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Welcome to this week's podcast. Now, today I'm going to dive into a topic that many business owners, many freelancers either ignore, even fear, or avoid until it's too late. And that topic is cloud accounting, otherwise known as digital accounting. Now, before you've groan, before you poke your eyes out, skip ahead.

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Just hang on because this will be worth your investment in time. Let's crack on.

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Firstly, let's start with this idea of what actually is cloud accounting. Now, you may have come across the term before cloud accounting. You may even think it means shoving your accounts into some digital folder using an app instead of spreadsheets. You'd be half-right, but you'd also be half-wrong and missing the point.

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Now, cloud accounting is actually using software that actually lives online to manage your business finances in real time. It's not just the accounts, it's not just keeping records of what you're spending, but actually invoicing, reports, finding out what's going on, connecting to your numbers more closely,

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the whole shooting match. What does this mean? Well, it means you can log in from your phone, your laptop or tablet. You don't need to be office-based. You could be sitting in your garden, sitting on a beach anytime, anywhere. You get what are called real-time updates. It's not guessing what's going on. As long as you've got that data captured, you can actually see in real time where you are financially, how much you are spending, what you're spending it on, where your money's coming from, what's overdue.

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You could automate the heavy lifting, the boring stuff perhaps, like chasing your customers if they've not paid their bills on time, sorting out the expenses, even getting those tiresome receipts entered into your accounting system. Now imagine this, you're in a coffee shop. You conclude your meeting with your client, and instead of going back to your office or scribbling your notes on a napkin, you pull out your phone, send them an invoice on the spot, and instantly it's updated your account,

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instantly they've received it, and what that means is you've got a greater chance of actually getting paid promptly and on time. That's cloud accounting for you, and that's just one illustration. And what does this actually matter? Well, let me tell you why it's important because here's the thing, too many business owners are still stuck in the nineties.

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Too many business owners for my liking are disconnected from their numbers. They see the numbers, the record keeping as a tedious exercise, which will actually do on an annual exercise when they submit their tax accounts. Now there's also a legislative imperative, and that's something called MTD, which is the acronym for Making Tax Digital.

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More of that towards the end of the podcast. Now, paper receipts, desktop software, spreadsheets, all that stuff serves its purpose, but the future for your efficiency, for your money saving, taking control of your business is in cloud accounting. Now, those devices, they do work. We've got many clients who still use paper spreadsheets and that's great.

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But it's slow, it's risky, and it's the decision making and access to information that is the let down. Now let's break that down a little bit more. Now, time is money. Literally your time is worth something. That time you are spending on tasks which you can actually speed up is time that you can be spending out there

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delivering work, chasing more work, developing your business. Using cloud tools can literally save you hours every week. Now as an illustration, take, Sandra (name has been disguised to hide; she's one of my clients). She's a freelance designer, and she got a number of projects going on. Now typically, pre-cloud accounting, she'd be spending some time either on a Sunday morning entering receipts, chasing invoices, and groaning of having to do that necessary

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and essential task of getting her records up to date. Now with cloud accounting, she can auto upload, set up what's called a bank fee from a bank account, so the bank automatically updates. She can send invoices out with a click of a button or the tap of your phone if you prefer. Her records are updated straight away, and she's saved on average

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three or four hours a week. Now, if you think about that three or four hours times, let's say for argument's sake, 20 pounds an hour over a quarter of a year, that's a lot of cost and time that's equated to, and also by the way, she's getting paid faster. In my experience, when you send out invoices on an electronic basis, you tend to get paid slightly faster.

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Now, it's not just time. It's also your mental bandwidth and your sanity. Now, secondly, mistakes. We all make them. But with cloud accounting, if set up correctly, if trained correctly, you avoid those costly mistakes. If you do something manual, however brilliant you may be, your brain sometimes will let you down and you will make mistakes.

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If you've got to correct those mistakes, it makes it very difficult to do if you've got a manual system, brackets a spreadsheet. With spreadsheets, you've got the possibility of dodgy formulas, missing out lines and invoices, duplicating information. Cloud systems can flag these issues in real time. You're not walking a financial tightrope with a blindfold or an image.

