Morning John,

This is one of those very devisive subjects.

It is clear that the ultimate aim of software providers is to replace the need for bookkeepers and accountants. Indeed certain cloud companies push their products with the strap line of "save on bookkeeping fee's" as they make no bones of the fact that they see the cloud as a solution instead of a bookkeeper... Of course, accountants are not going to mind that as it will cost the client more in the long run to fix.

The software companies also want people to go down the cloud route as they can hold your data to ransom so you have to keep paying every month forever.

They seem to have pulled a neat trick of convincing the masses that the move is to their benefit however, issues over access and data security (including where the data is stored) are brushed over.

Cloud offering are in general are simply not as good as the desktop versions of the software, but the expense of the desktop versions compared to the pay as you go route of the cloud means that many never get to experience the power and speed of the desktop versions.

If you think about the model what the software companies are adopting it is to sell their software to all business owners rather than to bookkeepers and accountants who will simply have to either buy the software or at least get access to it to be able to service their clients.

We are in many ways ceasing to be the sole focus of their marketing although att he moment I feel that they are at least still paying lip service to such whilst we still have some influence over which cloud package we advise if asked.

I think of it a little like an ice cream manufacturer who used to sell to icecream vans to sell to parents to give to children. Now they seem to be giving the icecreams directly to children and then telling the parents how much they owe them.

What do I see for the future? I see the likes of Sage and Intuit investing heavily in the cloud and a steady move away from the desktop by them. Intuit seem to be doing it wholesale. Sage seem to be more subtle in their approach in stating that they will stand by their desktop offering whilst at the same time making it a less attractive option.

The issue is though that they are giving the public what they want the public to adopt, not necessarily what the public want and (thinking of this from a Porters five forces perspective) I can see alternate suppliers such as VT who are willing to give accountants and bookkeepers what they want taking up much of the market abandoned by the current market leaders.

Its a conundrum as there is no doubt that the iPad / iPhone generation will continue to drive a desire for all things to be cloud based whilst professionals need solutions capable of opening more than one screen at a time.

For me I can see certain storage advantages to the cloud and use dropbox to give me access anywhere whilst still using desktop solutions. Gives the speed of processing combined with the advantages of offsite storage with local backups.

Can we ignore cloud based accounting software... unfortunately not as our clients adopt it before the ask us. However, provided that we can get the information out of the cloud and into Excel then we can create a trial balance to put into a desktop accounts package.

Overall though I'm with Vince as one of the founder members of the ACL (Anti Cloud League) but I fear that we are fighting an uphill battle agaist those who feel that they can run the accounts of a business from their mobile phones.

Just one final point that the software providers may have forgotten when believing that the cloud is a mass market solution for those using mobile technology. Business owners who are willing / have the time to do their bookkeeping on their phones are (sweeping generalisation warning) those trying to save on bookkeeping / accounting fee's. They will invariably go for the cheapest (free) option. The other sort of business owner who wants access to their data on their phone / tablet but not to input it themselves are only ever as up to date as the data input so the big question is, why are the likes of Sage and Intuit making seperate products that do not talk to each other rather than simply working on an app to access data input through the desktop? Why do they have to be seperate technologies / different file formats?

The problem is that they are attempting to be all things to all business owners yet somehow forgetting that improvement is supposed to makes things better / faster / more secure.

Should we send you an ACL membership pack John?

Good morning Comrade Shaun!

What will become of desktop software once quarterly "updates" are in place?  My understanding is that information can only be sent to HMRC from the software.  I can certainly see Quickbooks dumping their desktop offering come 2018 and possibly Sage dropping instant in favour of Sage one.  But what of our beloved VT? Will it become redundant for Sole Traders and a couple of years later small companies, or will they hopefully adapt it so that we can "update" HMRC when we are satisfied the accounts are in order?  I can see the cashbook morphing into some sort of cloud offering and may well be one of the free cloud offerings that the Government wants vendors to put in place.

 

The latest (I understand) on Safe Harbour www.itpro.co.uk/security/25393/us-and-eu-must-reach-new-safe-harbour-deal-by-january-2016

Reckon they missed the deadline? !

I'm interested to hear from any guys who are fans / users of the cloud, what benefits there are to the system. I can see the benefit for the most basic of clients, CIS chappie for instance. Cash accounting also. Accruals as we all know is a different beast...

There must be some?!?!

Hi Shaun 

I sincerely hope you're right, but if that was the case why is the Govt working with vendors to ensure free software is available, so that no one is left behind in the digital tax revolution.

