1. Summary

The Federation of Small Businesses estimates that firms spend more than 30 hours a month on accounting, banking and tax.


It’s not surprising when logging receipts, entering data, handling invoices, tracking in-goings and out-goings, and filling in financial paperwork is often done by hand. Add the number crunching it takes to file your finances with the tax man, and it becomes an onerous task. Especially if you have employee PAYE to factor in. 


Yet web-based book-keeping, accounting and payroll software changes everything.


Most packages automate the administrative tasks so you save time, reduce mistakes, and find it simpler to run your business. And because data is stored on a secure server off-site and accessed using a username and password, it can be safely edited by authorised personnel at any time.


With so many affordable off the shelf packages and bespoke alternatives for specialist needs available, this guide will outline some considerations. These include initial costs, set up fees, and ease of use, and whether your software provider delivers automatic updates in line with legislative changes so you are compliant with HRMC.   

2. What benefits might I expect?

  • 360 overview: Update your practices to comply with HMRC’s vision of a digital tax system and gain a comprehensive overview of your accounts.

  • Fluid cash flow: Use online tools to reduce important but non-profit making tasks such as late payments to increase your cash flow runway.

  • Financial control: Most software has in-built reporting tools for better financial planning and includes automated reminders for clients and staff.

  • Increased efficiencies: Financial software simplifies related processes (bank reconciliation, cash flow & expense management, and VAT returns).

  • Controlled costs: Cloud-based pay as you go software subscriptions often have no minimum contract period and can be stopped at any time.

  • Multiple options: Entry level products with standard features compete on price and service level agreements so shop around.

  • Peace of mind: SLAs are binding and define the support and response times that you can expect from your provider.

  • Intelligent integration: Many cloud applications are designed to talk together so you can design processes to reduce departmental duplication.

  • Smarter choices: Cloud-based applications allow you to update information in real time from any location using an internet connection.

  • Better performance: Connecting cloud based software to Superfast Broadband means multiple users won’t slow usage down.

  • Consistent service: Cloud-based packages automatically fix software bugs to reduce security issues and limit downtime from mandatory upgrades.

  • Data back-up: Reduce the risk of losing important work and having to start again with cloud-based automated data back-ups.

3. Real life example

Welsh headquartered asbestos consultancy Enquin Environmental, has achieved more than £300,000 of savings, equating to 30% of its running costs, and increased productivity by 50% using digital to transform its processes and culture.


Woman using a mobile tablet


The company recognised the need for investment in digital solutions for surveying and office management functions and today nearly all processes and systems are electronic based. This has significantly increased customer turnaround times by 50%, reducing it from four weeks to less than two.


  • New software saves time by automating data capture from initial enquiry to invoicing and can be cross checked for accuracy remotely.

  • Clients now access their own portal to manage asbestos in their property portfolios 24/7 from anywhere in the world.

  • The amount of travelling by staff is reduced, as records are transferred digitally rather than being brought into the office.

  • Enquin surveyors are equipped with the latest technology to capture survey data and upload field reports using hand-held digital devices.

  • Flexible working, delivering reports on the job, and filing on a central system means the company isn’t limited by geography and is more competitive and professional.  

4. Why should you care?

Many business owners find they are so busy running their business and winning new clients that they have little time to manage their finances as well as they’d like.


But ensuring cash flow is fluid enough to sustain a company is a real issue. Particularly, as recent research suggests small business owners spend an average of 1.3 days a month chasing money they are owned as roughly 64% of payments are late (Xero/Censuswide).

5. Working smarter

There are however a number of different approaches you can take to mitigate the risk of loose financial management. And the most useful is moving online so you can automate administrative tasks to save time and allow yourself to focus on what you do best.


It’s a decision that may cause you to stop and think, but it’s worth noting that payroll was one of the first areas of business to become the focus of software providers. So the marketplace for financial software is proven and relatively mature.

6. What is the cloud?

Even so, because we are used downloading software and storing data onto our own PCs or networks, the idea moving to the Cloud can be unnerving. But it isn’t as intangible as you may think.


