What cloud accounting is. How it can help you. What can go wrong.

For many charities the recent Covid-19 crisis has been a wake-up call in financial liquidity. Not just in respect of the sustainability of funding, but in how we manage our money. When doors to offices closed, we lost access to legacy accounting systems hosted on single computers. Without an up to date view of your financial position, how do you know where to target your fundraising efforts? Or how long you can keep the lights on if funding drops? You might have cash in the bank but without up to date details of your funding budgets, how do you know if you can keep paying your staff – now or in three months’ time?

With remote working for all becoming the new norm, charities and businesses alike need to rethink how they are working and accessing sensitive but critical financial data.

What is cloud accounting?

Cloud accounting systems are digital tools that can modernise and streamline financial processes, in exchange for a fee. They’re relatively robust tools, originally developed for the business world. They’re designed to transform processes that were once held on a single PC, or captured in spreadsheets, to a system that can be accessed from anywhere on any computer, tablet or phone using a normal internet browser. Obviously right now, this is a major advantage.

These tools are growing in popularity. According to a 2018 Sage report, 67 per cent of accountants across the globe prefer cloud accounting to conventional software systems. Accounting Today claims that 58 per cent of large companies are using cloud accounting services, and it has been predicted that 78 per cent of small businesses will rely solely on cloud technology by the end of 2020.

These same systems have now found a new home with charities and social enterprises – many even offer discounts to registered charities.

What are the pros?

There are several advantages to accessing these systems. For example, live feeds from your bank account mean cloud accounting keeps up to date with your finances. Systems are automated effectively, and reconciliation can often be done at the click of a button.

Systems are also designed to help you record invoices. Many will allow you to import bills from suppliers by uploading an image. Invoices are automatically matched to the payment on your bank statement, so that a copy of the original document is embedded right in the financial records.

Many also come with an expense management app downloadable to smartphones, meaning that team members can record mileage, take photos of receipts and add details in the app, which are then automatically forwarded. This can speed up payments and cut down on processing time.

Cloud accounting systems can also make it easier to ensure team members have access only to the parts of the system they need. Staff who only need to file their own expenses can see only that. Users such as trustees, who need to see details without inputting any data, can have read only access. You can also give your accountant direct access to the system, cutting out the need to download data and email it back and forth to them.

Access from multiple users creates some risks of fraud, but these systems do have detailed audit trails and highly encrypted servers, so these risks are relatively well mitigated.

What can go wrong?

The biggest barrier to any organisational change can be the very idea of change itself. Why change if something is working? There will be a learning curve, and time will need to be spent communicating about and training people on the new system. People will often be uncomfortable at first, but most experts and users agree that the pros outweigh the cons.

In this instance we would recommend you develop and share project and communication plans: Be clear with all their roles and responsibilities in the transition.

Plan on running systems in parallel. Run both your old accounting system and your new cloud accounting system for a month or two to ensure everyone is comfortable, and can trust the new system.

The cost to do this is likely to be relatively modest, as most services offer a free trial, and once the cloud accounting system is set up and people understand it, chances are they will see the benefits.

Having a clear project plan, and a promise of running parallel systems, should be good steps on a path to success, but if you still have doubters remind them the words of Robin Sharma: ‘Change is hard at first, messy in the middle, and gorgeous at the end.’ The efficiencies gained should far outweigh the pain of implementation.

Setup of any system is critical, and this is especially true for a charity setting up a system that was designed primarily with businesses in mind. Cloud systems may need to be adapted, like a lot of finance software, to meet the needs of charities.

Tracking spending against budget by individual funder is possible in some cloud-based accounting systems, for example, but will take some knowledge to set up properly. You will need to either learn the ropes yourself, or find a specialist team that can support you.

For Xero, one of the leading providers of cloud accounting software, there is a really helpful guide to how to set up your system created by the treasurer of a UK charity. Some of the descriptions used are quite technical, but if you already have an accountant on your team they may be able to set everything up using the information on this website. Xero also has some information here.

I’d advise looking at your resources – who do you have on your team to help you ensure that things are set up right? Any accountants who can take on the responsibility of researching and setting up the system?

Also, do your research. Before you dive in, be sure to check with fellow charities to see how they have handled this, check forums and the product websites themselves to see what guidance they can offer.

And get some help. If you don’t have someone who is capable of driving the project consider consulting an expert to help you with setup. Often systems will have ‘certified advisors´ who can help. Do ensure that whoever you get has experience both with the system AND with the charitable sector, as many traditional bookkeepers and accountants won’t understand your needs or what you are trying to achieve with a system.

It’s also wise to check the details of any accounting system you are considering to ensure it meets the necessary safety concerns. The good news is most of the leading providers offer bank level security, automatic encryption, daily data backups, multiple location data storage, and are fully compliant with GDPR.

Basically, research your providers. System security should be an integral part of your system selection process. If you stick with the major players you can have confidence in their security, as they have been well tested over many years by thousands of organisations. Major players include Xero, QuickBooks Online, Sage 50, etc. If you choose to go with a little known provider, do research to ensure compliance.

Understand cloud based systems are already the norm. Some people within your charity may be sceptical of cloud-based solutions, citing security. But you can take an evidence-based approach to addressing this. Find out what cloud-based systems they already use - Facebook, Gmail, Yahoo etc. Do they do online banking, or grocery shop online? Then they are already trusting the infrastructure of cloud-based security in their everyday lives.

Whatever you decide, we wish you luck!


If you have any questions about cloud accounting software, or need the help of a finance specialist focused on charities and social enterprise, please feel free to check out our services, and sign up for a free, no obligation consultation at, or contact us directly at 

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