My understanding at present, is that everyone who is self employed or has extra income of 10k or more will have to submit a quarterly "update" .  This update won't be a SA return as such but a record of income and expenditure from figur produced from an app.  

I don't think we will have the ability to submit these quarterly returns via the online system, as at present, but I hope to goodness I'm wrong on that.  Whether we will still be able to submit the final quarter return which balances the last 3 quarters with all the adjustments made I don't know, but again I hope so.

I was reading an article the other day on aweb, and it doesn't fill me with confidence one little bit

http://www.accountingweb.co.uk/article/making-tax-digital-known-unknowns/596568

 

I'm sure that sometime between now and 2020 someone in Westminster will have the eureka moment

Your confidence is far greater than mine   The person having that eureka moment should already have it, and he's the Financial Secretary to the Treasury.

-- Edited by Leger on Sunday 14th of February 2016 08:12:10 AM

[Aside: I'm actually on my hols - typing this in my hotel room, while looking out across Ullswater... not trying to make you all jealous; just pointing out why my reply to this thread is a little rushed, and not formatted to my usual standard. I'm just reading my various forums while waiting for my phone to charge - and I couldn't resist replying to this one!]

Basically, I'll start by agreeing with everything Shaun said - as another founder member of the Anti-Cloud League, he's summed things up nicely. And I, too, am confident that it will be possible to manually log-in to gov.uk on a quarterly basis to file returns. Not having that option would be insanity, because only idiots would imagine everyone is using (or can afford to use) software - cloud or desktop based - that will be able to automate the process.

(This does remind me of a few years ago when I had to report Sage to the ASA: their bullet point feature summary said something like "You can now submit VAT returns online directly from Sage - a legal requirement." Not the exact wording, but something like that - which made it sound like it was a legal requirement to use Sage to do this.)

[Wow, just look at that view...]

My real point, though, is to expand on a specific point. Shaun said: "The software companies also want people to go down the cloud route as they can hold your data to ransom so you have to keep paying every month forever."

This is a particular thing I dislike about Cloud (we are not worthy) nonsense.

[Speaking of clouds, my view includes plenty - but they make the view a little more dramatic, so all's good.]

It's the same with desktop software sold... sorry 'rented' on a subscription basis. One of the usual terms is "Software as a Service" but I prefer "Data as a Protection Racket." The problem is the need to keep adequate *historical* business records for a certain amount of time after the fact.

If the software - cloudy (still not worthy) or desktop allows it, sure, you can export all the reports you need covering every transaction, but keeping those records in that manner, while it should cover you legally, is not the same as keeping them in a format that allows you to easily drill into them, clicky style.

Which means if you go cloudy, and you want to continue to have full access to the raw data for the mandatory period, you have to keep paying your cloud provider (bow your heads before the cloud-masters) for access for length of time, even after you stop using that provider - for example if you change providers, or simply cease trading.

If you don't want to carry on paying, you have the option of those reports you can save out, losing the clicky-clicky benefit of the raw data. In most cases, not a problem - but in the event those accounts need to be inspected, access to the raw data will be a real boon.

TL;DR on the above paragraphs? VAT inspections will be a lot easier if you continue to use the same cloud provider (kneel before your new masters). Doesn't matter if something better, or cheaper comes along: The most sensible course is to stay where you are - which means your provider now has you over a barrel.

See? Data as a Protection Racket.

Now, in amongst that lot I said *if* the cloud software allows adequate report exports. A couple of my clients use one particular piece of cloudy software - and, frankly, the export options are quite limited.

This is going to come across a bit ranty about that particular piece of cloudy software - deservedly so - but it is leading up to something else.

One of the things you can export is a spreadsheet - not an industry standard CSV file, mind; a spreadsheet for loading into Excel (but, thankfully, OpenOffice Calc handles it) - of all the expenditure; purchase invoices, bank/cash/card payments. You can search/filter this before exporting. I do something with this each week for one client, which I'll come back to in a mo.

What I can't see a way of exporting is decent bank account reports - for example, outstanding payments/receipts. So when reconciling the bank, you have to spot unreconciled items the old fashioned way - using your eyeballs to see which ones don't have 'ticks'. (These days, with fewer and fewer cheques being written - the main source of unreconciled transactions - there aren't many, but that just makes them more of a needle in a haystack.)

And related to that, there's no 'statement' report to save when you've reconciled the bank - so, being cloudy, if a client decides to brea... I mean *change* something, it's harder to go back and work out what.

