Cloud Accounting Transition advice and case studies
Helpful advice from BDO clients who have already transitioned to the cloud
More than 15 per cent of Australian businesses have now transitioned their accounting processes to the cloud.
Why are so many businesses moving to the cloud? What are the biggest business improvements? And what do businesses need to know before they make the move?
Two of BDO’s clients, Harcourt's Sheppard Property and Markwell Marine & Communication, transitioned to the cloud in early 2014 and have shared their experiences of the change-over and the benefits for their businesses 12 months on.
Sean Connors is the CEO of Harcourt's Sheppard Property, an Adelaide-based real estate company with 20 salespeople and 35 staff. Daniel Chalmers is one of five employees from Markwell Marine Communication, a Cairns-based specialist retailer in marine electronics for small boats through to multimillion dollar yachts.
Why did your business move to the cloud?
Sean: Our main motivation was for easy access to the accounts. Previously, you had to go to someone to get the information. Cloud accounting allows myself, the business owner and our accountants at BDO to access our data 24/7.
Daniel: We were having consistent problems with our existing program, such as incorrect stock counts, so we switched to Xero in July 2014 and BDO helped us with the conversion balances and all the other high-end accounting pieces. It was a very smooth transition.
What business processes are now managed by the cloud?
Sean: We're running our whole business and accounting process through the cloud. BDO has taken over managing and paying our invoices, and they monitor everything that happens within the business. This has taken pressure off our admin staff, which allows them to concentrate more on the jobs they're actually there to do.
Daniel: At the moment, we use it for everything. One of the best features is being able to attach copies of records, such as electronic fund transfer (EFT) receipts, to transactions. If someone comes in and says they used a credit card on a particular date, we can go into the system and find the records. The business owner can see what we're owed versus what we have to pay, what bills are outstanding and so on.
What is the biggest improvement the cloud has made to your business?
Sean: Outsourcing our invoicing to BDO has created a lot of efficiencies for the business since no one in the office needs to do those tasks. Before, our staff spent numerous hours each week on these activities.
Plus, for business activity statements (BAS), pay-as-you-go (PAYG) and end-of-year tax time, BDO has the information at their fingertips, so it's a lot easier to prepare the necessary documents.
Daniel: The biggest improvement for us was payroll and automatic superannuation. It now takes me a maximum of 10 minutes per week to do payroll and 5-10 minutes once a month for my BAS. Our bookkeeper used to spend eight hours a week doing our accounts.
What are your top three tips for businesses thinking about moving to the cloud?
- Gain the knowledge around the cloud-based system before you jump in. Learn how to set up the business to take full advantage of the solution, such as streamlining and refocusing on certain profit centres.
- Use the tools that are in there, such as the Budget Manager. It will help you to drive your business further, know where you've been and know where you're going.
- Let your staff leverage its flexibility. People don't need to be tied to their desks or in the office five days a week. Use this to your advantage to help your business to grow and keep people happy.
- Make sure your accountants are 100 per cent on board and know what they're doing. With the start-up phase, you're going to need their support regardless of how savvy you are with accounts. Look for someone who knows both accounting and technology.
- Be prepared for the time it's going to take. I would recommend running your systems in parallel initially, even though it is extra work.
- Make sure you get the correct add-ons. You need Xero as the core, but you should look at which extras can support and enhance your business.
How has the access to real-time information helped with making business decisions?
Sean: Due to the nature of real estate, it's very hard to predict cash flow. We're guided by so many market conditions and deal with large, fast-moving commodities. The beauty of this system is that it gives some tracking ability to see where we're at in real time.
We have a really clear picture on our creditors and debtors. I can jump onto the system at any time and know we have X amount of money due to come to us and we've been invoiced for X amount. Before, we didn't have a great understanding of our cash position at a particular point in time.
Daniel: The business owner knows what our cash flow is and has really tight control over that on a daily basis. He's able to see exactly what's in the bank accounts - what's been paid, what hasn't been paid, when bills are due - as well as the incoming/outgoing position over the month. We can have a spike in purchases this month, but know that the accounts receivable next month more than cover the cost of business. That way, we know we're not going backwards.
That was the biggest issue we had with the non-cloud accounting program. It doesn't matter how many reports you print out - if you don't have your finger on the pulse daily, your business isn't going to do too well.
How has your relationship with BDO changed since moving to the cloud?
Sean: Now that we're all online, we're a lot closer to our accountants at BDO. In addition to the accounting data, we've given them access to our non-monetary information, such as listings, and they've gained a better understanding of our business and how it works.
Rather than once-per-quarter catch-ups, we're now in touch with them on a regular basis. We talk to them nearly every day.
Daniel: My accountant can basically look in, see what's going on and contact me or send me a message inside Xero to let me know if anything's off. They have 24/7 access to my account so they don't have to ask me to send data files, and we're not fixing problems four months after they occur. They can be proactive, and they definitely are proactive!
What is the future for cloud in your business?
Sean: In addition to moving to Xero, we’ve also moved from Outlook to Google as our business platform. So our contacts and emails are also now cloud-based rather than server-based.
When we recently set up a new location, we didn't need to spend $20,000 on a large server. Instead, we put everything up through the cloud. It's absolutely the way of the future.
Daniel: I was looking at systems to keep our files online, but we don't really need that anymore since we can store so much through Xero.
Aside from getting the web store running and maybe putting in another add-on or two later, we're pretty well up to speed. That's not to say it won't change in six weeks' time when BDO rings me to tell me there's a new great add-on available.
That is the advantage - you're at the forefront and it's so easy to get started with the next option. It just makes life so much easier.