In the past, accounting systems relied on server-based installations. This legacy approach involved setting up the software on a server or local computer. While they functioned as standalone products, managing the organization’s general ledger (GL) and accounting tasks, they lacked complete integration.
However, with the emergence of cloud technology and the adoption of native cloud solutions with SQL server backends accessible via the internet, a more integrated approach to accounting and finance has become possible.
It’s important to emphasize that cloud accounting extends beyond the ERP or accounting system itself. It encompasses all the operational systems that contribute data to the accounting process. This can include industry-specific management software or transactional data sourced from point-of-sale systems and other relevant sources.
Streamlined Finances and Team Coordination
Cloud accounting and cloud technology enable the integration of multiple products, providing organizations with a unified system. Many businesses recognize that they operate using disparate systems for sales, marketing, service delivery, and other aspects of their operations.
What’s particularly intriguing is that the accounting and finance departments must absorb and analyze all of this data. It goes beyond mere financial figures; it includes statistical data such as the number of new clients, employee turnover rates, and other relevant metrics.
By ensuring that HR, sales, marketing, and operational systems communicate seamlessly, businesses can leverage a single system that facilitates real-time decision-making. This coordination and the timely exchange of information empower teams to act swiftly and adapt to changing circumstances, ultimately driving greater success for the entire organization.
“It’s not just about dollars and cents. If we can integrate our HR, sales, marketing, and operational systems, we’ll have a unified system for making quick, on-demand decisions. This coordination will enable us to provide timely information for teams to act and adapt, leading to greater organizational success.”
Real-Time Financial Data
Real-time information, available on demand, empowers leaders within an organization. When our decisions are solely based on data from 30 days ago, we risk overlooking crucial changes in the information landscape that could significantly alter the situation.
In the past, relying on an after-the-fact accounting approach meant we lacked real-time data and operated reactively rather than proactively. This hindered our ability to foster organizational growth.
Let’s consider marketing as an example. When developing marketing strategies, we generate numerous innovative ideas. We closely monitor our spending and the corresponding results. If the metrics don’t align with our objectives, we need the agility to adjust promptly.
However, if we only receive those metrics 30 days after the fact, we’re forced to make decisions well after the optimal time to act. This holds true for marketing, sales strategies, and service delivery. Real-time information enables us to be highly agile as an organization.
As organizations grow larger, maintaining nimbleness becomes increasingly challenging. However, having instant access to pertinent information provides us with a greater capacity to adapt and make informed adjustments.
“The larger you get, the harder it is to make changes and move. So the more power that you have through your data, the more information you have at your fingertips, the better you can start to pivot faster and be more nimble like you were when they were smaller.”
Driving Exponential Business Growth with Collaborative Cloud Accounting
When discussing exponential growth in business, it can manifest in various forms and strategies. However, most often, we associate it with top-line revenue. This is where cloud accounting plays a pivotal role. It provides us with a reporting platform that empowers organizations to leverage information and make strategic adjustments. Real-time data is at the heart of this process.
Let’s consider a scenario where a certain line of business is experiencing remarkable success. In such a case, it becomes crucial to allocate a portion of the marketing or sales budget to further invest in that specific area. By directing resources and attention towards the thriving vertical, we can capitalize on its growth potential while shifting away from activities that yield lesser results.
As an organization, our focus should be directed towards actions that propel us to the next level and drive sustainable progress.
Effective Growth, Scalability, and Competitive Edge
When leveraging cloud-based solutions, integration becomes crucial. It enables seamless communication and collaboration between different systems, giving you a competitive advantage. The key to scalability lies in this integration. By connecting your systems, you can process more transactions using the same or fewer resources, such as staff or working hours.
This boosts productivity and cost efficiency.
Further, the incorporation of AI into cloud accounting and systems enhances overall efficiency. However, the true value of these products is realized when they seamlessly interact with one another. Manual data transfer between systems is not only time-consuming but also costly for your organization.
When discussing cost savings and the utilization of cloud-based software, many people often focus on the absence of servers and maintenance. However, I believe that this perspective overlooks the long-term benefits of cloud accounting, cloud products, and software-as-a-service (SaaS) models, which offer valuable subscription-based models for organizations.
It’s important to recognize that the value of these cloud and fast products extend beyond cost savings.
In business, the primary expense is labor. As organizations aim to grow and increase their enterprise value, one key aspect is minimizing labor costs through the effective use of technology. Scaling and expanding shouldn’t involve a one-to-one ratio of fixed or overhead costs to revenue. Instead, the goal is to achieve cost savings by optimizing this ratio.
This reduction in costs contributes to building enterprise value, offering advantages in terms of savings and empowering data-driven decision-making to drive growth.
How Cloud Accounting Technology Fuels Startup Success
Technology, including accounting technology, has the power to level the playing field for businesses and organizations. What was once exclusive to large enterprises a decade or two ago in terms of technology and capabilities is now accessible to even the smallest businesses and startups.
Thanks to the technology and software-as-a-service (SaaS) models, organizations of all sizes can harness these tools and gain a competitive advantage, allowing them to compete with industry giants.
I can further elaborate on the challenges that businesses face when they neglect to invest in their financial reporting, cloud accounting, and integrated platforms. It’s common for businesses to attribute success to sales and marketing efforts while overlooking the importance of robust financial reporting and data insights.
When organizations lack these insights, they often find themselves stagnant, unaware of how their business operates on a day-to-day basis. Throughout our experience working with thousands of companies, we have observed that the most successful companies possess a deep understanding of their numbers and the ability to make adjustments accordingly.