Oh, and while I'm venting about this particular cloddy... I mean cloudy offering: inter-account transfers. The software provides one 'reconciled' flag per transaction. So when a transfer is marked as reconciled on bank #1, it's also marked as reconciled on bank #2.

On the subject of VAT: zero rated, exempt, and out of scope. Three different situations where something has no VAT to reclaim.

Both zero rated and exempt should appear on the VAT return in the net inputs. Only out of scope shouldn't. A lot of software doesn't distinguish - and I'm probably not the only one who (using Sage, for example) lumps exempt and out of scope together, with neither appearing on the return.

This cloddy... sorry cloudy offering did the same. Until the developer learnt the differernce, and introduced a new, separate out of scope code.

Logically, since the previous exempt code included out of scope items, that should have become the out of scope code, and the new one should have been exempt - but, no, the new code was out of scope, and the old code remained exempt: But now the exempt code would be included on the VAT return.

Guess what happened on the next VAT return after the changed? Yes, everything flagged as exempt from before - from when the client started using the software a few years ago, right up to this point - was mopped up to be included on the return. A few years worth of payments to HMRC for VAT, for example, were now in the net inputs on the return. I had to do that return manually to produce the correct figures. (This is another problem with cloddy... sorry, cloudy offerings: You're at the whim of the provider when they make changes that can affect your figures.)

So, that report I export and use.

What I do is export all the unpaid invoices, parse them in a little proglet of mine to produce a form. That form is then uploaded to a client-specific section of my website. The client can log-in to see all the unpaid bills. I do this because the client has given me a log-in for their bank account, and authority to make payments on their behalf. However, with their online banking, there's no oversight: If I make a payment, that payment is made - end of. (With another client, the payments are set up, and the director has to log-in and authorise them.)

That lack of oversight means I'm unwilling to do this autonomously: So the purpose of the form is so the client can specifically say to me "Pay this, this and this" by selecting those items on the form and clicking submit (the form is updated with the selected items, and the client can override it by unticking those items and submitting again - I won't make any payments until at least a day after the form is submitted, to give him time to change his mind.)

Any flaws with this? Yes: The cloddy... I mean cloudy offering only exports the full amount of the unpaid invoices, and doesn't take into account partial payments. Invoice for £1000, to be paid in four instalments of £250? Until the first payment, it exports £1000. After the first payment, it exports £1000. After the second payment, it exports £1000 - and so on. There isn't even a flag to indicate it's partly paid, so no way to highlight such items to me to manually adjust: I either have to show them all in their full amount, or check every one to find any that are partly paid - in which case, I may as well be doing it manually, rather than using the export.

Another: Is there a way to flag things that are being paid by DD, so that they aren't included in the list? Nope. I've built the facility for an exception list into my program that processes the export: Supplier listed in this file? Don't include it on the form.

Something that can't be exported is payments against supplier invoices (the expenditure export is purchase invoices, and any other payments - by whatever means - that aren't against purchase ledger accounts). This means that another export non-option is payments on account.

If I see a payment and don't have a matching invoice/till receipt, I post it as a p/a to the purchase ledger. I then keep a separate spreadsheet detailing these. That spreadsheet is exported as a CSV, processed by my program, and ends up behind that same client log-in on my website - so the client has a list of all the paperwork I'm looking for/awaiting.

That spreadsheet is extra work, though, to make up for a simple (and I'd say obvious) facility lacking in this particular cloddy... I mean cloudy offering.

But where is all this leading me?

The client either receives invoices etc electronically and forwards them to me, or (in theory - see above) scans paper ones and sends them to me. I do all the inputting of invoices and payments, all other transactions from the bank account, etc.

The only thing they really use the software for is CRM, and invoicing - and to look at the figures.

Because I'm extracting certain data (or recreating some of it) and putting that behind the client's log-in on my site, I'm providing something that, really, does away with the need for the cloddy/cloudy software in the first place.

The client could use *anything* for the CRM. And they could use *anything* for their invoicing.

They could just send me the output of their invoicing software - ideally a CSV of all their invoices (just as another Sage-using client does) - which I could import into whatever software I prefer. I could use that software to do everything else (and probably more quickly), and export all the reports they need and put it behind their log-in.

They really don't need to be using cloddy/cloudy rubbish at all.

And more to the point: I could do similar for any of my clients - as could anybody else on this forum (subject to technical ability setting this sort of thing up; but you must all have IT people you can turn to when the need arises.)

In other words: Is there really any need for the cloddy stuff at all?

