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Reflections on online bookkeeping

Reflections on online bookkeeping post sale of my Practice

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Having battled valiantly against the invasion of our profession by automation and digitalisation I finally gave up and sold my Practice a few months ago; the fun had been truly sucked out of it all!

I have just been asked to help one of our local sports clubs with their Accounts and their bookkeeping and it has reminded me of why I sold out!

They had always done their books in a good old fashioned red Cathedral cash book; about 15 columns used and about 8 pages of transactions a year. They were then persuaded to come into the 21st century and use one of the major online bookkeeping systems (won't mention the software specifically but it is one of the big suppliers). Result is that they have got themselves in a right pickle with transactions being posted to all sorts of wrong accounts and codes and the bank reconciliation from downloaded bank transactions has become so chaotic that there seems no choice but to start all over again.

Although there is no VAT involved it just makes you wonder how on earth HMRC believe that MTD using commercial software reduces errors .. come off it!!

Just wondering in a reflective way what fellow accountants currently feel about these online bookkeeping systems generally after 6 - 7 years of their much wider use?

I decided early on when I started up my little Practice 8 years ago that I did not like online bookkeeping and would not let clients do their own bookkeeping because my intial experiences of clients trying to do it was terrifying. I seemed to spend more time unravelling things than I did doing clients' books in house ourselves and getting it right first time. So for me getting clients to either drop off or email me their bank statements, sales invoices, purchase and expense receipts and leave it to us was the best solution and it worked very nicely. We used VT software in house and the job for me and my small team went like clockwork.

However I realise I am probably a victim of my age and generation but intrigued to know if my actions were just those of a dinosaur or whether others shared/share my scepticism?

 

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By whyowhy
28th Mar 2022 14:53

Having set up my business 10 or so years ago, it was a direct result of online accounting. At the time Sage desktop was the only show in town and I hated it. I had been thinking of setting up a practice for years but didn't bother until Xero came into my conscious that I took the plunge. Most clients who do their bookkeeping make a mess initially but I have found them teachable in most instances and so it isn't an ongoing problem.

I base myself in the UK for networking reasons but I do travel and work a lot throughout the year in different locations and that has been facilitated by online software. But I now have clients in the USA, Australia, South Africa, the UK, Ireland and Canada. Without online software, it wouldn't be possible.

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By RobbieT
28th Mar 2022 15:55

In the same vein as Whyowhy, I went solo moving from Sage50 desktop and can say that cloud accounting revolutionized things: bank feeds and bank rules meant that data-heavy clients took a lot less time, improving margins and deadlines nicely. I've yet to fully get to grips with a successful invoice-analysis software (receiptbank etc) but for most clients it's not an issue.
Most of my clients don't want to get involved in the bookkeeping, and those that do have had (chargeable) training from me, and are generally aware of what they can and can't do... and aware that sometimes fixing things costs more than leaving them alone in the first place.
In addition, for the odd client who has other staff involved in the bookkeeping, it cuts down on the "pure" bookkeeping time I might spend (or outsource). Review tools are much better: Xero's Find & Recode more than decimated the time I'd spend correcting a VAT quarter compared with Sage50.
It's a gamechanger, provided you have internet. As to the sports club: despite TV adverts suggesting that any fool can use accounting software, we know that only holds true when training is applied. As our old IT teacher was fond of saying, "to err is human: to f*** things up entirely requires a computer"

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By carnmores
28th Mar 2022 18:08

your opening sentence says it all. personally I would never again countenance manual bookkeeping we must accept that some automation is good and makes life easier. you will doubtless remember the excruciating hell of filling in paper tax returns and preparing computations by hand. we have to try and move with the times tho I do accept we all have an inbuilt tolerance level

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Replying to carnmores:
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By lionofludesch
29th Mar 2022 07:01

Interesting.

I always prepared the tax comps manually, just so that I knew the answer before the computer. This was as much a check on me entering the data correctly as on the computer's ability. But it also forced me to understand the calculation and the points where the marginal rates changed.

It's unwise to rely solely on the computer.

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By jndavs
28th Mar 2022 23:39

Simplex - oh the nightmares!

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Replying to jndavs:
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By lionofludesch
29th Mar 2022 07:03

jndavs wrote:

Simplex - oh the nightmares!

I preferred Evrite. Simplex never got the hang of combining the tax records with the VAT records. It was a fundamental flaw.

