Cloud Accounting Intacct

Cloud-Based Accounting Software: What Your Clients Need to Know

Written by David Furth

Unless you’ve been hiding underneath a pile of financial records, you’ve already noticed that more and more organizations are making the move to a cloud environment. Perhaps, this has already happened at your own organization. That wouldn’t be surprising, since in 2016 the average organization used at least 13 cloud-based platforms.

Gartner forecasts that, by 2018, 40 percent to 50 percent of business users will have moved their core collaboration and communications systems to cloud platforms. In addition, International Data Corporation reported that the cloud software market will continue expanding at a compound annual growth rate of 18.8 percent through 2019. One of the major drivers of cloud-based software penetration has been small businesses. These firms rely on advanced delivery options to keep capital expenditures down and functionality optimal.

Accelerated Growth With a Cloud Environment

Investing in cloud-based software enables organizations to have accelerated digital innovation, while at the same time seamlessly connecting interdepartmental communications. Today’s advanced cloud solutions are extremely open and allow for the frictionless movement of information from system to system. Each department can make the best choice based on its needs to maximize performance.

Are Cloud-Based ERPs Superior? Yes

There are many ways that cloud-based ERPs are superior to on-premise accounting solutions. For example, because the platform is in the cloud, organizations save money on costly hardware and IT Support expenses. Cloud-based environments also offer automatic updates. This changes the way accounting departments function. Cloud-based solutions tend to be faster and more efficient in accounting workflows than the technologies of the past. Cloud-based solutions also improve user experiences and continuously evolve to keep up with the transformation of markets and operations. Cloud-based platforms reduce a lot of the challenges accounting departments experience on a day-to-day basis.

Challenges With Traditional Accounting Software

  • Data in the system is not up to date
  • There is a reliance on Excel spreadsheets
  • Software is only installed in one location
  • Backups can be cumbersome
  • Irregular updates, if at all

CPA Practical Advisor once listed the most common struggles of accounting in small business as follows: accounts receivable, cash flow, managing paperwork, finalizing monthly reports, and payroll. The publication noted that about 83 percent of entrepreneurs who responded to one survey stated that they do not even have the ability to audit within their management systems.

When approaching accounting with antiquated processes and practices, these types of issues will often cost companies severely either in terms of budget constraints or noncompliance with industry standards.

Advantages of Cloud-Based Accounting Software

  • A real-time overview of your financial posture
  • Automatic updates, ensuring that you have access to the best-in-class features and security measures
  • Access to your data from multiple locations — in a remote working world, this can ensure that efficient financial decisions are made
  • Everything runs in the cloud and your data is backed up automatically
  • Greater communication between departments and vendors

As you can see, there are so many benefits to adopting a cloud-based environment for your ERP system. Nevertheless, in the back of your mind you might be wondering how safe it is: Will I impose unnecessary risks to my organization? To be fair, there are risks with both on-premise and the cloud. However, with more organizations moving to the cloud, security is the number-one concern for all Software-as-a-Service (SaaS) companies. In fact, Gartner predicts that by 2020, 95 percent of cloud security failures will be from the end-user. Organizations can greatly reduce this risk by enabling IP restrictions, two-step authorization, and setting session timeouts.

Three Things to Keep in Mind

As a CPA, you are more than just a business associate — you are a trusted advisor. Your experience and expertise is valued and your opinion is trusted. When you get asked about whether or not an organization should move their accounting software to the cloud, keep these three points in mind:

  1. If you choose the right solution, your data is guaranteed to be safe and more accessible. This means it’s necessary to perform a due diligence platform search. There are real consequences when SMBs approach cloud app selection and implementation without a big-picture view. Often, they select a product that is right-sized for their organization right now, not a product that has the capability to grow alongside their business. When companies rush through the process, they can also experience unexpected operating costs, lack of real-time visibility, and over proliferation of applications and costs. Advise your clients to take the time and find the solution that best fits their needs both today and five years from now.
  2. With a cloud-based environment, you have the ability to work more collaboratively with your clients. You can access the system from anywhere. Instead of communicating through Excel, you can see real-time updates and financial reports. It’s as if you are in the same room working side-by-side.
  3. Chose a solution that has continuous audit trails. We all dread an audit — even the best of us. However, finding the right accounting solution can offer a collaborative compliance tool for capturing why something was done. It takes away the guessing game of “I think this was done because of this.” For example: During an audit, the controller can pull up a transaction that has a stored conversation and the attached supporting documentation. She or he can answer an auditor’s question about not only what and when it was done, but also why it was done.