Nice post Vince. I espechially liked the needing Sage to file VAT returns which concurs with my view of what the cloud providers are doing at the moment.

I've used Xero and I think that the best thing about it was that it convinced me that Sage 50 wasn't so bad after all.

OI read a little more about it since this morning John and found that the office for Bdget Responsibility have labeled the project in current form as high risk.

You may find this very short article interesting : www.computerweekly.com/news/4500258205/OBR-brands-HMRC-digital-tax-accounts-project-high-risk

Seems to be big question marks over changes in behaviour of users and a question mark over whether the project can be delivered to the promised timescales with the functionality that they see as core to the project. (these things are NEVER delivered to time or budget and seldom have half of the elements promised at the outset).

-- Edited by Shamus on Sunday 14th of February 2016 06:17:29 PM

"It would be nice to hear from some of the cloud providers, I'm sure there are many who frequent this site."

Wow, look at all those tumbleweeds rolling by.

That's a perfectly reasonable request by John, so where are the responses from those on that side of the fence?

(Cynically, I think that if there are any reading this, they may realise that some of us already know what's behind the curtain, and that we therefore don't want to follow the yellow brick road.)

sage one, quickbooks online, xero, kashlow,  accounts portal, clear books where are you?  (Sorry those I missed)

I'm being a bit crafty here and expecting the aforementioned vendors to pick this post up on whatever they use to pick up threads on forums when they get a mention.

Lol John, this thread seems to be heading towards the equivalent of inviting the Klu Klux Klan to carnival!

Does anyone remember the Candyman films with (the excellent) Tony Todd?

In those, if you said his name three times, he'd appear. Let's try that.

Sage One.
Sage One.
Sage One.

Quickbooks online.
Quickbooks online.
Quickbooks online.

Xero.
Xero.
Xero.

Kashflow.
Kashflow.
Kashflow.

Let's see if that works.

Shamus wrote:

---

You realise Vince that if they do apear it will be you and myself who have to write the subtitles below what they are saying explaining what they are actually saying and what they are missing out.

You'll all only have yourselves to blame when we have to call in Rentokill to get rid of our salesperson infestation!

---

 oh you cynic   It would be nice if some of them did come and contribute in a positive way.  John has raised two important issues in his last post (Vice and yourself have previously raised the same issues) Regarding the protection of data. Could the data be hacked?  Could the data be hacked, and what protections are in place to protect themselves of a DDOS attack?  We've seen some data breaches from some major companies, and with the advent of filing direct from the software, will hackers be able to circumnavigate HMRC and arrange tax refunds?

What can be done about having access to your data if you move vendor?  Will it be a case of being able to export your data from one and import it to another.  If you can't that's the major no no for me.

 

Some good questions, John - and worth looking at from the ACL perspective. (As you say, I've raised some of these points before, but it's always worth reiterating such things in a thread in which they haven't come up before).

"Could the data be hacked?"

The problem with this question is that no company holding data online can definitively say "No, it can't." Any company that does say that is either lying, or doesn't understand security - or both.

The truth is that even the most security concious company, one that salts and hashes passwords, encrypts everything under the sun, keeps all the software running on their server up to date with the latest security patches, etc., could still be compromised.

One reason is that part of the security involves people - and people, in general are stupid (consider - although often offered as a joke, it's actually true: 50% of people are of below average intelligence). People can be phished or vished, and generally subjected to social engineering tricks.

Another is that whole business of keeping stuff up to date with the latest security patches etc. Even those patches are applied the moment they come out, it means whatever security hole they are patching has been there however long (possibly since the software was first installed, possibly since a previous update introduced the hole). The hole didn't magically appear the day the patch was released to fix it - and it didn't appear when a whitehat discovered it and set the ball in motion to get it dealt with, and there's no guarantee that it hasn't also been discovered by a blackhat, before, since or at the same time.

Therefore, it's always possible there's a security hole that is yet to be discovered (by the good guys) and patched - and that means it's always possible that such a security hole could be found and exploited by the bad guys before it's fixed.

 

"Could the data be hacked, and what protections are in place to protect themselves of a DDOS attack?"

A DDoS attack is a slightly different thing, of course, and could result in you being unable to access the service - but the data should still be safe. In theory.

"We've seen some data breaches from some major companies, and with the advent of filing direct from the software, will hackers be able to circumnavigate HMRC and arrange tax refunds?"

After first changing the bank accounts to those of stooges, obviously, to make the trail of who nickedharder to follow - but when it boils down to it, this is another hacking question, so see above.