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By tom123
29th Mar 2022 07:41

I have always worked in industry, rather than practice. (I'm 50).
In my first job, for some unfathomable reason, they kept a red cathedral cashbook in parallel to Sage Sovereign.
I spent weeks with adding machines, and pencils, trying to add rows then add columns then subtotals

Fortunately that was a temp job - and, never again in my working life have I kept any kind of manual records.

The thought of it - the stress..

Current employer has cloud based, sector specific, software. It's a bit rubbish in some areas, but the flexibility to WFH just like being in the office is great.

Would never recommend going back to on premise hosted software now.

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By Winnie Wiggleroom
29th Mar 2022 07:41

put the right tool for the job in the right hands and the job gets done properly and efficiently, even in the right hands the wrong tool will not accomplish the same, neither will the right tool in the wrong hands

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Replying to Winnie Wiggleroom:
A Putey FACA
By Arthur Putey
29th Mar 2022 09:45

Ah but when you put the wrong tool in the wrong hands ...... you have an England cricket bat!

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By leedquinn
29th Mar 2022 10:10

I've always been worried about the adverts on tv stating how easy it is to do your books with the raft of cloud based systems out there, VAT compliance in particular can trip up even larger businesses so I completely agree that while the tool may make the task seem easier it can be storing up a lot of trouble if a professional isn't there to keep an eye on it.

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By ralan
29th Mar 2022 10:59

Have just received the first year of a new client and he is using a cloud based accounting system overseen by his father who ran his own business on same software for years.
Unfortunately there was a "problem" over 2 months mid year when the bank feed did not work properly and there were so many transactions the father was over whelmed and stopped reconciling the bank. Result the bank is out £11910 and I have requested that the bank be checked in full by them, if I do it then will take weeks.
So much for cloud accounting and Bank Feeds.
We put clients onto a much easier software that mimics a cash book and can be reconciled in minutes each month.

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Replying to ralan:
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By carnmores
29th Mar 2022 12:20

' if i do it it will take weeks' - why on earth will it. there is a simple way to reconcile and that is to do it in small chunks / months rather than try and do it all at once when a small error means starting the whole thing all over again.

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Replying to carnmores:
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By Arbitrary
29th Mar 2022 15:05

Spot on.

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Replying to carnmores:
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By ralan
01st Apr 2022 08:48

Unfortunately when you speak to the client during the set up and he tells you he is reconciling and then when you get access to the records it is all screwed up and the Bank feed went haywire for two months and then he says he can't/doesn't have time then it is dumped on us to sort out with all the extra cost to the client and time we have to spend instead of getting on with other work.
I now have Covid and working on it at home when I have the energy.
Sorry but some of the people on here seem to think Cloud based software is the be all and end all but when the client screws up they expect us to sort it out.
The S and Q adverts are misleading and should be looked at by advertising standards as clients expect them to do everything for them.

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By TASG
29th Mar 2022 11:04

In my opinion using a manual cashbook in 2022 is rather like using a hand drill from the 1930s. It is interesting historically, it will do the job, and it will take a lot longer than a power drill.

Both types of drill require a skilled user!

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Replying to TASG:
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By I'msorryIhaven'taclue
05th Apr 2022 13:03

You mean someone who knows the drill?

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@enanen
By enanen
29th Mar 2022 11:36

Spoke to a group of HMRC inspectors about people who file their own data from Xero Sage and QB. The inspections allow them to get good tax recovery results as the data submitted is garbage. The adverts are to blame-especially where it highlights that the software auto reconciles the bank. In our practice we call it 'Pushing Buttons' We quote out of the ballpark when someone does their own processing as we know we will spend more time sorting than processing it ourselves. It is like people who buy flight simulator for their PC and think they can fly a plane. Software versus Knowledge. It is a joke.

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By trecar
29th Mar 2022 12:34

A recent meeting of fellow professionals came up with the question of what to charge clients who do their own book-keeping online as opposed to those who pay the professional to do it. The universal answer was double the rate that would be charged if the professional did it. That to me sums it up. Twice the time is needed to correct the errors the non professional has made.

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Replying to trecar:
A Putey FACA
By Arthur Putey
29th Mar 2022 13:10

I disagree, provided you adopt a collaborative approach with clients they can do the donkey work and we can review and correct a small number of errors. The problems arise when accountants leave the client to it and then complain they aren't doing it right.

