Cloud Accounting in 3 Steps

Just a short time ago, when I was starting my career as an accountant, business owners would present me with an shoebox full of receipts for the year, ready to prepare tax returns and financial statements. ?At the time I thought nothing of the approach, other than it appeared to waste time - both my time and the clients.

The real issue was as the client grew,?this practice would remain.?Instead of presenting me with the shoebox, they would present a bookkeeper with the receipts. ?The bookkeeper would key that information in to a desktop accounting system,?and reconcile the accounts monthly. ?This resulted in the business finding out how it performed weeks later, or worse yet months.

Even the process of reconciling the bank account was crazy, you would wait for bank statements to arrive and then unless you could dial up the bank and extract a file, you would key that information in manually. ?All of this consumed time and resulted in accounting always being ?behind.

Businesses believed accounting, or bean counting, was something that had to be done to comply with tax laws rather than something that could add value.?Thankfully, cloud accounting has dramatically changed accounting for the better.

Cloud accounting has provided small business with the tools they need to automate much of the data entry and talk to their advisors armed with real-time performance information. ?Think about it, waking up in the morning and discovering how your business performed yesterday or better yet, how it is performing today. ?The current trajectory of cloud accounting, means very soon you will see your business performance in real-time with the only manual interaction being exception based.

Your cloud accounting system gives you the power to quickly understand the past, analysis what is happening now and plan for the future. ?This means your advisors can shift out of compliance and into the space of adding real value to your business, sharing their skills and experience while helping you achieve your goals.Is your small business or even startup, stuck in the past, using desktop software with accounting results that are processed too late to be useful. ?If you are, it is time to move to cloud accounting. Don't worry the move if handled correctly,?isn't complex and can be done in just a few hours - the results will amaze you.Let's take a look at a real Australian example, where with 3 tools we shifted ?the business to a full cloud accounting system, automated much of the data entry and generated reports that amazed the management team.First, lets set the scene with a bit about this business:

  • A high growth technology business located in Sydney's Surry Hills - winners of BRW and CRM magazine fast growth awards.
  • Employed 15 people in Australia,?with double that located offshore.
  • Had revenue growth of 20% pa - turning over $5 million per year
  • Had the founder operating as CFO.
  • Had their external accountant prepare financial reports that were delivered about 3 weeks after the end of each month.

Here is how, as virtual CFO, we automated their accounting:


This is a familiar story -?the business used spreadsheets to capture employee annual leave, used spreadsheets to track expenditure,?stored invoices in a folder for processing by their accountant at the end of each month,??didn't know which revenue figures could be trusted and executive team members were acting as CFO instead of focusing on what they did best - acquire customers and deliver great products.

After implementing Xero, we were able to tightened annual leave recording and give employees and portal to manage their own leave. We signed up for Xero's automatic bank feeds - getting bank statements and transactions feed into Xero daily and with matched these to revenue extracted automatically from the billing system. ?The business now had a single trusted source of revenue,??could process it's payroll without the hassle of multiple emails back and forward with their external accountants, and could operate knowing they complied with tricky record keeping laws.

?For a bit more about Xero, check out the video.


Xero gave the business ability to have a richer relationship with their virtual CFO. ?For the first time the executive team could step back from managing cash flow, paying invoices, managing the payroll and managing tax, and trust their finances to be handled remotely by and experienced financial manager.


Bookkeeping is a cost that every business understands is needed but is a cost that many businesses would like to do without. ?The good news for bookkeepers is that we're not there yet and there will be a need in the future,?to make sure the systems are behaving and handle exceptions. Thanks to cloud accounting software like Xero, the data entry side is disappearing.

To automate bookkeeping we chose 2 tools with one key feature, the system had to automatically feed data into Xero and there had to be an approval trail. ?Our brief was to set the business up for further growth and be audit ready.

To achieve this we implemented Expensify for credit card transactions - this is a system that automatically scans receipts, takes a transaction feed directly for the bank, automatically scans receipts and turns the transactions into an expense claim. ?Much like a big business, delegation limits are applied and the system automatically finds the right approvers.??This gave the business ability to ensure purchasing policies are complied with, gave rich reports on just were money was going on credit and feed transactions data into Xero.

The second system we chose was Entryless. ?Much like Receipt-bank, Entryless accepts invoices from suppliers in PDF, email or other form, scans the invoices and prepares the accounting entry. ?Yes there was some initial setup, but the system is clever enough to remember recognised suppliers and how you last treated that supplier, it simply records the next invoice in the same way, removing you from the picture. ?All you need to do, or your virtual CFO, is click on approve and the invoice is sent to Xero for payment and matching. ?Easy - check out the Entryless video for more information.


Boxes checked - we have cloud accounting setup and we've reduced the manual bookkeeping to reconciling and exception tracking. ?The next step is where a virtual CFO becomes a key feature, making sense of the information inside and outside of Xero. ?Xero and other cloud accounting systems are great at providing you with simple numbers and snapshots of business performance. The skill is analysing those snapshots and using them to plan for the future. ?Sounds complicated - with the help of Fathom the analysis the past was taken care of.

Fathom linked into Xero to automat monthly reporting. ?With a click of the update button you can get a report that is shareable between the executive team and virtual CFO. ?In just a few minutes the business could get a report that shows how the business performed against its performance indicators and trends, together with cash flow, profit and loss and balance sheets. ?These reports are customisable to the business and allow reporting for multiple businesses within.

The important feature of FathomHQ was that it produced reports the executive team were excited to use, reports that contained performance indications that could be actioned if sliding and it dramatically changed the way the business monitored performance. ?For more on FathomHQ check out this video.

With accounting sorted and no longer a lagging historical compliance tool, the business was able to improve profit margins by more than 10% in the first year, implement new products that resulted in revenue growing by 20% in a mature industry and plan for the future than included an exit. Incidentally the exit proved the value of the tools and virtual CFO, the business was able to secure an exit price 2x a bid just 18 months earlier.

Cleaning up your accounting can have amazing outcomes, not just cost savings through automation, but improved business value. ?Have you made the shift to cloud accounting and employed a professional financial manager yet.


If you are looking a moving to cloud accounting, we can help you with the move,?select tools that will work for your business and provide you with a virtual CFO. ?Contact us today