"What can be done about having access to your data if you move vendor? Will it be a case of being able to export your data from one and import it to another."

The bottom line is that there is no industry standard format for raw accounts data; every vendor - both in the cloud and on the desktop - has developed their own database structure for use in their software.

In most cases - as Shaun mentions - it should be possible to export the basic transaction history in CSV format, apply a little jiggery pokery to make it match the requirements of the target software, and import. However, that's still very limited, because there will be information lost in doing that, information that the software doesn't provide a way to export.

For example, a raw data export might include all of the supplier payments, but does it include how those payments are allocated against invoices? And even if it does, does the new software provide a way to import that information? If not, this is a process you'd therefore have to redo in the new software - not a major problem for some smaller companies, but taking the one I'm working on today? No, thank you!

With traditional desktop software on a perpetual licence, this simply isn't a problem: If you want to migrate from ABCAccounts to XYZAccounts, you keep the old data in the old software, transferring only live data at the transition point, and putting any new stuff in the new package. This works, because the software isn't going to stop working; you can still access that old data while you need to.

As soon as you hit the "-as-a-service" model, though - whether that's desktop software now sold on a subscription basis (I'm looking at you, Sage), or a cloudy "solution" - that changes to No payment; no access. (Hence my frequently calling it "Data-as-a-protection-racket")

We have a very real need to be able to continue accessing data for a period after it ceases to be 'live' - we can get around that by way of producing adequate reports, as I said in an earlier post to this thread, but that's not the same (not as good, by a long way) as accessing the raw data.

"If you can't that's the major no no for me."

Indeed - this is a particular bugbear of mine with any so-called "as a service" model.

Another advantages often given for cloud is being able to access your data anywhere - but the counter to that is the need to have internet access to do that. I can take my laptop with me when I go away (and I do) and access anything on it, without an internet connection. (And another counter is that if you can access it from anywhere, that's the same place any potential hacker could be - anywhere.)

Another offered advantage is multi-user access. Counters to that include the point made above about phishing/vishing/social engineering. The more people with access, the more weak points there are. And don't forget, each of those people will be accessing it from a device - possibly not always from one controlled by the company whose data it is, which increases the attack surface (via malware) still further. (And from the point of view of a professional in this industry: With clients who - or whose employees - do some inputting themselves, the chance of mistakes in the data increases; and I've encountered situations where data I've input has been "corrected" incorrectly; e.g. in order to reclaim VAT on something that VAT shouldn't be reclaimed on. Better if clients can't access the raw data and input stuff, IMO.)

Backups? That's another advantage that gets offered - the cloud provider will do that for you. But you will undoubtedly have other local data on your systems anyway, which should be backed up, so if you're doing that properly, this advantage is just smoke and mirrors.

Now I have to fix/change a client's router, so I'll have to leave it there.

So, with bank feeds, costa, lazy office security mixed in with man in the middle attacks, all looks ace.

Breach:

If You:

breach any of these Terms (including, without limitation, by non-payment of any Access Fees) and do not remedy the breach within 14 days after receiving notice of the breach if the breach is capable of being remedied;
breach any of these Terms and the breach is not capable of being remedied (which includes (without limitation) any breach of clause 3.4 or any payment of Access Fees that are more than 30 days overdue); or
You or Your business become insolvent or Your business goes into liquidation or has a receiver or manager appointed of any of its assets or if You become insolvent, or make any arrangement with Your creditors, or become subject to any similar insolvency event in any jurisdiction,
Xero may take any or all of the following actions, at its sole discretion:

Terminate this Agreement and Your use of the Services and the Website;
Suspend for any definite or indefinite period of time, Your use of the Services and the Website;
Suspend or terminate access to all or any Data.
Take either of the actions in sub-clauses (d), (e) and (f) of this clause 8(4) in respect of any or all other persons whom You have authorised to have access to Your information or Data.
For the avoidance of doubt, if payment of any invoice for Access Fees due in relation to any of Your Billing Contacts, Billing Plans or any of Your Organisations (as defined at clause 3) is not made in full by the relevant due date, Xero may: suspend or terminate Your use of the Service, the authority for all or any of Your Organisations to use the Service, or Your rights of access to all or any Data.

We all know how people love paying invoices on time...

-- Edited by abacus12345 on Thursday 18th of February 2016 03:08:01 PM

In regards to the legislation, I'm unsure of the standing if the servers are based elsewhere. How long before Google stick theirs near the international space station? Massive tax savings then.

