Many businesses are still using accounting
software from a CDROM so a company’s financial data can only be viewed and updated from one
computer. Typically, once a year, your client sends you their files, but before you can
work your magic, you need to convert their data into a format that works with your own accounting
and reporting software. This old approach means you have two different ledgers that are completely
out of sync; neither ledger has the entire picture. When you multiply that across hundreds
of clients, think of the hours you spend dealing with incompatible software, corrupt files,
different versions, reentering transactions, and data conversions. That wasted time isn’t adding
any value to your practice and it’s certainly not adding value to your clients’ business. Two major changes make the old way obsolete.
The first major change is cloud computing. Online apps have completely changed the way
people do business, such as banking, email and of course, accounting. The second major change
is the single ledger. The single ledger is one of the most important breakthroughs in accounting
since the personal computer. With the single ledger, both you and your clients have access
to the same data using the same system as the same time, not just as the end of the year,
but whenever your client needs your advice. It’s a live view of the business finances. More importantly,
the tools you use to prepare management and annual reports run on the same ledger
that your clients use. This changes the relationship you have with your clients from an annual
handover with one large fee to an ongoing collaboration that you bill monthly. That’s
much better for cash flow, more profitable, and your clients will love you. When you have all your clients on a single
ledger, it really is a gamechanger. Producing individual reports for each client used to
take hours. Now, by automatically linking each client’s unique chart of accounts to a standardized
set of reporting codes, you can apply tailored reports across large sets of clients. The shift to
cloud computing and the single ledger has marked a major turning point in the business of accounting.
To learn more, go to Xero.com/Cloud.