Category: business finance

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Accounting Online and Outsourced Accounting – Focus on Enabling Your Client

Accounting professionals and those involved in business bookkeeping and accounting service delivery have been literally bombarded with messages about “taking your practice to the cloud” and “working closer with clients using the cloud”, but what does all this really mean for the average professional practitioner?  Does it mean that the software and processes already established in the practice need to be replaced?  Does it mean that accounting professionals need to get all of their clients into online applications?  Are the tools used by the professional practice obsolete?  These are all valid questions, and are issues not always addressed in the marketing messages of the various “solution” providers.  The complexity exists with the variety of tools and solutions most professionals use in servicing their business clients, and no single-solution cloud service is able to adequately address this variety.  As a result, many professionals are either trying to assemble their own toolkits through an expensive and frustrating process of trial-and-error, or are avoiding adoption of new technologies altogether.

There are a lot of ways to “enable” a professional practice, focusing on the technologies and applications supporting efficient and profitable service delivery.  The key in selecting the right tools to support the practice is to fairly evaluate the nature of services to be delivered, and understanding how and where in those processes the firm and the client “touch”.  It is in the interaction – of people, data and systems – where better technology-supported collaboration with the client should be established.  In many cases, this means focusing on improving the client system and the accounting process will benefit as a result.

Processes which are entirely internal to the practice must certainly be evaluated and improved, but the initial problem – the new area of focus – is in how the firm and the client work together.  The needs in this area will necessarily drive adjustments to internal processes, which is to be expected.  Most practitioners have already established their methods of dealing with clients, workloads, paper and software that have been around for a while.  It is the new client demand – to get more benefit from existing providers and solutions – which must be addressed.

For example, there was once a need to obtain bank statements and cancelled checks in order to balance a bank account.  This caused many accounting firms to develop a standard process of sending someone to the bank each month to pick up the paper statements and documents for client accounts, so that the bookkeeping could be done and accounts reconciled. With the advent and acceptance of online banking tools, the process for most accountants has been adjusted to where the bank activity data is simply downloaded and integrated into the company accounting information, rather than transported in the form of paper documents which are then keyed in as data.  This simple example of “enabling” the client accounting system to interact with the bank resulted in benefits to the accountant processes, and caused beneficial changes to be made in the internal process of the firm (no more driving to the bank, timely access to bank data, more accurate data due to single-entry of information).  While the client likely doesn’t care how the books get done, they do care about the information being timely, complete and accurate.  Thusly is the accountant value increased through the simple use of a readily available technology.

As accounting and finance professionals look to find ways to deliver greater value to their business clients, they would be wise to explore how and why they interact with those clients and understand what is missing – what more can be done – to support and advise those client business owners.  By focusing on helping the client “tool up” their enterprises to support more efficient and profitable operation, professionals will find that the resultant benefit is more consistent and streamlined access to client data.  Enabling the client, in many ways, is enabling the firm.

Make Sense?

J

Read more about Online Accountants and Their Clients: Working Smarter, or just Closer?

Read more about Data Warriors: Accountants in the Cloud

Read more about using the cloud to extend “connectedness” beyond traditional boundaries

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Online Accountants and Their Clients: Working Smarter, or just Closer?

Online Accountants and Their Clients: Working Smarter, or just Closer?

There are a wide variety of ways to work closer with your clients, and the thing that you will always want to remember is that “one size does not fit all”.  In other words, not every client will like using your favorite technology or software, and not every business owner will recognize your suggestions as solutions, because perhaps they did not recognize the problem in the first place.  But that’s OK, and perhaps how it should be.  You see, using the right tool for any given situation is the proper approach, rather than trying to shoehorn everyone into the same solution or method.  With a client-centric approach, you can still develop consistent internal processes to keep your service delivery as efficient as possible, because many of the core services you provide are consistent across the client base regardless of the solution in use.  The trend is to help your client work smarter, and it will bring you closer to the client than ever before.

