In modern businesses, cloud accounting has now become the norm rather than the exception.
With real-time access to financial data, enhanced security, and a variety of other digital features, cloud accounting has transformed the way businesses manage their finances.
However, businesses could take this one step further and introduce cloud-powered accounting.
What is cloud-powered accounting?
At its core, cloud-powered accounting leverages not just the cloud but also technologies such as Artificial Intelligence (AI), Machine Learning (ML), and Big Data analytics, an accounting process which focuses on analysing large amounts of data.
By incorporating these advancements, cloud-powered accounting systems go beyond basic automation to offer predictive analytics, intelligent insights, and seamless integration with other business applications.
While traditional cloud accounting provides a certain level of automation like invoice generation and basic expense tracking, cloud-powered accounting goes further.
It can automatically categorise transactions, reconcile accounts, and even suggest tax-saving strategies based on past data and predictive algorithms, thus reducing the margin for error.
Cloud accounting systems provide you with real-time data, but cloud-powered accounting goes beyond this by offering intelligent insights.
It analyses your financial data to suggest ways to improve cash flow, optimise expenses, and increase profitability. For instance, it can forecast revenue for the upcoming quarter based on past trends, providing valuable information for business planning.
Although both cloud and cloud-powered accounting systems offer enhanced security features like data encryption and multi-factor authentication, cloud-powered accounting can take security higher by using AI to detect fraudulent activities and inconsistencies, thereby providing an extra layer of security.
Cloud-powered accounting systems are designed to easily integrate with other advanced business software solutions, from Customer Relationship Management (CRM) tools to supply chain management platforms. This makes it easier for businesses to have a unified and streamlined operation.
Future-proofing your business
Technology is ever-changing, and for businesses to stay competitive, they need to evolve.
Cloud-powered accounting is scalable, adaptable, and ready for future technological advancements.
As your business grows or changes, your cloud-powered accounting system can easily adapt to new requirements, whether they are regulatory changes or new financial reporting standards.
Cloud-powered accounting and Making Tax Digital
The UK Government’s initiative, Making Tax Digital (MTD), has been a pivotal factor in encouraging the adoption of modern accounting systems, including cloud-powered accounting.
If your business is registered for VAT, you should already be familiar with MTD and the use of cloud accounting software to file your VAT returns.
But if you are self-employed or a landlord, you may not have considered using cloud-based software yet.
You can also use MTD for Income Tax Self-Assessment (ITSA). Under this framework, you can maintain digital records and submit quarterly updates to HMRC, besides the annual tax return.
Cloud-powered accounting systems are aligned with the objectives of MTD, offering seamless digital record-keeping and effortless submission of returns. These platforms can automatically pull transaction data from various sources, categorise them correctly for tax purposes, and facilitate easy, timely reporting.
This makes cloud-powered accounting not just a convenient option but an increasingly necessary tool for compliance with regulatory changes in the UK’s taxation landscape.
To find out more about cloud-powered accounting for your business, contact us today.
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