Mistakes to avoid when setting up cloud accounting systems

Plus 4 tips to get it right first time.

Whether you’re considering moving to a cloud accounting system or you’ve already taken steps, here are four common software mistakes or pitfalls you want to avoid – and four corresponding tips to help you get it right the first time.

mistake three

‘Just testing’ the cloud

For some accountants and bookkeepers, moving to the cloud is a bit like deciding whether to buy a car or sticking to the reliable horse and cart. They hear a lot of positive buzz about the car and are pretty sure it will live up to the hype of being faster, more reliable, and more efficient. In the end, they do buy the car but think they’ll only drive it every so often, continuing to make the majority of their trips by horse and cart. 

If you believe this kind of thinking is far-fetched, it’s really not. According to Xero’s UK Industry Performance Report, an estimated 224,000 UK small businesses changed accountants in 2017. In fact, not moving to the cloud is the number one reason clients leave their accountants. Using modern technology is important to clients, who are leading the transition to online accounting systems. If their accountant or bookkeeper can’t keep up, then clients will find someone who will. 

mistake three

Jump up to the cloud and stay there

Almost every cloud accountant says that if they could start over with the cloud, they’d move faster. 

If you put a goal in place for your firm to learn to use a cloud-based accounting system, and to roll it out to clients as quickly as possible, you can plan accordingly. Being strategic and swift with your rollout is the best way to ensure scale. It can be tough when starting out with any new system, but accountants who’ve gotten over that obstacle say the results are more than worth it. 

mistake three

Over-reliance on compliance

Some accountants and bookkeepers still believe that the opportunities to be gained from offering advisory services is overblown. But the data, and those accountants and bookkeepers who have successfully added advisory to their service offering, say otherwise.

First, the data. Xero’s industry performance report shows that the opportunity is huge: Basic compliance services bring in average income per client of only £4,200, but offering full bookkeeping, payroll, Virtual CFO and other business advisory services increases revenue to over £6,500 per client. The opportunity scales with the number of clients firms have online. Pacesetting cloud accounting practices in the UK are bringing in £382,700 a year on average in advisory revenue alone.


mistake three

Build an advisory plan

The rewards of offering advisory services – or completely transforming a practice – are worth the effort. Accounting software lends itself to advisory services, as it provides a day-to-day snapshot of how client businesses are performing. 

Take the time to draw up a plan with senior stakeholders, then phase in advisory services with current and new clients who will benefit most. Once you’ve started small, you can add to what works, and introduce proven revenue-building practices like monthly billing or subscription accounting. 

mistake three

Using the “wrong” apps

One of the biggest mistakes that accounting firms make when they move to a cloud accounting system is focusing on apps in the wrong order. Xero’s industry report shows that below-average performing firms tend to start their app journey with ‘popular’ apps, such as those for real-time messaging, customer management and social marketing.

While such apps are fantastic when used in the correct context, the data shows that the best way to achieve rapid growth is to start with apps that improve practice efficiencies.


mistake three

When choosing apps, tackle the core accounting functions first

The types of apps that can help you quickly see efficiency gains include those that automate data extraction, expense claims, payables management, payroll, and compliance workflows. There are also great apps for reporting, financial analysis and forecasting. Have a look at the Xero app marketplace where you can search by business type or function to find the best ones for your business.

mistake three

Using multiple online accounting systems and letting clients choose

It’s a fact: The more accounting software or approaches your firm supports, the more inefficient and costly things might be. Many systems means paying for two, three, or more different subscriptions. And you’ll need staff who will have to split their focus amongst multiple platforms, instead of being an expert in just one. Sure, there are bridging apps and other methods for working with more than one system, but they’re no substitute for the efficiency you can get using fewer software platforms.

mistake three

Use a maximum of three accounting platforms – and, ideally, just one

Of course you might automatically say, “What about my clients?” Many clients are attached to the accounting system they’re familiar with, and trying to force them off it might just make them leave.

The best way to deal with this situation, according to accountants who’ve been through it, is to know your clients as well as possible.

According to a Roy Morgan Image of Professions Survey 2017, accountants and bookkeepers are the most trusted financial professionals of all – well ahead of bankers, lawyers, and business executives – and most clients will be happy to be moved to the cloud, as long as the accountant makes it clear that their practice knows and trusts it. More reticent clients will respond well to a request for a trial period – and if they’re not happy afterwards, they can always switch back.


Learn more from The Pacesetters

In these best practice books, discover how advisors around the world are using cloud accounting to transform their practices. The Pacesetter series is available to buy on Amazon.

The Pacesetters shows how UK accounting practices are reshaping their industry.

The Pacesetters: Advisory describes how to add advisory services to your business offerings.

Not ready to buy yet?

These extracts from The Pacesetters series give an insight into how cloud accounting can make your business more efficient and more profitable.