Determining what is right for each job or task should be part of your value, whether it’s deciding how to connect remotely with your client, or helping your client find the right software system to support their tasks, with you ensuring that the integration to the accounting system is there and working properly.  Where the focus was once placed on accurate data entry, now it’s on placing the proper solution in front of the user, and through the use of the solution to perform their various tasks, the necessary data is collected. Accounting professionals should recognize that the collection of information in real time facilitates better business decision making, and that they can be instrumental in delivering this decision support resource to their client.

As an example, I know the owner of a small construction business.  This guy runs around with estimates, invoices, receipts, and other paperwork in his truck, and getting him to stop long enough for his bookkeeper to collect all that paper from the truck cab is one of the hardest and most annoying jobs she has.  Her focus is on collecting the paper and then entering the data and getting invoices and reports out.  The accountant is frequently requesting more information or clarification of data, as well as the information necessary to meet various reporting deadlines.  Even after implementing QuickBooks accounting in the office for this business, the ultimate problem wasn’t solved.  Certainly, the information is better-organized and accounted for once collected and entered, but the business owner still lacks timely information about the performance of his business, and sees little additional value in his accountants participation beyond the annual tax return.

On the other hand, I know another guy (landscaping this time) who has an accountant that has him use his phone to record just about everything he does as he does it.  He bids a job, and sends it via email.  He gets paid for a job, then snapshots a copy of the check and deposits it.  Buying equipment or supplies?  Sure, but electronic payment and approval tools let him track that as it happens, too (again, snapshot a copy of that receipt, etc.).  For this business owner, there is more business going on because less time is being spent doing the paperwork of business.  The bookkeeper in the office has the information necessary to keep things up to date, and can focus on how to streamline things even better.  The accountant has a much higher quality of information – faster – upon which to advise the client (which he has time to do, because he’s not cleaning up bookkeeping data or collecting information for reports and returns).  This business owner sees much more value in the participation by his accountant, because real issues are able to be identified and addressed in time to make a difference.

So, for today’s accounting professional, bookkeeper or consultant: is the idea of “working closer” with your client simply the concept of working remotely on the same systems at any given time, or is it to know more about their business and to help them do business better?

Make Sense?

J

Read more about Data Warriors: Accountants in the Cloud

Read more about using the cloud to extend “connectedness” beyond traditional boundaries

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Cloud FAQs for CFOs: CFO.com

There’s an amazing article on CFO.com called Cloud FAQs for CFOs and every business owner, manager, accountant, CFO and CIO should read it.

Here is one of my favorite Q/As from the article:

“Q: But I’m a finance officer, not a technologist. Can you guarantee that the total cost of ownership for the cloud is lower than what I’m already spending for my on-premises IT?
That depends upon what you’re already spending. Do you know?

According to Forrester senior analyst Dave Bartoletti, most companies are not all that good at knowing how much it really costs to run an application because IT departments “are still seen as cost centers.” The company buys the servers, the storage, and the applications, and flips the switch. “What does it cost to run?” Bartoletti asks rhetorically. “Who knows? You just depreciate the assets over a certain amount of time and after they’re fully depreciated, you buy more.” Even organizations that account for staff costs, maintenance, energy — all the indirect spend that goes into producing a service the business needs to run — will probably not be able to cost out individual applications with any degree of accuracy. How much, for example, does your e-mail cost? “If your CIO can’t tell you it’s x, y, z, per box,” Hotels and Resorts CIO Mike Blake tells CFO, “that’s a problem.”

“Enterprises are making significant investments in cloud technology in pursuit of lower costs,” says Dave Zabrowski, founder and CEO of Cloud Cruiser, a provider of cost analytics for cloud consumers, but “if you can’t see what you’re spending, there’s a good chance you’re spending too much.”

And that problem, that financial black box, has been the bane of the finance officer’s life in the IT age. The cloud, if nothing else, presents an opportunity to open that black box”

 Read more on CFO.com (http://s.tt/1jGJU)

Make sense?

