When businesses do business, they generate a lot of information. In most cases, this information has a relationship to a financial transaction of some sort, like a bill from a vendor or an invoice or sales receipt for a customer. It can be difficult for a small business owner to find the best way to manage the information about customers and products and suppliers, and figuring out the best way to handle the bookkeeping and accounting is often a secondary issue. Sure, it’s important to know how much money is in the bank, but online banking helps with that. For a small business owner trying to keep their operation running, the biggest problems are the ones they face every day, like remembering which customer likes which products, or knowing which suppliers will deliver in a pinch. Bookkeeping just isn’t a huge focus, other than during tax time, because it doesn’t help them get business done.
It is this question of value in daily bookkeeping and accounting work that business owners and their accounting service providers alike are struggling with. Certainly, most business owners recognize the necessity to get the books done, but it is generally for compliance purposes alone. Payroll taxes, sales and use taxes, personal property taxes, income taxes – these are the items that business owners think about when they think about accounting. If you see it through the eyes of the business owner, accounting = paying taxes. It’s a tough value proposition for the accountant, when you think about it. The business owner has to pay someone to figure out how much they have to pay someone else. Yeah, try to sell more of that, and good luck.
The cloud, on the other hand, is beginning to help accounting and bookkeeping professionals change this perspective. It’s a relatively new working model and concept, even though the technology and approach has been around for some time.
Hosted applications have been around for quite a while, too, but it has been only recently that the market has begun to realize the full potential of the hosted model. We have the investment in SaaS solutions to thank for that – they blazed the trail for online application adoption, and this created awareness of the possibilities around hosting solutions. The SaaS and “true cloud” applications continue to emerge and gain acceptance, but hosting is providing businesses with the ability to retain use of their business applications and data, yet benefit from the same managed service and remote access that other online solutions provide. The private and hybrid cloud is proving to be the viable model for many businesses, rather than the shared public cloud.
When you look at how public accountants and professional bookkeepers work with their clients, the concept of creating shared access to accounting applications and financial data makes a lot of sense. Time and distance are the real issues to be solved – the business owner and their accounting pros generally work from different locations, and likely need to access the information for different purposes at different times. If they aren’t in the same place and using the same tools, how efficient can the collaboration truly be? With the cloud, on the other hand, collaboration is fully enabled, and allows each user to do what they need to regardless of the location and time.
As the accountant or bookkeeper is able to work more closely with their client (using the same tools and the same real-time data), information can be processed more regularly and with a higher degree of accuracy. Outsourced accounting and bookkeeping providers are then able to give their clients current, accurate financial information which serves to help make better business decisions. Additionally, by helping with the organization and processing of information as business happens, fewer gaps are found in the data and more controls are implemented which protect against data loss or misclassification. The result for the small business owner is better and more complete information (generally customer and vendor data is improved, not just transaction data), and perhaps knowing the true cash flow and availability now that outstanding checks and undeposited funds are accounted for.
For the accounting professional, the benefits are many. Not only is the professional in a better position to deliver tangible value to the client (much higher value than just a tax bill!), the value is delivered more frequently which increases the overall value perception of the service being provided. Internally to the accounting or bookkeeping business, the increased efficiency introduced with real-time application and data access means that processing workflows and resources may be more streamlined and handled with a great level of efficiency, which drives improvements in profitability and the consistency of service delivery.
There are a lot of new and exciting products and services emerging, and businesses are being encouraged to adopt online and cloud computing models for a wide variety of reasons. For accountants and bookkeepers working with small business clients, it makes sense to do a little exploration and find out how other professionals are applying cloud-based solutions to benefit the professional practice as well as the client operation.
Read about Hosting All My Applications in the Cloud
or more about the Collaborative Online Model for Small Business Accounting Professionals