Managing your finance function with cloud accounting
This article appeared in Edition 21 of the Scots Autoscene magazine created by the Scottish Motor Trade Association (SMTA).
The automotive industry is fast-paced, competitive and constantly evolving. Whether you’re running a dealership, a repair centre or are a supply chain retailer, keeping a firm grip on your finances is essential for long-term success. The finance function is crucial for managing risks, driving strategic growth and delivering profitability. From cost and cash flow management, to budgeting and pricing, using an effective finance system that produces real-time data will help you to make informed decisions.
Paperwork Jenga
Traditional manual financial management methods are often complex, time-consuming and prone to human error. I’m sure we’ve all seen an office that had piles of paperwork stacked up on every desk, a sea of post-it note reminders and filing cabinets stuffed full of forms and receipts… and only one person who knows where everything is!
Fortunately, cloud accounting platforms offer a seamless, data-driven approach to managing your finance function without a mountain of paper. It’s easier to stay organised as everything can be stored digitally and the software is easy to navigate, even for those unfamiliar with technology. Software can streamline operations, from automated invoicing to real-time reporting, provide the agility and accuracy that modern businesses need to thrive.
The benefits of cloud
Cloud-based software solutions are accessible, efficient, represent good value for money and save valuable time. Benefits include –
• 24/7 log in so you can access up-to-date financial information anywhere there is wifi
• Multi user access for the same cost
• Automation of repetitive tasks like invoicing, payroll and expense tracking
• Reduction of manual errors while saving time on bookkeeping
• Live bank feeds automatically import your bank transactions into your accounting software
• Bank rules eliminate the need to manually post repetitive transactions
• Optical Character Recognition (OCR) software pre-codes transactions based on what has previously been processed, saving time on manually processing large volumes of transactions
• Save money on manual software upgrades that must be uploaded onto individual computers. With cloud solutions updates are automatically applied
• Scalability & flexibility where subscriptions can be changed as your business grows
• Secure data storage & backup – financial data is protected with encryption and automatic backups, reducing the risk of data loss from hardware failure or security breaches
• Remote access & collaboration between business owners, finance teams and accountants. Workflow efficiency is improved with cloud-based document sharing
Software apps
You can add extra functionality to your finance function by using apps. These are integrated software applications that work together to streamline business operations, enhance productivity and improve efficiency between different functions like accounting, customer relationship management and communication. An ideal app stack (using multiple apps at the same time) for an automotive business could, for example, be the reconciliation of invoices with inventory management.
A workshop might have hundreds of invoices for the same value (e.g. a MOT test charge) which would be very time consuming to reconcile manually. An app like SumUp would mark them as paid automatically.
We know a big pain point for many automotive businesses is processing large volumes of invoices from the same suppliers. Apps like Auto Entry and Dext Prepare can retrieve information directly from suppliers and, with predefined supplier rules, post automatically into your accounting software. The time saving from these solutions can be considerable.
Reducing risk
There are some potential risks with cloud accounting including cybersecurity breaches, system outages and data privacy concerns.
To mitigate the risks, businesses should consider the following –
• Regularly update passwords and restrict user permissions to sensitive financial data. Partner with reputable cloud providers that have robust security frameworks
• Invest in staff training to ensure employees are confident and competent using the software
• Choose cloud providers with automatic data backup and disaster recovery solutions. Maintain offline backups for critical financial records to prevent data loss during outages. Establish contingency plans in case of temporary service disruptions
• Maintain compliance & regulatory standards and verify that the chosen cloud accounting platform complies with industry-specific regulations. Ensure that data storage practices align with financial reporting laws e.g. how long you should keep customer records
• Review cloud software pricing models before you commit to avoid unexpected cost increases if you grow. Many providers offer free trials or demo videos
• Secure internet & network infrastructure – use a reliable, high-speed internet connection to prevent workflow disruptions and protect local networks with firewalls and antivirus software
• Migrating data – it is important to not only select the most appropriate cloud accounting software solution for your business needs, but also engage with someone who is capable of migrating your data correctly from the old system to the new one
Looking forward
Cloud accounting solutions used correctly offer significant benefits to business owners. And with app technology evolving, integration of additional functions will continue to help business owners improve their processes and performance.
Arran Anders is our Outsourced Finance Manager who is an online accounts specialist with experience in accounting software platforms and associated apps. He guides business owners in choosing the best software solutions for their needs and offers tailored training to maximise their investment. You can contact him at aanders@thomsoncooper.com.