You’ve probably heard the term ‘cloud accounting’. But you might not be sure exactly what it is or how it could benefit your creative business. In this article, we’ll explore what you can do with cloud accounting. We’ll also consider why you might switch if you are currently using a paper or desktop-based accounting system.
What is cloud accounting?
Cloud accounting is simply accounting that’s managed online. The ‘cloud’ is a network of remote computer servers hosted on the internet that store and process data. As it’s all online, your data is backed up and always available. You can access it wherever you are and whenever you want to.
Why is cloud accounting a good fit for creative businesses?
Creative business owners are often out and about, away from your desk or office. You may be travelling for business, on a film or TV set, in the theatre, performing in concerts or gigs or supporting others at creative events such as fashion shows or exhibitions. When you spend a lot of time on the road, you want easy access to your business data.
What sort of cloud accounting packages are available?
When we think of accounting, we often think of invoices and payments. But really, this is bookkeeping rather than accounting. There are many different cloud-based bookkeeping packages on the market aimed at smaller businesses. One of the market leaders is Xero, a cloud-based subscription offering user-friendly software to help automate your business finances. Other similar packages include Quickbooks, FreeAgent, Zoho and Freshbooks, all of which offer similar features such as automated invoicing, credit control and receipt capture.
However, cloud accounting software is not just limited to bookkeeping and tax accounting. There are a variety of other packages which could fall into the cloud accounting category helping businesses to manage their finances better.
Cash flow management software
One of the most important things in any business is keeping good control of your cash position. Without enough available cash to pay bills as they come due, even profitable businesses can fail. You can prevent this from happening by using cash flow modelling software to help you predict the ups and downs in your bank account. When you know in advance that cash could be tight, you can plan for this and manage the short-term blip.
Inventory management software
Some creative businesses make physical products to sell. This could be artwork, toys, books and so on. If this is you, you need to know how many of each product you have in stock so you can fulfil customer orders on time. You’ll also know when you need to re-order from your suppliers or when you need to produce more products yourself. Inventory (stock) management software can help you keep track of your raw materials, work-in-progress and finished goods.
If your creative business is employing staff, that comes with significant costs. So you might want to consider using cloud-based workforce management tools to keep better control over your staff processes. These software packages can help you efficiently manage everything people-related from recruitment and onboarding to payroll, expense processing and attendance management.
Although not strictly cloud accounting, many creative businesses may also benefit from cloud-based project management tools such as Asana or Monday.com. Project management software is vital if your business is running multiple complex projects simultaneously. Don’t miss tasks or deadlines again. Events management companies in particular would be lost without cloud-based project management tools that enable teams to work collaboratively to deliver for their customers.
Predictive analytics & business intelligence
Usually reserved for larger organisations, you can get analytics software that enables you to predict your business performance and dive down into large datasets. Unless your creative business is enterprise level you might find this a bit overkill but I’ve included it for completeness.
Benefits of cloud accounting for creative businesses
Creative business owners are often great at innovating, pushing the boundaries and driving the market forward. However, unless you have support to help manage finances, this is where things can come off the rails if you aren’t careful. Cloud accounting tools can bring several different benefits to your creative business, including collaboration, accessibility and security of data, automation of finance processes and scalability as your business grows.
Features of cloud accounting software that are important for creative businesses
Your creative business has the same finance needs as many other small businesses. Most cloud accounting software subscriptions come with the following features:
Project tracking: Track the time and expenses spent on each project so you can bill your client easily and accurately and work out which type of projects are the most profitable.
Invoicing: Create and send invoices quickly and easily. Use recurring invoicing for customers you need to bill each month.
Expense management: Manage your paper receipts using receipt capture technology, track your spending and generate reports.
Payroll: Manage your payroll efficiently and generate payroll and PAYE reports.
Reporting: Regularly check your business health by reviewing your profit and loss statement, balance sheet and budgets/forecasts vs. actuals.
Tips for getting the most out of cloud accounting
When you set up new ways of working, it can be daunting at first and you don’t know what you don’t know. That’s why you should consider getting support from your accountant who is an expert in helping set up your cloud accounting system to meet your business needs. Some areas to focus on include:
- Set up your chart of accounts correctly. Make sure your accounts accurately reflect the structure of your organisation. Add a more granular level of sales and expenses accounting if you have found it tricky to work out your most profitable products, services or customers in the past.
- Enter your financial data, reconcile your accounts and review your financial statements regularly. There’s little point moving your accounting online if you aren’t on top of your bookkeeping. Check your financial position at least monthly.
- Use the reporting features to track your financial performance and identify areas where you can improve.
Move your creative business to cloud accounting today
All it takes to get the ball rolling is a quick phone call to 0116 224 7122. Why not use your creativity more effectively by ditching your paper or desktop-based accounting and embracing the benefits of the online world? Whether you’re looking for bookkeeping or cash flow management support, Numbers Know How can put your business on the right track for success.
Sign up for your FREE trial to Numbers Knowhow, the revolutionary cashflow software designed to empower you with the numbers you need to transform your business. With Numbers Knowhow, you’ll have access to powerful tools and features that will unlock a world of financial understanding and growth.