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By arthurallan
30th Mar 2022 20:24

Interesting feedback thank you. Whilst some responses echo my scepticism about clients doing their own bookkeeping because generally they haven't a clue what they are doing there are clearly some practitioners who are now comfortable with their clients doing it.
It feels like a sea change in attitude from when I set up my Practice 7/8 years ago when the prevailing consensus seemed to be very anti online bookkeeping software.
However my gut feeling is still that even well trained clients are likely to be very prone to making alot of errors and I think HMRCs recent claim that online bookkeeping and MTD reduces errors and increases the tax paid is laughable.

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By lh3f9764bg1g
31st Mar 2022 09:26

As far as I am concerned . . . . . if your client is using one of those online bookkeeping packages and you are trying to use that to prepare a set of accounts then Don Rumsfeld's quote becomes particularly apposite:- "there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know".

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Replying to lh3f9764bg1g:
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By richard.snape
01st Apr 2022 16:16

I seem to recall he said the real problem is the unknown unknowns. The thing that we don't even know we don't know. I guess KPMG have a particular problem with that.

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By Donald MacKenzie
31st Mar 2022 10:03

There is nothing magical about online software, compared to PC based software, as, for many, the mythical idea of doing accounts while in their van or on the bus is just nonsense.
I much prefer the simplicity and ease of use of VT over Xero, Freeagent or Quickbooks. Many clients manage to get in a proper guddle trying to use such software.

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Replying to Donald MacKenzie:
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By I'msorryIhaven'taclue
05th Apr 2022 13:20

I too have a preference for VT, and this thread has set me wondering whether a remote desktop rdp connection to a Windows 10 or 11 server might achieve the best of both worlds. I believe VT charge for licences on a per user basis, viz:

source: https://vtsoftware.co.uk/prices/numlicenses.htm
The software can be installed on any number of PCs/laptops.
A licence must be purchased for each person who operates the software (whether simultaneously or not).
Additional licenses can be purchased at any time.

Setting up a multi-company version of VT transaction+ and having clients log in remotely via rdp should have everyone singing from the same hymn sheet, and save shuttling backup data copies to and fro between client and bookkeeper. Has anyone here tried this? And is anyone from VT able to offer guidance here upon the feasibility / licencing requirements?

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Replying to I'msorryIhaven'taclue:
AS
By AS
05th Apr 2022 13:42

The main issue with this is probably the cost of Windows client access licences (CALs), and if the users also use Excel, then you need to add in the cost of Office licences.

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Replying to AS:
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By I'msorryIhaven'taclue
05th Apr 2022 14:00

Thanks AS. Are you certain the Windows 10 / 11 remote desktop access isn't free?

https://support.microsoft.com/en-us/windows/how-to-use-remote-desktop-5f...

I believe the VT Transaction+ accounting package is stand-alone, so doesn't need Excel (it's the VT Accounts package, which produces IXBRL accounts, that needs Excel; we don't want the client accessing that latter program).

I had in mind that the VT Transaction+ bookkeeping program could operate from a dedicated PC or server, with a Windows 10 or 11 operating system but no Microsoft Office programs installed.

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Replying to I'msorryIhaven'taclue:
AS
By AS
08th Apr 2022 11:36

Do you intend to access the client's desktop like this or allow a client to access your desktop to access VT? How would you deal with multiple clients accessing your desktop? Alternatively, if you are accessing a client's desktop, then you will waste a lot of time logging on and off with each client and, if the client switched off the desktop then you will lose access.

I was under the impression you would set up remote desktop services on your server as this allows full security. Any client accessing the server would only see that client's files hence the comment about the cost of Windows CALs. The last time we purchased the CALs was a few years ago so I do not know how much they cost now.

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Replying to AS:
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By I'msorryIhaven'taclue
08th Apr 2022 12:19

Thanks AS,

Yes, I'd thought a RDS on a server or dedicated desktop our end so that clients are able to login as you've described in your second para above.

I'd read from my earlier link that the "apps" with which to login are free, but thanks for the heads-up that CALs have to be purchased. I suspect the small number of clients who use these to allow us to login to prepare accounts must set up a "free" temporary CAL of 52-89 days' duration. Back to the drawing board for me!

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By I'msorryIhaven'taclue
08th Apr 2022 12:20

Urghh... double clicked!

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By SE_Confused
31st Mar 2022 14:03

The use of rules when we do the bookkeeping for clients raises an issue. If we set up a rule to claim the VAT on the items we know usually have VAT like mobile phone bills, builders merchants etc BUT we do not see the bills wouldn't that expose us to a risk i case the client cannot produce these invoices if they are audited?
How do you deal with this?

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