A point I wonder, with the future exponential growth of the cloud.....Will these servers remain in the States?? Or a possible Google style placement in Ireland - maybe Lichtenstein etc etc..... Tax savings 'and all' Especially is all sales are completed offshore / cyber space.

With bookkeepers / accountants receiving X amount of commission from sales / recommendations to new / current clients, there really is no need for any UK land based official sales staff within these cloud companies.

All training videos can be viewed online - from anywhere.

Next big scandal in X amount of years time - - HMRC recommended software platform provider pays £3.50 in corporation tax on millions of revenue.

The price will go through the roof, especially for those sitting in the top three positions- word of mouth recommendations - trust ahem! - I wonder if accountants will still reap their X amount of return off implementing the software when the change happens?

Those terms were written, or at least last updated in 2011 -- I'm expecting a new updated version within the next 12 - 18 months......

abacus12345 wrote:

---

When your client agrees to be a part of the cloud, how do they pay their subscription? Do they pay direct to the cloud provider, or do they pay through you? I'm just wondering about the kickbacks which appear at the moment to be on offer. Most of our clients on Xero we pay their monthly fee and we just recharge what we pay for them each month.

I assume that your pricing menu has to be re-written? As surely what you charge can not be the same? Due to the fact that you, we, us - are expecting them to do the majority of the inputting?? I'm guessing you can't really expect them to pay you the same rate, whilst asking them at the same time to do the bookkeeping themselves? Depends who is doing the bookkeeping.  Some clients do it themselves and others leave it to us.

Can it be assumed that the majority of clients you introduce to the cloud requires training? Yes, for instance moving a client from Liberty to Xero, setting up all the background details eg chart of accounts, settings etc, importing the opening balances and list of debtors and creditors, transferring across the nominal for July 2015 which is the start of their year and going to use that as a basis for 6 hours training.  Then going to provide 3 months ongoing support if required.  Fee for all this was £1500+VAT.

For those who are users of the cloud, what is it that you actually do? Could you run me through any given month - plus end of year please? Just the same bookkeeping and year end routines if was using SAGE but the bookkeeping is much more straight forward in most cases with bank feed, bank rules and receipt bank.

I'm trying to embrace the changes, yet, aside from one positive comment from Mark, for which is appreciated, all i'm sensing is gloom. Some people just dont get the cloud but we embrace it and will be aiming to move more clients across to a cloud package over the next few months.  Is one of the questions that will be sending out in a survey to clients via surveymonkey.  Do they want to look at a cloud accounting option?

The idea was for this thread to become a debate of sorts, yet it feels more like a monologue. Even I myself feel like an anti.

Where are the positive thoughts? The increase in revenue through the saving of time? No more coffee stained receipts to sift through... We see ourselves charging basically the same price as before but our  time involvement is reduced.  If we are doing the bookkeeping we give the click Xero and Receipt Bank free of charge and give them a discount on their year end accounts as the finalisation process should be just a case of importing the TB and doing a few notes compared to if they are doing the bookkeeping where there is invariably reconciliiations and reallocations necessary.

---

 

Where I have the choice, I will always go for/recommend a desktop solution.

However, I do use cloud software for a small number of clients. The choice of software in these cases was down to the clients. At the end of the day, I use what the client wants me to use. I may not like it, I may see flaws-a-plenty in it (either the concept in general, or the specific package) but if it's what the client wants, then that's that. It's their accounts, after all.

They pay the cloud providers themselves (usually by DD); I am no part of that. I simply have a log-in that the clients have set up for me.

I charge by the hour, so factoring in what they do is irrelevant; if the client does any inputting which reduced my time, it reduces their cost as a direct result. If they do any work and get it wrong, resulting me have to correct things, that's increasing my time, and therefore their cost.

As for training, having not suggested or recommended the cloudy solutions, they've received no specific training from me - but when they make mistakes that I find, I try to point out the error and explain things so that they know what I've done to correct it and why, and hopefully will learn from that.

As to what I do: looking at the two extremes - the cloud-based clients for whom I do the most, and the least:

Most: They use the software for their CRM and sales invoicing, so those just appear by magic in the system from my point of view, but I do pretty much everything else - entering purchase invoices, etc, payments and receipts from the bank (for which I also have a log-in), reconciling the accounts, submitting the VAT return, and so on. Just the same as I would if I used desktop software running on my own system (though I'd also have to get the sales invoice data into that.) I used to keep a Google Docs monthly P&L spreadsheet going for them, but these days they simply look at the figures in the cloud software, and aren't interest in the monthly comparatives.

