Google cloud accounting and you’ll likely get a list of articles, apps and consultants promising a better life with a switch to the cloud: save time, save money, make your business better – it’s essentially the best invention since the abacus.
The fact is a switch to the cloud isn’t always better. The automobile was faster than the bicycle but even today, not everybody needs a car. Sure cloud accounting has a variety of benefits and is in many cases a great solution – however, it’s only a great solution if you know what your problem is.
Transitioning to cloud accounting software may mean additional resources from your team and higher costs in the short run as you learn and adjust to new processes.
Yet if you’ve correctly identified your pain points and determined which cloud accounting package can help, the value of the switch will be apparent.
While each business will have its own unique needs and pain points, there are a number of common issues which entrepreneurs face and which can generally be addressed effectively with the right cloud accounting software:
In the desktop world, data is generally stationed on one computer accessible to a single user (let’s leave out hosted desktop solutions for now). If you have a bookkeeper who prepares your books, you’re always in the dark until you receive the reports. If you’re collaborating with a team, they won’t know what’s going on either until someone shares the data with them.
Lack of transparency can lead to poor decisions. If you don’t have access to your numbers, you’re less likely to use them when planning ahead and may rely on inaccurate measures like your bank balance to assess how your business is doing.
Cloud accounting software can then be a valuable tool to increase engagement with your books and ultimately lead to better decision-making.
In many cases accounting is associated with retroactive data. You’ll complete your bookkeeping a few weeks or even months (we won’t go into the annual shoebox approach) after the period has finished. That means whatever data you’re looking at will be outdated. If you’re looking to base business decisions such as hiring and pricing on your data, doing so on numbers that are 3 months old won’t be that useful.
When used effectively, cloud accounting features such as online bank feeds or data extraction from receipts can enable real time reporting. You can then engage your team or advisor in discussions on data that should be much more valuable.
You may already be using software in your business for tracking customer contacts, project management, issuing proposals, managing leads, controlling inventory, or running an ecommerce store. However, if the software you’re using doesn’t communicate with your accounting software, you may experience transparency or relevance issues, or be doing a lot more work.
Before going on an integration binge, it’s important to know just how your accounting software integrates with the other tools you’re using. What data is brought over and how does that benefit you?
For example, if you’ve got an online store and using an ecommerce platform, having your revenues and cost of goods sold automatically brought over to your accounting system on a daily basis can be hugely valuable over weekly or monthly manual journal entries. On the other hand, having all your individual customer details imported could be an extra headache and waste of time.
A switch to the cloud isn’t always as easy as flipping a switch. However, through identifying the data that’s important to you and the processes that you’d like to streamline in your business, the right cloud accounting software should create productive benefits and a lot of value.