Why you really should use technology for your accounting (but never do so for efficiency)

Is efficiency a meaningless word?

The trend in accountancy and bookkeeping at the moment is to move over to cloud based accounting software. This is generally because you can automate the data entry side of things and therefore, as the software providers tell us, become more efficient.

But what is the point of running an efficient business if you have no need for that efficiency. In some cases, being what others may consider "inefficient" could be absolutely fine.

In my world, efficiency normally comes with a price tag. More often than not the cheapest option is not the most efficient.

As an example, the cheapest way for me to get from Cardiff to London would be to walk. Not the most time efficient method at it would take about a week but in terms of a mode of transport, it would be free. I would guess that the most efficient way of getting from my house in Cardiff to London would be to purchase and use my own private helicopter. Looking at Google I should be able to do this journey in around 55 minutes. I wouldn't have to worry about traffic, or travel anywhere to access it. However I can't find one for sale at under a million pounds.

That may seem like a random example, but there is very little point in paying out for "efficient" systems if you have nothing to do or nothing to fill any of the time gained with. Is the two or three hours saved by taking a private helicopter over driving or catching the train, worth the staggering extra cost?

I run a bookkeeping and accountancy business that uses the cloud based software Xero, plus several other integrating apps such as Receipt Bank. Do I do it for efficiency? No. But are my systems efficient? Yes.

For me the time saved allows me to create dashboards and work on KPIs and other fun and interesting stuff for my clients. Plus on days when the weather is nice, I can finish a little bit earlier and take my son to the park.

So for me, incorporating software into my bookkeeping equals more interesting work and a better work/life balance.

But what would make you move away from storing receipts in a box or file and waiting until your financial year end to look at them? What would make you move away from a spreadsheet on excel?

Just being more efficient? Or…

…to have more cash.

Sometimes we can become so busy marketing our business, serving our customers, just doing our job that we forget to chase for the money that is owed to us. The 30 days credit that we give gets stretched and it's easy to let that go but then one day you find yourself with cash flow issues. So you block out one morning the following week and start to make the phone calls.

There is an app called Chaser which links to Xero. This will send out polite email reminders to your clients. Meaning that they are contacted automatically about their outstanding debts. Efficient yes. But it could also really help with your cash flow.

…to make better decisions.

A box of receipts will always be just a box of receipts. And most of the time; old receipts. Why not use Xero and team up with a bookkeeper or accountant like myself and have regular management meetings where we can discuss exactly where your business is today – not where it was last year.

If we combine Xero with software like Receipt Bank plus, say, Vend or iZettle or Timely for your income, you could be discussing your business' performance with very little data entry/collection from yourself within a week of the month end. Efficient yes. But it will also help you to feel in control.

…to reduce surprises.

Surprise you owe £15k in corporation tax which is due tomorrow! Having regular bookkeeping allows you to plan and to save. Running around trying to get additional funds; whether that is loans or taking on non-ideal customers just to make some money is not good for your business.

In business, like in life, good surprises are nice. But there are steps we can take to avoid or reduce the nasty surprises like tax bills and cash flow wobbles. So is it efficient. Yes. But it will also mean that you spend less time worrying and dealing with things that you could have known ages ago but chose to ignore.

… to meet compliance duties.

Annual accounts are for HMRC and not you. VAT Returns are for HMRC and not you. So wouldn't it be great if you could spend less time on things that had no impact on the success or failure of your business. It's admin time. Reduce it. Go home and do home/family/friends type stuff. Efficient yes. But cut out the boring!


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