Least: The client uses the software for invoicing, and enters some supplier invoices, payments and receipts themselves. On a monthly basis, I arrange to pop in and collect the bank statements and any paperwork they haven't dealt with. I enter that lot, reconcile the bank accounts, and email them any notes and queries that need answering, and a list of any payments for which I haven't seen the paperwork; if they've received what I'm missing by email, they send them to me, otherwise the missing paperwork is included for the next month's collection. They submit their own VAT returns, and also look at the P&L figures themselves in the system.

My invoice to Most each month is, on average/off the top of my head, about 2.5 x my invoice to Least. (Conversely, Least is paying more for their cloud software than Most is!)

"I assume you receive no commission with the client paying the cloud provider directly?"

Not for me, no - but since I have not been part of the process to adopt a cloud solution (and my advice would have been against it), I wouldn't be entitled to anything anyway.

"How 'easy' is it to spot mistakes they have made?"

That depends on your role and how much you do. For example, where the client inputs some sales receipts, errors in which bank account they use, or the amounts entered, are obviously going to show up when you reconcile the bank - these are hard to miss because they'll affect that reconciliation.

Whereas errors in how expenditure is analysed, for example, you're less likely to spot, unless you're checking every last thing they do, and depending on the size of the business, the number of transactions [entered by them] that may not always be practical - you could end up charging them as much as, if not more than you would if you were doing all the work yourself.

You can consider certain nominal accounts 'suspect' and worth checking on regularly - such as client entertaining - and check everything that goes through that account. And, depending on the business, you might consider the same for certain purchase ledger accounts.

Another sensible approach is to make a specific point of double checking a sample of their inputting, picking a suitable number of each of credit card payments, supplier invoices, supplier payments, and so on.

If you have a feel for the business, once each month is complete, you can glance at the financial statements for the month and you may spot things worth investigating (Why is the rent so much higher than usual? The GPM for ABC Ltd is usually around 35%? Why is it suddenly 55%? And so on). Similarly with the VAT - you should be able to get a feel for what a typical VAT return for the client should look like, such as the payment normally coming it at around x% of the turnover - so when it differs wildly, you investigate.

It's pretty much largely the same as it would be with desktop software, when the client does [some/all of] the inputting and you come in once per month to reconcile things and produce management figures. You won't spot everything - and you might not spot anything. You can only try, and you can only do so much.

"With the cloud is there still a need to see all paperwork?"

Depending on how you're working - given that it's cloud, probably remotely - you might not be able to see all paperwork. This can also depend on the cloud software and how the client uses it - for example, they might be able to upload scans of invoices and till receipts and link them to the relevant transaction.

"Are you then just checking over what they have already inputted? So the time you spend checking over things, is time you'd had spent inputting them yourself if you were using desktop software?"

See above: You can't [be expected to] check everything. Well, unless they're specifically paying you to do so - which is unlikely, especially if they've adopted cloud to do some work themselves and reduce your invoice.

"With sales invoices is it a case of, they enter the info, invoice gets sent to their customer via email, this in turn is automatically added to their sales - debtors / bank accounts?"

Sales/debtors, yes - not their bank accounts. (At least, not with those packages I've used/am using, or with those clients using them.)

In theory, there may be packages that integrate with payment processors/gateways so that credit card payments automagically appear, or direct debits, or whatever - but not the cases I've seen/used. (It's possible those packages offer that functionality, but just hasn't been set up/used by my clients)

"Purchase invoice gets scanned, converted to cloud extension, then in turn lands in the correct accounts?"

Again, this will vary from client to client. Taking the Most/Least cases from my own clients that I gave as examples before:

Remember that Most has be doing all the inputting on the expenditure side. They therefore forward all invoices received by email to me. (These are usually PDFs, but some silly sausages supply them in Word, Excel or whatever format.) For stuff received on paper, including till receipts, they supposedly scan them and send them to me - which doesn't always happen, but that's another matter.

Least, on the other hand, does some inputting themselves - but a lot comes my way (as I said, on a monthly basis I pop in and pick up bank statements and paperwork.) In their case, some of the invoices are again electronic (PDFs), and some are paper and stay that way. E-invoices get uploaded to the cloud system, linked to the transactions, and any paper invoices in the stuff I pick up each month, along with the bank statements, goes in their annual file, which I hand over to them when the year is complete.

As an aside: In both cases, as well as any electronic invoices come to me for inputting being uploaded to the cloud, I keep a copy locally here in a /clientname/invoices/[tradingyear] folder on my computer - regularly and stringently backed up, obviously. I also rename the invoices to the form: "yyyy-mm-dd-suppliername-invref" (or as close to that as possible - e.g. not everyone uses invoice numbers - so they are easy to find within each folder. This means that I have an easy to access archive of these.

