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Cloud Accounting for Startups: Take Control of Your Finances
Cloud accounting for startups help new businesses organize their finances quickly, at minimal expense. What are the benefits of cloud accounting for startups?
Is cloud accounting for startups the right solution for you?
Launching and operating a startup is a time-consuming task. From company incorporation, to HR, marketing, and sales, there’s often little time left for startup founders to focus on finance.
Finding the time to balance the books and ensure accounting strategies are in place is rarely the highest priority for startup founders — but hiring a full-time accountant can be prohibitively expensive at the startup growth stages.
Composing and submitting annual reports is mandatory for all Australian startups, however. A startup must be financially organised in order to succeed with investors and stakeholders. Fortunately, the widespread availability of cloud accounting platforms such as Xero have made it possible for startups to automate many time-consuming accounting tasks at minimal cost.
What is Cloud Accounting?
Cloud accounting services are a powerful method used by lean startups to increase efficiency while minimizing expense. Rather than store financial data and software on local hardware, cloud accounting services host data on remote servers.
Businesses and startups using cloud accounting services are not obligated to install or maintain hardware, and are free from the time-consuming and costly task of ensuring software is up to date. Cloud accounting services function in a near-identical manner to traditional accounting software, with the added benefit of streamlined user interfaces.
One of the most attractive features of cloud accounting services for Australian startups is the data-sharing features they offer. Cloud accounting services allow team members from different departments or locations to access and work on the same data.
The use of cloud-based solutions across all industries has accelerated dramatically over the last decade. Data collected by Forbes indicates that 80% of enterprises now run critical applications on cloud infrastructure, significantly increasing business efficiency.
What Can Cloud Accounting do for Startups?
- Cloud accounting delivers a wide range of benefits for startups, primarily by automating time-consuming financial tasks — automation is critical when minimizing time expenses for any new startup. Cloud accounting services are able to automate:
- Invoicing: Automatically generate and deliver invoices to both customers and suppliers. Many cloud accounting platform, such as Xero, integrate online payment services with invoicing services, increasing remittance rates.
- Accounting: Startups are able to easily view profit and loss accounts, accounts receivable, and bank statements via cloud accounting platforms — with customizable permissions for each user
- Payroll: Payroll management, such as the processing of superannuation contributions, can be complex. Cloud accounting automates superannuation payments and facilitates the simple calculation of employee benefits
- Accessibility: Startup founders and employees are able to access financial data from any device
- Third-Party App Integration: Many cloud accounting platforms integrate directly with third-party POS platforms and ecommerce solutions to streamline data collection
- Reporting: Cloud accounting reporting automation allows startups to export full reports in a variety of formats.
Gain a Real-Time View of Your Startup’s Finances
Maintaining a real-time view of the finances of your startup is essential. Following an efficient startup financial strategy means remaining aware of the current financial status of your business.
A principal advantage delivered by cloud accounting services is the ability to generate and view real-time reports that deliver accurate, up-to-date, and easy to understand overviews of business finances. Cloud accounting services present financial data such as revenue figures, outstanding invoices, current debts, and cash flow data in simple charts, helping startups to overcome the financial pitfalls that cause many small businesses to fail.
Keep Your Startup’s Financial Data Safe
Large-scale enterprises are often the target of data hacks in which sensitive financial information is stolen. Hackers don’t only target large enterprises, however — the Australian Cyber Security Centre has recently issued warnings to Australian small businesses regarding data breaches that have compromised the personal information of over 773 million individuals.
Startups and small businesses are often “soft” targets for bad actors, often operating with weaker cybersecurity policies when compared to large enterprises. Cloud accounting services protect startups from hacks and data breaches by leveraging stronger security protocols.
Cloud accounting services also remove the threat presented by the physical loss or theft of hardware, ensuring that financial information is stored safely and can be accessed from any device.
Cloud Accounting Tools for Your Startup
- There are many different cloud accounting tools that can reduce the amount of time you spend on administrative and accounting tasks. Xero, the most popular cloud accounting tool, can be used in tandem with a variety of different third-party tools that integrate directly with the Xero software suite.
- Hubdoc is a unique document tracking tool that makes it possible to create an entirely paperless accounting ecosystem. Hubdoc scans and stores documents such as invoices and receipts, uploading them to the cloud and creating a searchable index of business paperwork. Hubdoc is also able to connect directly to your bank in order to capture bank statements, streamlining the accounting and auditing process.
- Futrli is a forecasting and reporting tool designed to capture data from Xero, and use it to create easy to understand, actionable insights through interactive forecasts and reports. Using accounting data from Xero, Futrli can help your startup keep track of cash flow, create long-term business plans, and assess the viability of different strategies.
- CloudPayroll is a cloud-based payroll management system that allows startups to automate the payroll process, automatically paying staff, recording payroll data, and integrating directly with Xero
- Expensify is designed to eliminate the administrative time cost associated with expense tracking and approval. Using Expensify, it’s possible to create automated rules that allow users to submit expenses and have them either approved or denied, without the need for time-consuming manual assessment. Expensify also links to Xero, ensuring all expenses are automatically tracked.
- Employment Hero brings HR and employee engagement onto the cloud. Promising to cut HR-related administrative time costs by 80%, Employment Hero allows employees to manage themselves via a dedicated smartphone app, automating payroll management, onboarding, employee detail updating, and leave requests.
Cost-Effective Accounting for Startups
Many new startups operate with a tight budget that doesn’t leave much room for professional accounting services. Localized accounting software creates overhead expenses such as hardware maintenance and software costs that are not required when using cloud accounting services for startups.
In addition to minimizing operational costs, cloud accounting services reduce the total amount of time that must be dedicated to financial tasks — less paperwork and more automation allows startup founders to focus on growing their business.
The modular nature of cloud accounting services allows startups to pay only for the services they need, while still providing room for growth as a business scales. By streamlining accounting tasks, minimizing total expenses, and keeping financial data safe, cloud accounting services provide startups with the right tool at the right time.
It’s not necessary to wait until the next tax year if you’re considering adopting cloud accounting services — if you’re interested in the benefits of cloud accounting services for your startup, get in touch with Fullstack today.