Why Cloud Accounting Makes Sense for Your Company
October 29, 2020
In this episode of The Bottom Line, Tim Schuster, Senior Manager in the Private Business Services Group, has a conversation with John Delalio, Managing Director of EisnerAmper’s Outsourced Accounting Services Group. John explains what cloud accounting is, why accurate and timely information is critical, and how outsourcing your accounting department can benefit your company.
TS: Well, it's great for you to be here as well. So John, why don't you tell the listeners more about you? I gave them a little bit of an intro there, but just give them a flavor of what you do.
JD: Absolutely. So I run a group within Eisner that is designed to help small businesses make decisions with their business using data and financial information. It's a type of outsourced accounting. It's a type of bookkeeping. It's a type of a lot of things. But essentially, what we do is use Cloud-based technology to make it such that the bookkeeping part of a client's life is minimized through automation. And then we leverage accountants to help our clients make decisions and understand the data that they're getting from the system.
TS: So John, let's get into the meat and the potatoes here. What is Cloud accounting and how can it help out privately held companies?
JD: Absolutely. So Cloud accounting, as I said, leverages Cloud-based accounting technology at its core. So over the last 20 years, things have moved to the Cloud, as you probably hear all the time. Well, one of the things that's moved there is the accounting system. And what's nice about it is the software has been designed to be very intuitive, easy to use, and more importantly, it connects to all your different data sources so that data doesn't have to be entered. So it connects to your bank account. It connects to your sales system, your bill pay system, your HR payroll.
Your AR system. And what happens is all that data flows, I know you said jargon-free, but it does flow through the Cloud into the system. And our job is now just really to make sure that the data is flowing, it's accurate, it's reconciled, and closed so that we can present it to our clients on a monthly basis so they can make decisions or what have you. The days of only knowing how much money you've made until tax season is over. We can do it every single month and in shorter timeframes as well.
TS: Well, I'll tell you right now, with more accurate and timely financial data, that can only just help a client. So how can Cloud accounting help with budgeting and forecasting?
JD: The thing about budgeting and forecasting is you need to start with accurate data, and I've been in business long enough that the numbers that are provided and people don't even want to start because they know it's wrong from the beginning. So then the effort turns into a, "Well, let's reconcile and clean up our data before we start budgeting." Well, then after that's all done, budgeting is about to start and nobody's got any energy left or any time left. So they spend very little time in actually creating the budget.
So what's really fun about Cloud accounting is the data is all accurate. It's accurate every month. And we can electronically move that into a tool to help with the budgeting. So then you're making decisions like, "Okay, if I add a sales rep in this region, what's going to be my impact to sales?" And our teams can help you model it. You can do it all yourself using our tools or we can help you with it. But starting out with accurate data is really important.
And then the other part, I think, that's really important is knowing where you stand. Actually, this is probably more important.
Knowing where you stand with the budget on a monthly basis is everything. You want the budget to be alive, providing real-time feedback on your business.
TS: Let me tell you, John, that's absolutely incredible. And a theme I keep hearing, too, it seems like that outsourced can really save some costs, right? This can eliminate the need to hire an accounting team and provide really with better platform and budgeting for forecast for a lot of our clients. Is there anything else that you can think of, too, that is beneficial for being part of a Cloud accounting team per se or a client that can utilize these services?
JD: Yeah, absolutely. So one of the things is we use a lot of, I'll say, Cloud-based bill pay solutions that we connect into the financials. And that helps in two ways. One, gone are the days of having to carry a checkbook around or worry about, "Did I pay that with check? Did I pay it with a wire? Did I pay it with an EFT from my bank?"
No. We use technology that allows you to pay your bills with a click of a button from an iPhone. But what's really valuable that is the second item is there's a serious amount of risk avoidance that happens by using that technology, because what we use, every single step of that transaction is recorded in the Cloud. So it's very, very difficult to have fraud occur in an organization. So not only does it save costs, but it mitigates your exposure points for fraud and things like that.
I also think there's a benefit, too, to if you're a fast growing company and you don't want to give away equity to a CFO or an accounting team as you bring them in. Well, with our Cloud accounting services, you don't have to.
TS: That's extremely useful information. Thank you so much for being with us today.
John Delalio: Anytime, Tim. Thank you very much.
TS: Absolutely. And before we close out our podcast, I'd like to provide one of my famous New Jersey fun facts. Well, this time it's not a New Jersey fun fact. I wanted to keep theme of computers. Did you know that typewriter is the longest word that you can write using a letters only in one row of the keyboard of your computer? Fun facts for today, folks.
So thank you for listening to The Bottom Line as part of the EisnerAmper podcast series. Visit EisnerAmper.com for more information on this and a host of other topics and join us for our next EisnerAmper podcast when we get down to business.