If you haven’t transformed into the trusted advisor role yet, prepare to do so. It’s coming. According to a recent CPA.COM study, “80% of CPAs think their role will change significantly in the future — the CPA of the Future will offer more consultative business development, risk management, and advisory services by 2025.” Start to gain a better idea of the general landscape, and reach out to trusted subject matter experts for their sound advice. It might sound like a cheesy public service announcement, but it’s a fact that “The More You Know,” the more you can help your clients and be part of the process.

In Conclusion

I hope that I’ve inspired you to do more research or take a deeper look into cloud-based solutions. Research all the pros and cons and fully understand the risks. At the end of the day it is all about finding the right solution for your organization. There are a lot of great options out there and it is not a decision to be made lightly. Please read my eBook: Choosing the Right Middle-Market Accounting Solution to begin your search.


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About the author

David Furth

David Furth is President and Co-founder of Leap the Pond, a leading provider of Sage Intacct-based accounting solutions for growing organizations. Leap the Pond delivers Sage Intacct solutions to growing organizations with BIG plans. Leap the Pond's team averages more than 20+ years of experience with accounting and operations. Each consultant leverages this experience to help customers drive improved performance, streamlined processes, and real-time metrics. Since 2008, Leap the Pond has led more than 350 successful projects for nearly 300 organizations.

David has spent the majority of his career at the intersection of technology and business, working with companies on process improvement and software implementations in accounting, budgeting and forecasting, procurement, and supply base management. He has provided strategic guidance to founders and CEOs – consulting to companies, ranging from early stage and angel funded start-ups, to established market leaders.

As President of Leap the Pond, David is responsible for overall company operations and leads the marketing and sales functions. David holds an MBA from NYU’s Stern School of Business and B.S. in Civil Engineering from Lafayette College. Contact David at [email protected] or 1 (203) 361-9200 or join the conversation on Twitter or LinkedIn.

4 Comments

  • The decision of moving to cloud-based accounting software can turn out to be the most productive decision for any business but only if the right software, right cloud platform and right cloud hosting provider are chosen. In addition to enhancing the flexibility, collaboration, and speed of tasks, cloud-based accounting software gives more security to the data as the data stored in the local desktop will always be vulnerable to threats on both physical and virtual level. Cloud is the new normal for most of the businesses and that’s why one should not lag behind in the tough race of competition by restricting themselves from adopting the latest technological innovations

  • In general, I agree. But it does depend on which cloud based product you are working with. There are two difficulties that I would like to point out (there are more than that, but I’ll pick just two).

    1) “Automatic updates” – with SOME cloud vendors, this can be chaotic. Updates that occur multiple times a month, that you have no control over. While updates to desktop products can be complicated to implement, often (not always) your firm has some control over when those updates occur, so you can plan them for times that aren’t critical. Some online vendors just make too many significant changes too often.

    2) “your data is backed up automatically” – well, yes, hopefully (usually), but these are “disaster recovery” kinds of backups. Many (most?) of the online products don’t give you the ability to take snapshots, which you might need for an audit, or to protect against a malicious employee, or a bad data import. I’m very dissatisfied with online system’s ability to make any but a disaster-recovery backup.

    All in all, there are many advantages to online accounting systems, but I don’t think that we can say that they are better in ALL aspects when compared to an on-premise system. We have to keep pushing the online vendors to improve…

  • Charlie, thank you for your comment. My experience is that the two concerns you have raised should not present a problem, if as I mentioned in the original post, you choose a solution wisely. The beauty of cloud solutions, offered by the top providers, is that 1. they are designed in a way to cause no disruption when updates are made – functionality is added/enhanced and pre-built integrations are maintained, and 2. rigorous infrastructure is in place for continuous back-up of transactional data. You should expect nothing less. If this is not your experience with your current cloud provider, you may want to consider alternatives.

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