J

read more about the confusion over hosted licensing on The Progressive Accountant http://www.theprogressiveaccountant.com/tech-tips/confusion-over-hosted-licensing.html

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Is your purchasing and expense approvals process holding up your business?

Is your purchasing and expense approvals process holding up your business?

When a small business owner hears about purchase and expense tracking, they immediately think of traveling sales people needing reimbursement for plane tickets, hotel rooms, and meals.  For others, it is a process geared towards control, making sure monies aren’t being spent where they are not approved.  Either way, purchasing and expense approval processes are generally viewed as “necessary evils” of doing business, and as such are often facilitated with spreadsheets to which receipts, invoices, quotes, or other documentation is attached.  Reviewing and approving this information is generally a manual process which takes time and attention from other activities.

When times are good, when credit easy to come by and everyone is fat, no one sweats the small stuff. But times haven’t been good for a while and today the small stuff looms large, especially in small businesses trying to grow at a time when investors and customers are wary.
CFO.com (http://s.tt/1kq4O)

Yet, as with so many things in business and in life… it’s not a problem until it becomes an obvious problem.  Most businesses don’t really recognize the amount of time they invest in these types of reporting activities, much less realizing that there are bigger business benefits to be achieved if only they would leverage technology to intelligently address the process.  Redundant information entry and exchange is reduced, accuracy of expense reporting is improved, and data collection and integration eliminates the impact of re-entering  information, or time delays in manual paper-based processes.

The growing problem at Blade, Verbeck says, was not so much that money was being misspent as that the work was burning up his and the finance department’s time. Requests and invoices piled up on his desk, distracting him from more valuable tasks, while employees were either waiting to purchase the stuff they needed to do their jobs or buying and expensing it.
CFO.com (http://s.tt/1kq4O)

In a recent article on CFO.com, David Rosenbaum describes several business experiences in addressing the payables approval process, and the benefits achieved through solving what was once not recognized as a problem.  From simply reducing the amount of money spent on nonessential items, to finding cancelled contracts still being paid, a structured and intelligent approvals process can make big differences in a variety of areas.  The essential element is a structured and intelligent process and not one designed simply to factor the spend into the cash flow.

The savings that can be retrieved by automating and rationalizing approval and purchasing processes are palpable (a 2009 Aberdeen Group study estimated that “improving the percentage of all non-payroll, tax, tariff, and fee-related spend” — that is, indirect, nonstrategic expenses — brought under the management of a dedicated group can help enterprises “achieve a 5% to 20% cost savings for each dollar brought under spend management”). But the real value, says Kristen Lampert, corporate-services manager at specialty-investment bank Ziegler, is de-risking organizational spending by making sure the approval chain has the right people weighing in on the right things.

There’s an old saying that “if all you have is a hammer, then every problem looks like a nail”, and Microsoft Excel has been the hammer of choice for many businesses over the years.  However, there are some things that can (and perhaps should) be done better and more efficiently with a solution designed specifically for that purpose.  Not everything is better in a spreadsheet.

Make Sense?

J

Read the entire article on CFO.com

  • Read more about using the cloud to extend “connectedness” beyond traditional boundaries 
  • Read more about how there’s no fear and loathing in accounting
  • Read more about the pressure on accountants to deliver more value and intelligence to their clients
  • Read more about Data Warriors: accounting in the cloud
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Compliance in the Cloud – Their System; Your Responsibility

Can you outsource compliance to the cloud?

Outsourcing IT to a cloud service provider can be tremendously beneficial for a business.  The model allows an organization to offload not just IT infrastructure costs, but also the costs associated with developing and maintaining all of the practices and processes involved in managing and maintaining the infrastructure and systems.   There is tremendous responsibility in handling everything from platforms and infrastructure to creating best practices for maintenance, management of scalability and growth, forecasting bandwidth requirements, implementing and monitoring security compliance, creating effective and comprehensive disaster recovery plans, and more.

