Man in the Cloud looks down on Cash-in-hand Planet Earth!
❮ Author: Anne McCudden Published: 29/10/2024
Financial transactions evolve at speed in the new world and begs some searching questions….
Exchanging our goods and services for what we want from our fellow humans, happens domestically, socially, and occasionally in business. Moving to the medium of exchange, such as money, is less enjoyable, we put an equitable value on things, we record it, and we pay tax where we have to. As Accountants and Bookkeepers, we make sure our clients record transactions as honestly and accurately as can be. Today, it is easier than ever, and the Government knows it.
The evolution of computerisation has helped standardise how we do things, and the solutions we use are accurate, reliable and a true reflection of the information we feed in (as long as they are not on Horizon!).
Making Tax Digital (MTD), which mandated VAT registered companies to record transactions and electronically post to HMRC forced even more businesses to record their accounting transactions electronically. MTD is estimated to increase tax revenues by c£3.9 Billion by 2033-34, according to the National Audit Office.
So that is what forcing small companies to post transactions on-line does. Transactions were trending towards debit cards without MTD, and the upturn in debit card transactions overtook the downturn in cash in 2017. Then an unexpected driver to automating transactions which caused short term extreme damage to the economy, now looks like bringing about a sea change in financial transactions that could benefit the economy in the medium to longer term.
No surprise, it was the Covid pandemic that switched the majority to electronic payments, which are, of course far more traceable than cash (with or without a receipt!). Restrictions on our movements (Number 10 parties excepted – thanks Boris), and the fear of Covid 19 transmission on banknotes, made even less formal traders adopt the terminals that feed their payments through touchless devices into their company bank accounts.
Recording these transactions makes it so much easier to account for the reality that is going on in business. We used to have to manage the software on behalf of some of smaller clients, use a plethora of spreadsheets to make sense of the garbled transaction communications from clients (for whom a week late was early!). Now, whilst things are not perfect, they are moving in the right direction.
We have worked with clients on QuickBooks, Xero, Sage, and are now focussing entirely on Odoo as it brings far more than just bookkeeping software for a comparable price. They are all cloud-based, which means that as long as the access is shared, our clients record everything on the cloud – often on mobile phones now. So, we can check and spot the gaps, fill the gaps, and submit to HMRC – This means we can provide our clients up to date financial information on their business as well as much, much more.
“Ahead of any changes, accountants should consider switching to Cloud-based software that can sync with their desktop, and meet with clients over the phone or Internet, instead of in-person.” (AccountancyAge 27/11/23).
If any clients or up and coming finance professionals are looking for advice on best practice and cloud-software please give us a call.