George Nash in our St Albans Accounting Solutions Team shares some examples of how implementing Cloud Accounting Services for clients has made a positive impact on their business and in some cases resulted in the recovery of overpaid VAT.
Using cloud accounting software has a wide array of benefits for both accountants and their clients. At Rayner Essex, when doing bookkeeping for our clients, we use online software called Dext Prepare (formerly known as Receipt Bank).
A function which is extremely helpful for accountants like us, is the ability to access invoices from suppliers at the point they are sent to our client. This allows us to keep the payables ledger up to date, ensure no invoices are missed, and that the correct amounts of VAT are claimed.
More importantly, it saves our clients valuable time, since they no longer have to sort through the invoices they receive and then send them to us, meaning they can instead focus on running their businesses.
Real time information
One of the biggest advantages of cloud accounting is how it allows you to access up to date information, often in real-time. This is because you can use a bank feed, which digitally links bank accounts to accounting software. This helps you to: stay on top of the payments flowing in and out of your account; create invoices to be sent directly to customers and to maintain good credit control. All of this is made much easier and quicker to manage by cloud accounting.
One of Rayner Essex’s clients manages their sales ledger through Xero, and the software allows them to use the up-to-date ledger to send monthly statements to customers. Another client manages their cash flow using detailed, real-time data on how much is owed to suppliers and expected from customers, which they obtain from their cloud accounting software.
Cloud accounting software like Xero and Quickbooks enables our clients to include digital copies when invoices are posted in the accounts. In fact, when invoices are processed using Dext Prepare, Hubdoc or Auto-Entry, this happens automatically. This enables both the accountant and the client to check invoices quickly and conveniently.
This function is extremely beneficial when we carry out bookkeeping reviews for our clients, whether this is at the end of the year when accounts are being prepared, when the client has prepared the bookkeeping in-house, or when we are taking over from a previous accountant.
When carrying out a review of a supplier account for a client after a new invoice was received, we were able to quickly look back on previous invoices and discover that there had been inaccuracies with the invoices and the VAT charges included in them. Thankfully, we were quickly able to identify the issue and request the full, correct invoices from the supplier, including the right VAT charges. This enabled our client to recover over £13,000 in input VAT.
One of our clients imports goods from overseas, meaning they have large shipping and import duty costs posted to their cost of sales. However, they hadn’t claimed the correct input VAT back from the VAT they had been charged on their imports. Thankfully, because we were able to quickly access digital invoices through the cloud, we were able to very quickly gather all the relevant invoices and submit a claim on their behalf, which resulted in the client receiving £5,000 of recovered VAT.
Both of these scenarios could have been achieved by spending hours searching through old files, but because we could use cloud accounting software to easily collect digital invoices, we were able to access all the information quickly in order to help these clients.
Sales integration with cloud software
The government’s Making Tax Digital (MTD) plan has meant that all VAT-registered companies with turnover exceeding £85,000 must have a digital link between the source of their sales data, and the sales which appear on their VAT returns. Therefore many businesses have had to improve the way their sales data feeds into their accounts. From April 2022 this will apply to VAT registered businesses with turnover under £85,000.
For many of our clients who operate in the hospitality and retail sector, linking up their tills with the online sales platforms they use would have been virtually impossible without using cloud accounting software.
One of our clients, who runs a wonderful café/restaurant, needed to integrate their till system with their online accounts. We were delighted to be able to help by setting up the till software so that all of the data could feed easily into their accounting system on Xero. This means card sales were quickly consolidated into their bank account, cash payments were accurately and easily recorded (saving our client having to write them all down), and all of the client’s products and their respective VAT rates could be managed. This was especially helpful during the Covid-19 pandemic, making it much easier to adjust VAT rates and prices when the Eat-Out-To-Help-Out scheme and the reduction of VAT to 5% were introduced. You can read our post about reduced VAT rating for hospitality and accommodation services here.
If you would like to find out more about how Cloud Accounting can help you and your business then please contact us via the form below.
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