"Is there an asset register / stock management tools in the cloud? If not, are there third party extensions available?"

If there are either in the packages I've used, I've not used them, and I haven't noted they're there. I suspect some do offer such things, some don't - and those that don't probably will eventually as they grow and improve.

HTH

 

Leger wrote:

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MGreen wrote:

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Had a chuckle reading this thread.

It reminded me of the CEO of Blackberry's reaction when Steve Jobs unveiled the iPhone (not to dissimilar to some of the reaction to cloud accounting here) . The rest as they say is history.

That said, what this creates is an excellent opportunity for new tech savvy Bookkeepers to grow their business by converting clients to 22nd century who have dinosaur accountants and bookkeepers who think Excel is state of the art accounting tool (VT comes to mind).

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I use VT Transaction +, for which I paid a one of fee of £150 5 years ago. I also use VT Accounts, for which I pay £250 a year for unlimited clients.  Bar one client, I do the bookkeeping for them all.  What advantages do cloud systems have over VT?  And can they they produce their final accounts to FRS and produce iXBRL like VT Accounts do.  If I have 10 ltd company clients, that equates to a cost of £25 each, even less if I have more.  Why should I increase that cost for my client by going the way of the cloud.

As you are an advocate for the cloud, how about addressing the security concerns and more importantly, having to pay a monthly subscription for as long as you need access to those accounts, even if you wanted to switch elsewhere.  

I'm not averse to the cloud, or technology (although I wouldnt touch an Iphone if you paid me lol, Android all the way for me!!

In Mark's position (pro cloud) I would do exactly the same as him. I scoffed at him when we discussed receipt bank a few months ago, but when he (patiently) explained that it actually saved him money, as it freed up his time to do more lucrative work, I saw his point.  It wouldn't work for me, as my fees are earned by doing that mundane stuff like entering invoices and receipts, so I'd be daft to part with my hard earned money, wouldn't I?

I am a very technologically minded person.  However I don't change for changes sake, and stubbornly refuse to contribute to the cash cow called the cloud, without any benefit to me or my clients.

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Hi Abacus John,

good post and I agree with your sentiment.

as with clients being let loose with traditional desktop software you will often find that you have to amend their bookkeeping.

I've had several clients where I've basically had to scrap everything that they have done in the cloud and restart it from scratch.

I have been doing this a while and I have yet to find one set of books that I have not had to fix before I can prepare the accounts (thats from all different software types, not just the cloud).

I know that some have the approach that they prepare the accounts based on the clients supplied books and records with emphasis in the engagement letter (that the client never reads!) that issues in the bookkeeping relate to the client and the accountant is simply compiling accounts to the correct standards for their supplied books.

I personally though am more of the mindset that our role is in attempting to protect the clients from themselves so each set of accounts that I get is a virtual mini audit but that was always what I thought the job was.

The worry is of course that many accountants who are geared to fast throughput in order to maximise thier own profits whilst still doing a great job for their clients. That appraoch is not actually doing the same job for their clients as my prudent audit based approach meaning of courdse that I can handle less clients in the same time frame.

Its a seperate cunundrum to the cloud issue, the cloud simply being one of the delivery systems for attempting faster throughput. But, it's all linked in with the same fundamental variance in approach between approaching clients books with professional scepticism believing that unintentional errors exist that need to be found. Or, approaching them assuming that the client has prepared their paperwork correctly and working on the basis of a straight compilation.

The latter approach obviously being higher throughput and innevitably more profitable.

Then again. Profit does not come into the ethical considerations dictated by IFAC and our professional bodies rules.

I am not saying that anyone's approach is wrong. Just simply that there are two approaches.

 

p.s. amended to be more specific on the adressee.

-- Edited by Shamus on Friday 19th of February 2016 04:37:48 PM

Hi John, lol, no different John, namely the one whose post mine followed directly after.

But seperately though I concur with your sentiment.

Agreed John,

I'll move the posts when I've finished work tonight so will likely be the early hours which would work well as I'll be able to build a new thread without other posters making comment during the build.

I'll then clear up all of the filler comments like this one that I'm currently writing out of this thread And just leave a pointer to the other thread here.

kindest regards,

Shaun.

p.s. I don't tend to lock threads. To the best of my recollection I've closed off one in the past five years and I'm pretty sure that Steve has locked the same number.