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Thirdly, you can see the big picture, and this is a real powerful asset to your business. Imagine driving your car when your windscreen is all frosted over. It's got dirt on there, and there's no water in the bottle. Would you drive a car with a frosted windscreen? Unlikely, and if you do, that's very dangerous.

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Now, running your business is very much like that. Now, cloud accounting will give you what's called dashboards, reports. You can literally log on and see at a glance how much money is in your bank account, who owes you money, what you owe to your suppliers, what you've spent, if you want to dive deeper to see where that money is going.

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If configured correctly, the insights you gain will be invaluable. What does that mean? Well, it means you make better decisions, you give some clarity to your thoughts, and there's no panic arising in terms of unexpected costs. Now, you might rightly be saying, but isn't it complicated? Well, that's a bit of a myth.

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You don't need to be a techie or a numbers nerd to actually get this right. Tools like Xero, which is our personal recommendation, are built for real people. They're not necessarily designed for accountants. Accountants use them. Individuals who aren't financially trained use them as well. Most of them are configured, set up, and literally a plug and play.

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When we set up clients with cloud accounting, we will always train them, induct them, give them an overview of how to operate the systems effectively. You can connect your to bank, you can upload receipts with a photograph, and we've got clients who hate paperwork, can't think why, and they've got their phones.

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We can set things up, they can take a picture and that's it. Job done. They can throw that piece of paper away and that information is now in their accounting system. You can configure your systems to remind you when invoices are overdue. It's like having on tap a digital finance assistant that doesn't complain or takes a holiday. But you still may not be convinced.

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You still may see it as a cost as opposed to an investment. Well, let me talk you through some of the costs involved if you do decide to avoid it, and let's imagine a worst case scenario. Work has been really hectic, family life, things going on, have been such that you’ve neglected to keep on top of your accounts, to keep on top of your records and your books.

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You don't know who owes you money. You don't know who you owe money to. You've got work coming up, but you don't actually know where you stand, what you've been spending, how much to charge. You don't know if you can actually afford it. Invoicing has been delayed. You haven't got those invoices out to customers.

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You've got bills outstanding, but you've not been able to chase them up. You spend more money than you realise that you've got. You've got a tax bill coming around the corner. You can see where I'm going with this one. This is effectively getting in the way of your business. It's silent financial sabotage, but it is avoidable

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with the right system, with the right mindset, and obviously with the right people helping you. Now, it's an understandable thought, you might be thinking, hang on, I've got to change from one system to another. That's going to be a lot of hassle, a lot of activation, but it doesn't have to be. Here's a brief outline of what I would suggest.

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Number one, select your software. Again, on a hands up here, on a personal recommendation, Xero would be my tool of choice. We are a Xero Platinum Partner, by the way folks, and we are able to provide Xero systems and set things up for clients, and we manage to pass on the discounts that we get. Familiarise yourself, understand the system.

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Remember, you don't have to be an expert accountant here, but you need to have an understanding about how to navigate the system. Get your bank account, get it set up correctly from the beginning. No more entering in bank transactions. The systems could be configured automatically. Get yourself a simple workflow, so focus on getting those invoices out to clients, recording those expenses, and do it say once a week.

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30 minutes a week is better than several hours buried under paper or digital otherwise, and stick to it. Consistency. Small, regular habits like brushing your teeth, beat those big panic sessions. Now, if you still need more, drop us a line. We have a link to a free digital guide on cloud accounting.

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Remember, cloud accounting isn't about going digital just for the sake of it. It's about taking control, saving time, and making better decisions, keeping your business lean, profitable, and ready to grow. Now, I did say at the beginning of the podcast, there's a legislative imperative as well. Now from April, 2026, we have something called Making Tax Digital, and that is where HMRC are compelling small businesses and landlords to submit their accounts on a quarterly basis.

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And to do that, you need digital accounting at your side. So, from all the favourable business reasons for doing it, you've also got a potential legislative and a compunction reason to do it. The sooner you get familiar with it, the less hassle and aggravation you're going to have. Now, folks, if you found this episode useful, if you found it of value, then I'd love it if you've not only subscribed to the show, but share it with someone who you feel can benefit from it as well.

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And remember, plan it, do it and profit.