The UK accounting sector has been slow to fully embrace cloud, despite the myriad advantages that a fully cloud-based system would offer.

According to a recent survey by Cloud2me, a third of participating firms are still operating hybrid IT environments, combining modern cloud-based tools with traditional on-premise servers. And many mid-sized firms are still relying on legacy desktop and server-based practice management solutions to get the job done. But why?

Let’s look at how a desktop practice management approach could be stopping your firm from being competitive. And why a 100% cloud approach to the key to remaining competitive.

A sluggish desktop system or efficiency in the cloud?

The inconvenient truth is this: If you're still using an incumbent desktop system for all your practice tools, your capabilities as a firm will always be limited.

By sticking with the ‘traditional way of doing things’ you’re affecting the firm’s efficiency and slowing down productivity. You’re also limiting your recruitment potential and creating workflow challenges that simply don’t exist when you’re running the firm from the cloud.

For example, if your team wants to work from home, or from the client’s office, a legacy desktop approach is going to throw up several hurdles:

• It takes time to log in to the VPN, access the server and find the systems you need
• All your software tools and solutions are slower, so simple tasks take an age
• You can’t be sure which version of the client workpapers you’re working on

By moving all your practice systems to the cloud, you remove these obstacles. In this ideal world, everything you do is based in the cloud, with instant access to all the most current data.  

Suddenly, you can work from anywhere, you can recruit anywhere and you can outsource work to literally anywhere in the world that has an internet connection.

Sounds appealing, right? But what’s the alternative to embracing cloud technology and sticking with old desktop systems and sluggish servers?

Step back in time to the challenges of the pre-cloud age

To really understand the limitations of sticking with desktop software, let’s take a step back in time to 2007 when I was a fresh-faced manager, working for an accounting firm in Cardiff.

I was charged with the idea of founding an outsourced team to help us get on top of our client workload. At the time, the cost of hiring in the UK was prohibitive, so the concept was to hire a team in India, to get them up and running with our firm systems and to outsource the basic bookkeeping and low-level accounting to this outsourced team.

I did the research, found the Indian team and got everything set up. At first, it all sounded great…then we started the process of doing the work and the whole thing fell apart!  

1. Bags of receipts: Many clients had literal bags of receipts that needed to be scanned and digitised. This created a huge bottleneck from the very beginning. No work could be done until we had digital versions of the receipts, but that meant someone in Cardiff doing the grunt work to get all this paperwork scanned and into the digital domain.
2. Messy bookkeeping: The client’s bookkeeping could be messy and incomplete, so we were spending a lot of time checking and tidying up the books. At the time, we didn’t have cloud accounting in the firm, so this was all done in Sage 50, which meant using a backup (and stopping the client from using their accounts while we made amendments).
3. Different clients, with different requirements: We had a range of clients, some big and some small. So, not all clients needed the same level of detail in their accounts. But the outsourced team tried to apply the same methodology to tiny micro-businesses as they were for larger corporate entities. They didn’t know the clients or their businesses, so they couldn’t adapt to what that business needed.
4. The UK team wanted to remain in control: The team in Cardiff wanted to be in control of the process. But they couldn’t see what was going on, what work had been done, who was doing it or what tasks were still outstanding. They were also dealing with angry clients when engagement deadlines were missed, or work wasn’t completed.
5. Complex value-add services: The firm was pushing value-add services to clients, but it’s very difficult to give advice when you don’t know who’s doing the work and when. You couldn’t access the data because the spreadsheet hadn’t been returned yet from the overseas team. Plus, you couldn’t chat to the person in India who did the work because they were on the other side of the world in a different time zone.
6. Version control: When you finally had a copy of the spreadsheet, you couldn’t be sure if it was the most up-to-date version. Were there two different copies? Had all the amendments been picked up? Could you trust this data to be the correct version to work with? Or would you need to check it all with the Indian team?
7. Client queries: If the client had a query and needed an answer fast, how could the Cardiff team provide an answer? Who should deal with the query, the UK team that had the relationship with the client, or the Indian team that was doing the actual work?

The arrival of cloud technology – and the transformation it brought to the accounting industry

That was the pre-cloud world we lived in at that time in the mid noughties. But a quantum shift came along: cloud technology arrived and, with it, the development of cloud accounting .

Early cloud accounting providers, like Xero and Kashflow, appeared on the scene, offering a brand new way for clients and accountants to work together online.

Suddenly, you could:

• Get clients to do their bookkeeping online to create digital ledgers
• Access the clients numbers in the cloud 24/7from anywhere with WiFi
• Work with one version of the client file thatwas always up to date
• Collaborate easily with teams and clients indifferent geographical locations.

This was the point at which I discovered Xero. To my mind, it was perfect and could solve all the outsourcing issues and snags that we’d been experiencing. We could all log into the same system, see the same numbers and have ‘one point of truth’ for each client.

At the time, in 2007, Xero didn’t have VAT capabilities (due mainly to Xero being a New Zealand product), so my firm was less than enthusiastic about moving to the cloud. I was told cloud was a fad and no-one would use it.

However, time has shown that cloud was anything but a fad.

One point of truth for all client data, in the cloud

Cloud accounting and cloud tools have transformed the way we do accounting. There are entire ecosystems of cloud-based apps, covering just about every aspect of bookkeeping, accounting and forecasting for your business clients.

