In today’s market, where time is money and efficiency is of utmost importance, it is imperative to leverage technology to benefit and grow your company—allowing it to operate both more efficiently and cost effectively. Cloud accounting, one of the more recent technological advances, is having an immediate impact on business’ overall operational efficiency. There are many cloud accounting platforms available in the market. This article will provide a brief summary of three of the most popular—QuickBooks Online, Xero, and Intacct. Each of these platforms has its pros and cons.
Operating on a cloud platform provides an organization with the opportunity to synchronize transactions directly from various financial institutions—eliminating data entry and the human error associated with it. This level of communication provides real time data and allows executives and business owners to spend more of their time growing their businesses and achieving their strategic objectives. Operating on the cloud also provides ease of access by offering the ability to log on to your platform from any location—giving you real time financial data.
The ease of access available through cloud technologies offers business owners and executives, as well as accountants, a significant advantage. For instance, scheduling time to meet with providers to transfer files and information will no longer be necessary, saving valuable time that most owners and executives don’t often have. Additionally, the cloud allows accountants to have access to reports at all times, enabling them to handle a company’s back office accounting whenever necessary.
Which Accounting Platform Is Best for Your Business?
As noted, QuickBooks Online, Xero, and Intacct all have their strengths and weaknesses, and each may present added benefits to companies within specific industries.
QuickBooks Online is typically used by larger companies that have payroll and require detailed reporting. The only downside to QuickBooks Online is that there are currently no job costing capabilities, which could pose an obstacle to companies within certain industries. However, there is a workaround that can be used until QuickBooks Online releases a new version that provides this functionality.
Xero is a platform option that is an ideal solution for smaller companies. It is specifically suited to companies that are more budget-oriented and do not have payroll. If there are payroll needs for companies using Xero, it is recommended that this function be outsourced to vendors—such as ADP, Paychex, or Zen Payroll. In fact, certain vendors have the ability to set up a feed that will automatically record payroll. However, this requires mapping transactions to the correct account in order to work properly.
Intacct is also a great platform for larger companies as it has the capability to produce more detailed reports, as well as the ability to job cost clients. Much like Xero and QuickBooks Online, Intacct also has the ability to utilize bank feeds. The only downside to Intacct is its interface, as it is not as user-friendly a platform as the previous two discussed. Unfortunately, this can make the implementation process associated with Intacct complex, which may be a deterrent to companies that are looking to implement and utilize immediately.
Company Size and Industry Considerations
Regardless of which platform your company selects, the advantages of utilizing this technology will become immediately evident. However, certain platforms do work better for companies of a certain size or within specific industries. QuickBooks Online works well for companies of varying sizes in every industry. However, it lacks extensive reporting and easily accessible job costing capabilities.
Xero, on the other hand, works best with smaller companies that do not have a lot of activity. Based on these limitations, the platform may be best suited for professional services or the private medical/healthcare industries.
Finally, based on Intacct’ s ability to run a significant number of reports, including customized reports, it is a platform that can be utilized by companies of all sizes and industries. For instance, the platform’s job costing feature makes it a viable option for construction companies.
Making the Transition to the Cloud
When transitioning clients to cloud accounting, there is often some resistance within a company. Typical drivers of this resistance include cost, learning and adapting to a new system, security risk, and/or the level of willingness to embrace new technology.
Regarding cost, cloud accounting platforms, unlike desktop software, bill monthly rather than annually. Additionally, most platforms allow the user to identify and select the appropriate party to be billed. For example, if a company does not want to deal with the monthly billing process, it can have its outside accountant receive the bills and process payments directly.
For companies that face internal obstacles with regard to learning new systems and embracing new technologies, these issues can be remedied through selecting the best platform for your company and providing thorough training and follow-up to your employees.
Another obstacle that may prevent adoption of cloud technology is the perception that the platforms lack security and expose a company to unnecessary risk. Although this is understandable due to recent high-profile data security breaches, security risk with cloud-based accounting platforms is no longer an issue. The reputable platforms on the market must adhere to the same regulations as all financial institutions, and are also held to the same level of liability.
Finally, changing an accounting platform could result in a transition that is disruptive and time consuming. This risk can be mitigated by performing the proper level of due diligence during the platform selection process and by working with your outside advisors to ensure that the transition goes as seamlessly as possible. Unfortunately, when transitioning to a new platform, a company may have to reenter its historical data, as most cloud platforms do not integrate completely with older systems.
In some instances, this can be avoided. For instance, moving from QuickBooks Desktop version to QuickBooks Online will be as easy as clicking a few buttons, and all historical data will be transferred seamlessly. However, when transitioning to Xero and Intacct, a company will need to recreate all historical data—such as vendor info, chart of accounts, and opening trial balances—into its new system, which may require an investment of time and resources to be accomplished effectively.
Cloud Technology Is the Future of Business Accounting
Although there may be some concerns and/or reservations with moving to a cloud accounting platform, once completed, the benefits will far outweigh the challenges. The key is to choose the right platform for your business. Not all platforms suit all businesses, so it is imperative to perform research and make multiple inquiries in order to find the best fit.
Although there may be some challenges or disadvantages to the various platforms, cloud technology is the future of business accounting and will save owners and executives time and money. Utilizing cloud accounting correctly will allow owners and executives to focus on growing their businesses by providing the peace of mind that their accounting operations are being handled in an efficient and effective manner.