How cloud accounting is affecting insolvency professionals
Cloud accounting is seeing significant growth, bringing new challenges to insolvency professionals.
The main reasons that companies use cloud accounting software are:
- There are no software updates. The cloud is accessible via an internet browser.
- Authorised personnel have quick and easy access to data, from anywhere
- Data is always up-to-date with the latest changes
- Data security and off-site backups are outsourced
The cloud can be thought of as someone else's computer and, therefore, the shift towards cloud accounting is impacting business review and insolvency professionals in the following ways:
- An increasing amount of data is accessible from anywhere, and so off-site data backups are becoming more critical
- Accessing, reviewing and exporting data held in the cloud requires new skills
- The gatekeepers through which data can be accessed are expanding requiring new relationships with cloud providers
An article written by a solicitor outlines some of the contractual considerations in accessing financial data held in the cloud, and I don't disagree with the points raised, but I do think the solution to first gain access to online financial data and then to review or export the required data can be much simpler.
How to access financial data held in the cloud
First the basics, you'll need an internet connection and an up-to-date browser.
Next, you'll need to know which cloud provider the business uses. Then, there are three key stakeholders to approach to gain access to the required data.
- The cloud provider
- An external accountant or bookkeeper
- The business's finance director
Pick one, two or all three, and follow these steps:
- Ask them to provide a complete export of the firm's latest financial data held in the cloud. If you don't have access to the cloud for this data to be imported in their proprietary file format, you should request a more generic file format such as CSV or Excel.
- Set up a master account with the cloud provider. This will allow you to login as an accountant, and be able to see a dashboard of the other firms' financial data, to which you have been granted access. Ask to gain the required permissions to access the data.
"The Insolvency Practitioner could speak to FreeAgent direct to ask them to transfer the clients account onto their Dashboard. There is no additional cost in doing this and it takes 10 minutes to speak to Free Agent, with them normally transferring the client within 2 days." Tom Bowen ACCA CTA - Hilton Sharp & Clarke
- Ask for login details to get direct access to the business's subscription. This will mean that you avoid having to create a master account (and any related costs that may apply).
"To get access to the ClearBooks data for a client, you just need the business owner or (more usually) the accountant to set you up as a user. This will take them seconds. There is no additional per-user fee." Tom Trainer BSc FCA - Chartered Accountant Online
"There is no extra charge for adding users to each organisation, so make sure every user has their own separate and secure login." Xero website
Points to consider:
If the data is only going to be exported to CSV or Excel then you may only need access to the required data for a day, a week at most.
Cloud software is often paid for monthly in arrears. This will limit the pre-appointment debt that may need to be settled in order to obtain access to the required data.
Even if a payment has lapsed, data in the cloud should be accessible once a new account is opened.
How to review or export financial data held in the cloud
Once you have access to the cloud where the data is stored, you can either review the data where it is, or proceed to export the data. It is important that you export the data as soon as possible. At the flick of a switch your access rights could be removed, or worse, the cloud provider could enter an insolvency process.
"Exporting financial data can be done very easily in FreeAgent, assuming the correct export report is available, it depends exactly what you want to export. It takes just a few minutes to do this, and can be done in FreeAgent by the insolvency practitioner or anyone else with access rights to the data." Jon Green - Approved Accounting
Details on importing and exporting data from Xero can be found here.
"If a client has cancelled their FreeAgent subscription they will be unable to access their data in the future, they will need to ensure everything has been downloaded in a CSV format." Tom Bowen ACCA CTA - Hilton Sharp & Clarke
Instructions to review or export the financial data vary depending on the cloud provider. Please see the separate sections below for helpful links.
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