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6 WAYS THE CLOUD CAN AID VAT COMPLIANCE

Worried about the impending indirect tax? Look to cloud accounting software to ease the pain

With the roll-out of value added tax (VAT) in the UAE drawing nearer, businesses are growing increasingly concerned about being prepared. VAT compliance will require significant changes to processes and systems, as well as getting employees trained.

With businesses required to automate their processes to ensure that transactions are captured flawlessly, transitioning their accounting activities from on-premises systems to the cloud could result in major cost savings. IDC estimates that spending on cloud platforms across the Middle East and North Africa will reach $715 million (Dh2.6 billion) by the end of this year and VAT compliance is expected to further drive this trend.

 

With just weeks to go for VAT implementation in the UAE and Saudi Arabia, we look at how using a cloud-based accounting platform can help:

 

Lower Costs

 

Cloud-based accounting platforms offer businesses a range of benefits that legacy on-premises solutions cannot. The first and perhaps most crucial advantage of the former is that operating costs for the business are reduced. This is primarily due to the cloud service-provider’s provision of regular updates and maintenance of the required infrastructure. On-premises software sitting on company servers, on the other hand, requires comparatively large hardware and training investment. 

Cloud accounting service-providers can lower operating costs

 

Cloud accounting service-providers can charge businesses on a subscription basis, which lowers operating costs further. Zoho Books, for example, offers a basic package starting at Dh29 per month, which includes automated workflows, bank reconciliation, custom invoices, expense tracking and recurring transactions. 

 

Greater accessibility

Thanks to cloud-based systems being accessible via browser, the services can be accessed via smartphone and tablet, which frees personnel from being tied to a desktop PC, or even a physical office. Additionally, a cloud system can provide the CEO and other senior executives a quick overview of crucial financial data in just a few taps on their smartphone.

 

Speed and efficiency

For big and small business-owners, as well as their accountants, the last few days of a month have traditionally been a trying period.

With an integrated cloud system, book-keeping can be handled faster

Depending on an organisation’s scale, it can take three to four days of bookkeeping work to close out the month, with another couple required for important reports to reach senior management – and that’s before taking VAT into account. With an end-to-end integrated cloud system, the bookkeeping process can be handled in a matter of hours, thanks to a more streamlined handling and accessibility of data.

With an integrated cloud system, book-keeping can be handled faster

 

Goodbye spreadsheets, hello automation

One of the challenges for companies transitioning towards compliance with the new tax is the integration of VAT coding for both receivables and payables into existing accounting and IT systems. Manually entering in a 5 per cent charge on supplies being received by a business can be a huge time suck.

An automated system can help businesses keep tabs on all tax-related calculations and reports. Invoices that arrive with VAT already factored in are easier to handle than having a person pull out a calculator and sit down to do this laborious task. Even VAT returns are automatically calculated, removing the need for a separate tax filing application.

 

Add-ons and integration

Legacy accounting systems weren’t designed to work with third-party service-providers, but a simple update can allow this on cloud accounting platforms. Office 365, Paypal, G-Suite – all can be brought into the cloud accounting fold to offer businesses a comprehensive overview of transactional activities.

 

Collaborative activities 

With clearer and more easily shareable reporting options, cloud accounting platforms are also designed to accommodate better communication between departments. This will in turn support a better understanding of available budgets and potential future issues, ultimately allowing a more accurate financial forecasting.

 

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