The benefits of using or moving to online accounting software, such as Xero or QuickBooks Online, have probably not been as obvious or prevalent until now.
The benefits of online accounting during Covid-19 and beyond
As we face the challenge of dealing with the coronavirus outbreak and lockdown, more and more businesses, especially small businesses, are having to work remotely. This requires more dynamic and remote access to a business’ financial records and systems by those needing to work on them as well as those that need to access accurate and timely information to take decisions to manage financial affairs.
Desktop, fixed location and office based financial management imposes limitations and restrictions for those not able to access their normal place of work. In contrast, online accounting software offers users secure and increased access to financial reporting and management systems for those users in differing locations and using a range of devices from mobile to laptop.
Online software has the added benefit of enabling real time information to be shared with third parties, such as your accountants, with pre-agreed access protocol and authorised permissions. This means that you are able to receive more timely and relevant support and advice, which is very much needed in the current situation.
Coronavirus Business Interruption Loan Scheme (CBILS) applications benefit from online accounting
Few, if any, businesses haven’t not been adversely affected by the impact of the lockdown. Many have experienced a drop in turnover, even a total loss of income. Few businesses have been able to continue to trade as normal, with workforce shortages, supply chain issues and temporary closure making it impossible for customers to buy. This has placed most, if not all, businesses under financial pressure.
Whilst many employers will have looked to the government’s Coronavirus Job Retention Scheme to assist with the financial cost of looking after employees who are unable to work, businesses still face significant pressure in terms of meeting other fixed costs such as premises, as well as the provision of working capital to keep the business afloat and ready to trade as lockdown starts to lift. Very much aware of the situation and keen to safeguard against the economic impact of Covid-19, the government launched the Coronavirus Business Interruption Loan Scheme (CBILS) on 23 March. Whilst the loan scheme should offer access to funding for businesses that have been affected by the current situation, those seeking financial assistance need to adhere to an application process in line with that when seeking loan finance from their bank or other financial intermediary.
For those businesses with tried and tested financial management and reporting systems and the ability to prepare relatively easily financial forecasts, the application process, whilst time-consuming, may be relatively straight forward. For those less conversant with the process of making an application, it may be more daunting. However, in such cases the use of online accounting software could be a real benefit.
When applying for a CBILS loan, banks will require:
- Copies of the last 2 year’s accounts
- The latest quarterly management information prior to the pandemic and to the end of 2019
- A cash flow forecast - ideally for the next 18 months
It is important you are able to demonstrate the loan requirement is as a result of Covid-19, this loan isn’t designed for general business expansion, and that you have already considered and implemented all other measures.
Banks are also looking for businesses that can demonstrate an understanding of their business finances and it is in the production of these numbers where we are asked to assist. All businesses will have prior year accounts, but not every business has quarterly management accounts and a cashflow model they can easily update.
We have always promoted the value of management accounts in order to monitor and control your business. With CBILS applications, it has been hugely beneficial to have up to date management information that was already being prepared by Streets for our clients. Online accounting software, including Xero or QuickBooks Online, is a great asset for businesses wanting to have regular accurate management information and in this current climate of enforced remote working, online software is invaluable.
It also proves highly efficient when looking to produce a financial forecast, including cashflow, to support your CBILS submission as we are able to extract income trends, gross profit margins, overhead costs and general trends of the business at certain times of the year. This approach has the added benefit of enabling us to prepare quickly and accurately applications for consideration by banks and their credit teams, prior to the application being sent to the government for final approval.
This would not be possible if we were waiting for software backups or if we were required to visit client premises to prepare accounts. Online software, like Xero or QuickBooks Online, means we can work in real time with your business to prepare up to date financial information and it is this online software that enables our rapid response. The value of online accounting software is unquestionable during this pandemic – both in order to access business records and to work collaboratively on accurate up to date accounts.
This new understanding of the power of online accounting software has even led to businesses asking us to move them from desktop software to cloud software during this period of lockdown, which we are able to do, both migrating data from desktop software and even providing remote training for staff.
Working with a number of our clients in the last 3 weeks, we have seen a good success rate in loan applications. Our clients that are able to demonstrate a strong financial understanding of their business, especially those supporting this with regular historic management information, are finding they are experiencing less interrogation from the banks and in turn speeding up their loan approvals.
For further information on online accounting software solutions and assistance with preparing applications for the Coronavirus Business Interruption Loan Scheme, please email your usual Streets contact or email@example.com