On the other hand, struggling organizations are typically behind in terms of the information they receive, less profitable, and less efficient. They heavily rely on manual processes and struggle to keep up with industry advancements in technology, hindering their ability to innovate.
“Technology can level the playing field for businesses. What was once reserved for very large enterprises just 10 or 15 years ago, in terms of technology and capabilities, is now accessible to even the smallest businesses and startups, allowing them to utilize and benefit from it.”
Overcoming Challenges in Adopting Cloud Accounting Effectively
From my perspective, one of the biggest challenges businesses face is making the right decisions regarding the selection of suitable products. In today’s marketplace, there is an abundance of cloud-based accounting products available for businesses of all sizes, ranging from small to medium to large-scale enterprises.
Each of these products has its own unique capabilities, feature sets, and components that cater to specific industry needs.
However, it can be overwhelming for businesses to navigate through this sea of options and determine which product is the right fit for their organization. The requirements of a manufacturing organization for an ERP product differ greatly from those of a professional services firm or a healthcare organization in terms of feature sets and capabilities.
Due to the abundance of choices, businesses may not always have the necessary knowledge or resources to make an informed decision.
The solution lies in finding a reliable partner, an organization that can guide businesses through this decision-making process. However, it is crucial for the partner to be honest and transparent, even if their own services may not be the right fit for the business.
As consultants, we work with specific accounting platforms that may not suit every business that seeks our services. In such cases, we are upfront about it because we understand the significance of investing not only money but also time into selecting, implementing, and utilizing a product.
It is essential to find the right fit for the organization in the long term. Rushing into a product selection without thorough consideration can lead to significant setbacks. I have witnessed numerous instances where organizations hastily chose a product, only to realize one or two years later that it was not the ideal solution.
This setback negatively impacts their growth initiatives, not just in terms of revenue, but also in terms of systems, processes, and operational efficiency.
To avoid such situations, businesses should seek guidance from experienced consultants who can help them find the right product that aligns with their specific needs and long-term goals.
By making informed decisions and selecting the right accounting platform, businesses can set themselves up for success and drive growth in all aspects of their operations.
How Cloud Accounting Software Guards Against Risks
When discussing cloud accounting or cloud products, we are referring to organizations that assume the responsibility of cybersecurity. Every organization faces risks, but it’s important to note that most organizations do not possess the same level of security and support as SAS (Software as a Service) providers do.
For example, companies like Sage, which owns Intacct, and Intuit, which owns QuickBooks, are multi-billion dollar organizations with robust infrastructures that surpass what a typical small or mid-market business can afford.
By leveraging their cloud-based platforms, you are benefiting from their enhanced security measures.
However, it’s essential to recognize that risks still exist. Two years ago, Walter Flowers experienced a significant data breach despite being the leading provider of tax preparation software in North America. They had to address and resolve the breach on their own.
On the other hand, as an organization, you might have encountered multiple clients who fell victim to ransomware attacks and had to pay a substantial amount to regain access to their data. Such incidents can be financially burdensome.
Given these considerations, it is generally preferable to leverage a cloud solution and rely on the security measures provided by reputable cloud providers.
By doing so, you can offload the burden of cybersecurity risk from your organization and benefit from the expertise and resources of these established providers.
Predicting the Future of Cloud Accounting
I’d like to highlight the significant buzzword in the industry right now: AI. An article published in The Wall Street Journal recently discussed how 50% of accounting tasks currently performed by humans are expected to be automated in the coming years.
This indicates a substantial investment and focus on integrating AI and machine learning into cloud accounting and other cloud products, with the aim of streamlining data processing.
However, I don’t want to alarm anyone. Personally, I believe there are still ample opportunities for our accounting industry to provide value-added services and advisory support to our clients.
While AI can automate certain tasks, it doesn’t diminish our potential; rather, it allows us to redirect our efforts towards areas where we can drive meaningful changes and assist our clients in a more impactful way.
AI also plays a role in leveling the playing field. Instead, the freed-up resources can be reinvested in other competitive advantages that help our organizations thrive. We can focus on creating additional jobs and opportunities, driving innovation, and enhancing our overall competitiveness.
“The organizations that struggle the most are always behind on the information that they receive. They’re typically less profitable, they’re less efficient. They rely on manual processes. And they struggle to innovate.”
Indeed, cloud accounting has been widely utilized for several years now, and it’s essential to acknowledge that it’s not a brand-new concept. However, there are still many organizations that have not embraced native cloud solutions.
As technology advances and AI becomes more integrated, these organizations run the risk of falling behind their competitors and facing significant challenges in the future.
Therefore, it is crucial for organizations that have not yet invested in cloud infrastructure to do so promptly. The optimal time to make this investment was three years ago, but the next best time is now.
By adopting cloud accounting and leveraging the benefits of cloud-based solutions, organizations can position themselves for success, stay competitive in their industry, and mitigate risks associated with outdated technology and processes.
How LWI can help
As a Sage Intacct partner, our company has made significant investments in providing a range of services related to accounting and financial management.
We offer outsourced accounting services, including bookkeeping, controller, and CFO services, all utilizing the capabilities of Sage Intacct. Additionally, we specialize in implementing Sage Intacct for clients who purchase the software directly from Sage.
Our expertise lies in configuring the software to maximize its potential and enhancing the reporting capabilities to empower businesses with real-time, on-demand information.
Through our services, our primary objective is to equip businesses with the tools they need to succeed and thrive. We recognize the value of data and leverage the features and modules of Sage Intacct, such as Sage Intacct Planning and Fixed Assets, to harness the data within organizations effectively.
By providing businesses with timely and accurate information, we enable them to make informed decisions and drive growth.
By Matthew Lescault, President/CEO