The key challenge to overcome was getting your clients to understand the inherent benefits of cloud accounting, and to get them to move their finance processes over to the cloud.

If you’re not in the cloud, you’ll always have a fundamental disconnect. There will be two sets of data and a breakage at this point in your workflow. Moving clients to platforms like Xero removed this disconnect.

With cloud, you have one set of numbers, available around the clock (and around the world).

Are your practice systems in the cloud?

In 2025, maybe 60% or so of your business clients are on digital, cloud-based systems. That’s great, and is a step in the right direction.

But have you moved your practice tools to the cloud?

The vast majority of firms have not yet moved their practice processes over to cloud systems. In fact some are still using paper for their workpapers! Given the innate benefits of managing your workflows via a digital, online system, it’s crazy to think that so many firms are still struggling with legacy desktop systems and physical piles of paper.

Let’s take a look at the different parts of your firm and how these disparate functions should be connected and integrated:

• Client systems: Every client that could be in the cloud really out to be. The larger the percentage of clients using cloud accounting, the higher the level of efficiency, speed, quality and accessibility in your workflows.
• Workpapers: Without moving your workpapers into the cloud, all those version issues and lack of oversight issues come into play. There’s a fundamental disconnect between the digital bookkeeping and the internal workpapers process.
• Accounts and tax systems: All your accounts and tax software should be linked to your workpapers, so every member of the team has instant access to all numbers, data and documents. If they’re not connected, the real question in 2025 is ‘why not!?’
• Practice management: Your practice management software should be connected to your cloud accounting, workpapers and accounts/tax systems. Having this holistic system, with all platforms talking to one another, is what allows you to really maximise the benefits of switching to the cloud.

6 ways you could be working in the cloud

In an ideal world, both the client side and firm side should be fully connected. That’s why practice management via old, legacy systems no longer cuts the mustard.

With the client side digitised and delivering the efficiency benefits you’d expect, there’s no reason to not achieve the same efficiency boost from cloud-based practice management.

Things your systems could be delivering include:

1. 2-way bookkeeping sync: You should be linked up directly with your client’s bookkeeping. The client’s data is coming straight to you and journal adjustments that you're making go back to your client data. You've now got one source of truth and a single, unified way of working.
2. Accessible data sets: You have full access to accounts, budgets and workpapers from all previous years and periods. With Active , even if the client has been on different bookkeeping platforms, you can pull through all of those data sets. Each one is a distinct data set that you can access, use and work from through your core system – without the need to hunt around for a decades-old CD-ROM disc.
3. Set the work to be done: What work needs to be done for each job? An experienced manager will know the client and the work required. But a new junior needs a list of tasks that outlines what is, and what isn’t, required. Your system needs to stipulate what work, and what FRS, apply in any given instance. In Active, we have different binders  for different occasions, so you can tailor the work to fit the type of client.
4. Rollover review points and internal notes: If there’s anything unusual that needs to be noted on the file, this can be rolled over to the next year. When the new team opens the workpapers, they have all the review points and know everything they need to know. Points are picked up immediately and nothing gets missed.
5. Linked supporting documents: if a team member has dropped all the supporting documents into the file, the person doing the review can go straight into these docs to check details or review an amount etc. No time is wasted hunting around for the relevant bank statement and then uploading it to the workpapers.
6. Communicate on the file: everyone on the engagement team is looking at the same information. Everything is live and up to date, with no duplicates and no old information to mislead the team. You can all work, collaborate and communicate through the one online file, and access the workpapers from home or the office.

These are day-to-day examples of functions and internal processes that your firm needs to nail down and move across to the cloud.

You have up-to-date information available to the whole team at any time of day, from any location. And, critically, you have one point of truth, so everyone is working from the same file, the same binder and the same data sets.

What do you need to fix in your firm?

If you’re thinking now’s the time to switch your practice systems and workpapers over to the cloud, you’re right. The big question  is ‘What parts of our current legacy systems are broken, and how can we use cloud tools to fix them?’.

As a starting point, consider these practice elements:

• Links to your clients: How do you get information to and from the client, and how do you work with the client to get their accounts done, checked, reviewed and filed.
• Is it on the cloud?: If a particular process or workflow is not on the cloud, is that an acceptable thing? If it's a fundamental system and it’s not cloud-based, you’ll always have that inherent data disconnect to cope with.
• You can work anywhere in the world: With a holistic, cloud-based system, you, your team and your outsourced workers can work from anywhere in the world. How does that change your recruitment and hiring strategy, and the way you function?
• Are all your systems connected?: You might have a multitude of discrete systems, but are they all talking to each other? If they’re not properly connected, you’re still stuck with the same problem you had before; you’re moving data around manually.

Switch to Active and empower your accounting firm 

You’re already in the process of moving the majority of your client base over to cloud accounting and digital systems. So what’s stopping you from going digital with your practice management?

Bringing your firm into the digital age requires:

1.          Connected systems that talk to each other and seamlessly share data

2.          Linking up with your clients so you share information back and forth

3.          Leveraging the benefits of cloud to be agile and work globally.

This is an empowerment opportunity and a chance to give your firm a competitive edge, based on the benefits, efficiencies and advantages of being a 100% cloud practice.

At Active, we believe the future of accounting lies in the cloud. And we’ve got the cloud-based workpapers, ledger and reporting tools to help you make this a seamless transition.

Find out more about Active

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