The Power of Virtual Accounting

The coming to age of cloud computing has brought about a large number of commercial opportunities and efficiencies available to the business community, particularly small and medium enterprises (SMEs). One of the opportunities and efficiencies is virtual accounting or, as some protagonists like to put it - cloud accounting is one of the strong emerging service offerings. What started as a theoretical computing possibility is indeed a reality today.

Accounting controls have progressed from the days when it was considered a specialised and an awkwardly difficult task, fraught with illogical principles that undermines business freedom. Accounting packages such as peachtree, Sage, MYOB and so one have made very useful contributions in reducing the difficulty of day-to-day accounting, but these programmes appeared to add to the learning curve and accessibility is limited to the computer system that they are installed on.

Some rather slick and simpler solutions are emerging in the market based on cloud computing principles. The ability to access your books of accounts and useful performance reports at anytime and from anyplace with internet connectivity and the simplicity of use that virtual or cloud accounting solutions bring has accelerated the uptake. Users are instantly amazed at how easily they have been able to manage their books by themselves or through a part time accountant working remotely. This brings additional opportunities of efficiency and reduced.

Clearly, the economic benefits of virtual accounting significantly outstrip its costs by several multiples. Like most shared services, the installation, support and maintenance costs are spread across the number of users bringing the unit costs down over time. The commoditisation of accounting computing power as an anytime and anyplace services has been helped in no small measure by advances in telecommunications. Significant improvement in wired and wireless communication bandwidth, the ubiquitous WIFI access in major cities in Europe and the smart phone revolution, have made virtual accounting the best solution for SMEs.

Whilst technology and the growth of personal wealth have delivered a range of possibilities, it is not an excuse for carelessness. Accounting is no less a serious matter than it was 50 years ago. Diligence is still required to ensure that accounts reflect a true and fair view. The level of regulatory scrutiny and the keenness of tax authorities to grow national revenue in the challenging economic circumstances of today cannot be over emphasized. Users of virtual accounting services must ensure that their records are accurate and complete.

Simple steps to harnessing such strengths include:

1. Using reminders to plan their accounting and administrative tasks including invoicing, bank reconciliation and updating the books account.

2. Using the invoicing and chaser facilities (e.g. email reminders) on virtual accounting solutions to manage their business operations and working capital.

3. Accessing their account reports regularly either directly or through part time accountants to ensure that the books reflect what they expect.

4. Regularly using the various reports and aids e.g. working capital ratios, sales and profit graphs, that virtual accounting solutions instantly generate to make business decisions

5. Utilising the account closure and financial statement generating facilities and tax filing plug-ins to generate their accounts for regulatory and tax filing purposes.

6. Keep your password strong, safe and secure

The simple steps help ensure that business are well controlled and that regulatory and tax obligations are met in a timely manner.

Recently, the UK tax authorities and the International Accounting Standards Board requirements for companies to file accounts using the eXtendable Business Reporting Language (XBRL) came into play. Traditional accounting packages have had to find add-ons to further process the accounts generated in order to comply. This is an added cost, but virtual accounting solutions are designed to be compliant.

Overall, the virtual accounting promise appears to have been delivered.

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