery on the card. Spending is registered and itemised online, and feeds directly into an accounts package like Xero. “It gives the accounting team instant visibility over spending,” says Mr Farnell.

It is possible to get paid faster, with an add-on like Stripe. This enables a Pay Now button to be added to emails and invoices, making it simpler for customers to settle bills. Cash-flow is improved as a result.

The overall impact can be tremendous. For a company like Selesti, a fast-growing digital agency for brands with clients such as Zoopla, Barclays, and Soho House, cloud-based accounting is essential to ensure expansion is kept on track. “We rely on it,” says Kate Wood, the office manager. “We have senior management meetings every month, and need to know costs. We also use it to manage projects. It’s vital there is are no delays with our financial information. The fact that the MD and I can look at the accounts at any given time is so important. Of course, we have accountants, but our system means we don’t have to ask them.”

Selesti is discovering that a cloud-based system can do so much more than basic accounting. “We use it for purchase orders, so we know what is going out. There are no hidden nasty surprises.” Receipts are handled with an app add-on. “We use Receipt Bank,” says Ms Wood. “We scan receipts into Receipt Bank. It’s really efficient.” In the future, she says, Selesti will be doing more and more with the accounts platform to administer the business.

Don’t think of an accounting system as technology for technology’s sake. It’s technology to deliver a better way of delivering services to customers

A further bonus awaits. A company with up-to-date accounts is more valuable. Sean Mallon, MD at Bizdaq, an online marketplace for buying and selling businesses, says, “Having been involved in literally thousands of business sales, from one-person operations through to corporates, there is a consistent theme in which businesses sell for the best price and in the shortest time – those with well-prepared and clean financial details. Making Tax Digital should ensure that most businesses are forced into maintaining their bookkeeping, which in turn will make due diligence much easier and quicker for buyers.”

Mr Mallon points out that a buyer will be able to arrange finance more easily when the target company has clean financials. “The biggest reason for a deal breakdown is the lack of funding available. This isn’t always because a lender doesn’t want to lend, more often it’s down to the lack of quality financial information being available at a particular point in time. Making Tax Digital will ensure that most businesses have better-kept financials, which are up to date and should ultimately make funding of these ventures far easier.”

Ultimately, moving to a modern, efficient cloud-based accounts package is about giving a company a foundation for sustained, long-term growth. “If your business is over a certain size, you need the right tools to manage effectively,” says Will Farnell. “Don’t think of an accounting system as technology for technology’s sake. It’s technology to deliver a better way of delivering services to customers.”

As Kate Wood of Selesti puts it: “I simply can’t imagine what it would be like to go back.”