In reality you are renting server space from giant warehouses to store your data and access software via the internet from companies that are also renting space. So a simple analogy would be the difference between parking your car on your driveway where you can see it, and parking it in a secure multi-story carpark where you can’t see it but you know it is there and as long as you pay the charges you can retrieve it. 


This is the model used by many Software as a Service (SaaS) providers and most use public Clouds where software and hardware resources (such as data storage) is shared. What this means to you is that you’ll pay a monthly subscription to access online payroll software on demand, for example, and use it to do your own payroll processing and reporting. 


This works well for most small businesses though larger businesses or those who host valuable private data, such as a bank, may prefer to pay for a private Cloud where access to line resources are more restricted.

7. Why use the cloud?

As well as allowing you to pay as you go, most online providers regularly update their software overnight so that you always have the best resource with minimal hassle. But since there are now so may providers with different options available it is worth asking if their automatic updates include compliance measures to meet legislative changes. This is particularly important given the Government’s ‘making tax digital for business’ focus. Though you won’t be mandated to use it until April 2019 and only if you are above the VAT threshold.


We suggest it is prudent to get on board with digital sooner rather than later as the initiative is being driven by HMRC and it makes sense to not only be compliant but use compatible formats. If you choose to do this, there are numerous tried and tested online finance systems worth researching. Some specialise in just bookkeeping for example, but many deliver all the features a small business will need to run a perfectly efficient finance ‘department’. And there are now many apps available for download to tweak and personalise the system to best meet your needs.

8. Getting started

Free software with basic functionality can often be upgraded to a monthly subscription. And they give you a good opportunity to try before you buy.


Compare prices, service level agreements, compliancy, data migration and customer reviews. And think about what you want to do. Your starting point should be off the shelf packages, which offer excellent value for money if you only require simple, standard business functions. Though check that you and the vendor are on the same page, as what you may consider standard some may consider specialised.


These include but are not limited to:

  • Accounting for no-profit entities

  • Credit control

  • e-Commerce and point of sale

  • International functionality such as foreign currencies and sales taxes

  • Purchasing order processing

If you are unsure, take advice before you use an online finance system, and ask pivotal questions:

  • Do you need a system that links to your bank and requires your login and credentials?

  • Is the software vendor handling and or/storing these securely?

  • What are the positions of the vendor and the bank on legal liability in the event of fraud or any other unfortunate incidents?

  • Which systems do payroll, accounting and bookkeeping need to communicate with?

  • For example, do you want to offer employees self-service access to various payroll and human resources features?

Once you are armed with the facts about what your system needs to do, check its compatibility with all your software and devices that you currently use or plan to use in the future. It is becoming progressively easier to connect different types of software applications and services in the Cloud using ‘point and click’ tools that need no programming or specialist knowledge. 


The benefit is online payroll, accounting and bookkeeping services and associated data can easily be connected to the growing range of other business software and services available online and installed on your computers. And this can bring vast savings as our real life example illustrates.

9. What should I be considering?

  • Consider the costs: The cost usually increases with the level of functionality used and the number of people who need access to the system. And whilst a system that meets the needs of a sole trader can cost as little as £15 per month, a small limited company can expect to pay twice as much, and costs for a large enterprise could run into thousands.

  • Get help and advice: Most suppliers offer some help with initial set-up and configuration but check they will do everything you need help with. Or take advice from and IT specialist or reseller with expertise in transition projects and/or experience of your chosen system.

  • Speak to your bookkeeper/accountant: It is always advisable to discuss your plans with your bookkeeper, accountant or finance team.  They may be able to help you to choose the system that best meets your needs and assist with the initial set up.  Of course they could be using the system themselves to help with your monthly and year-end accounts, so getting buy in is key.

  • Plan for the transition: If you are already using a spreadsheet, bookkeeping and accounting software, or other business systems (such as Customer Relationship Management or e-commerce) you may need to consider data migration or integration. If you want to import data from an existing system you will find varying degrees of support, depending on the service provider.

  • Test the migration: Existing users may want to ensure their migration plans include software testing, backups of existing data and when and how to go live with the new system. Your transition to online accounting will be more demanding than that of first-time users, and may require support from specialists.

10. Additional information