Cloud Accounting: Make Better Decisions About Growing Your Business
- Nov 4, 2019
- John Delalio
Growing and running a successful business is not easy. One frightening statistic is that 80% of new businesses fail within five years. And as companies grow larger, it doesn’t seem to get any easier. Consider the large number of family businesses that don’t survive the transition to the next generation; often, the cause is a lack of effective planning.
In the last few decades, computer accounting systems have evolved and gained a tremendous capability to supply a lot of information quickly to business owners. Yet, the statistics on long-term business success have not changed. Why is that? More importantly, what can be done to increase the likelihood of success?
One area that can be radically transformed is the daily accounting and bookkeeping of a company. Cloud-based accounting technology has made it relatively easy to acquire accurate information on the state of a business in almost real time. However, traditional bookkeeping has simply not taken advantage of these advancements to facilitate better decision making and business planning.
Cloud accounting is designed from the bottom up to provide a level of services and convenience that cannot be matched by any traditional or online bookkeeping system. Cloud accounting can be customized to facilitate the growth of your business by providing you with easy access to information, analytical tools, and an entire team of accounting experts. And the many advantages of cloud accounting are available for about the same costs as traditional or online-based bookkeeping services.
The biggest advantage of cloud accounting is that you have an accounting team that can be assembled with the particular concerns of your business or financial situation in mind. Your taxes are handled by an expert in the tax code; your payroll is handled by a payroll expert. If you're dealing with trusts and inheritances, you've expertise available for that. Your entire financial picture is under the aegis of a qualified virtual comptroller who is intimately versed in the details of your industry sector. Your short- and long-term financial decisions are based on accurate data and expert advice. Contrast that with the sort of information you might get from a bookkeeper who doesn't have informed expertise in any one area, the financial projection aptitude, or in many cases the knowledge of the trends of your business and the markets it's in, and the value of cloud accounting becomes obvious.
You have access to data and reportage whenever you want. With cloud accounting, your data is available to you 24 hours a day, and you can examine that data using analytical tools that are designed for simplicity and usability. You don't have to wait for a report from your bookkeeper, and you can work with your data on your own, customizing the way it’s presented to you in graphs, charts or numbers. You can also apply modifiers and extrapolations to your data and take advantage of the advances in AI that allow for more accurate projections. And you can do a lot of this from a mobile device. All you need is an internet connection.
Cloud accounting data is more accurate because humans aren't entering it. Human error in typing in numbers is the main cause of financial data inaccuracies. Cloud accounting drastically reduces the number of points of failure by virtue of having less people involved. In a typical cloud accounting transaction, there is one endpoint: the initial entry of the data, and that's it. The rest of the data handoffs happen via highly encrypted data streams. Further, the data is cross-checked by a number of applications and team members. The net result is very accurate data and excellent error tracking such that if there is a problem, analysts can quickly home in on the source of the problem.
Cloud accounting data is timely. Because 95% of the bookkeeping in cloud accounting is automated, your transactions are entered into the system as they happen, not at the end of the day or week or whenever the bookkeeper gets around to cranking in numbers. Accounts can be checked at almost any time of day or on the weekend, and the information presented is typically up to the minute. With cloud accounting, you can be on your boat on a Sunday afternoon, bring up a report on your mobile phone, and see information immediately that in a traditional bookkeeping system might be unavailable for days, depending on the schedules and procedures involved.
Cloud accounting offers an upgrade in security vs. traditional bookkeeping. Because your data is in the cloud, constantly backed up, it is free from physical damage or tampering. Fire, flood damage, or theft can't affect your records. Further, the chance of malfeasance is tremendously reduced. In traditional bookkeeping systems, there are a limited number of people involved in maintaining your records. If someone decides to "cook the books," there is limited oversight. In cloud accounting, your data is under constant scrutiny from multiple data points and team members, which provides an umbrella of oversight. It's difficult to get away with an illegality, or even an honest mistake, when the data is being consistently monitored. In cloud accounting, your data is also encrypted, and communication between the various service providers is encrypted and password protected. Financial-information-grade cybersecurity is extremely high. It has to be because of the millions of transactions and billions of dollars that are transmitted across the internet every day.
The next step is to get in touch with a cloud accounting specialist and schedule a consultation. Discuss your current business situation and your future financial goals, and design a system of integrated products to make your data accurate and accessible. Most importantly, figure out an ideal advisement team to keep your business locked in on your goals so that growth and advancement are a natural end product of good data keeping and analysis along with expert advisement.
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John Delalio is a Partner in the firm’s EA Outsourcing Solutions (EAOS) Group which provides outsourced Accounting, Finance, HR, and IT solutions to small businesses, startups, and family offices.
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