The question which begs to be asked is whether or not HIPAA, PCI/DSS or any other compliance requirements, and the complexities, risk and legalities that come along with them, can also be outsourced to the CSP. For that matter, can any real level of responsibility be fully outsourced, where the liability for non-performance or noncompliance is also fully shifted?

Ummm. No. It is still your problem.

What too many companies really don’t understand is that they aren’t eliminating risk by moving to the cloud, and the requirement to meet various compliance requirements really can’t be outsourced. Particularly in this area, businesses need to recognize that outsourcing certain functions doesn’t reduce or eliminate responsibility or liability.  Just the converse, it could make things a bit more difficult if you don’t keep close tabs on how the provider implements and is involved with your solution. Even beyond that, what is the impact to the business operation when requirements are not met?  Cost recovery from the provider may be one option, but how does that help the business remain operating in the meantime?

“Gramm-Leach-Bliley (GLB) Act  Requires financial organizations to enter into contracts with third parties that they share their customer information with (including cloud vendors) to ensure that the third-party handles that information securely. Executives of those financial organizations can be held personally liable for failure to do so.

Sarbanes-Oxley Act (SOX)  Defines specific security mandates and requirements for financial reporting to protect shareholders and the public from accounting errors and fraudulent practices. SOX dictates which records are to be stored and for how long and requires the data owner to know the location of the data in the cloud and to maintain control of it. Failure to comply can result in fines and/or imprisonment.”

source: CIO.com

This discussion Isn’t limited just to compliance with regulations (at least it shouldn’t be)

In this conversation we need to also address what a business should do in terms of protecting and preserving its information assets (data!) even beyond what the CSP offers. Keeping confidential and private information secure and protecting the data of the business (and clients or patients or other entities) is essential, even when the CSP fails in its obligations or abilities.  This aspect of disaster recovery and continuity planning is not often considered by the CSP yet remains critical to the business customer. The sales pitch, however, never really delves into this area, because it represents an aspect of service coverage that the provider simply can’t provide.

Illustrating this particularly difficult aspect of outsourcing to the cloud is the hard lesson learned by customers of a QuickBooks hosting provider who experienced a severe outage due to a ransomware attack. The hosting service provider promised customers it backed up their data and it did, but the backup archives were also compromised.  In order to restore service, customers were expected to have their own backups of the cloud-hosted data.

While there may have been items in the service agreement which address these issues, I can say – based on a great deal of experience in just this area – the service providers rarely make this point very clear to customers, and more frequently tell customers backing up their data is no longer something they need to really worry about. It’s like that really tiny type at the bottom of a contract that nobody notices until it is too late.

“..restoration proved more difficult in Texas. Lezama explained that for the Texas clients, the backups had been compromised as well, because their backup data had synchronized with corrupt files. But Cloudnine clients are obligated backup their own data as well, as a sort of third-level security measure..”

source: AccountingToday

With compliance in the cloud, it’s their system, but your responsibility.

Outsourcing IT to a cloud service provider in no way eliminates or reduces the obligations of the business to manage certain aspects of information systems and data.  What outsourcing can do is deliver a greater operational capacity and agility more affordably.

The responsibilities to establish information and systems management practices and processes remain firmly with the business, and actually represent a strategic component of the business that is unwise to outsource anyway. Resilience in a business and its ability to conform to regulatory and other requirements are the foundations of sustainability. Remember that cloud providers and services can be leveraged to improve certain cost and system performance metrics, but it remains solely with the business customer to find ways to reduce risk and create a greater assurance of continued operational capability.

Make Sense?

J

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In Bookkeeping, Accounting, and Information Technology: The Value of Outsourcing

The Value of Outsourcing

The small-business market, unlike the mid- and enterprise markets, utilize the general services of public accountants in much greater volume and typically for more fundamental business services – such as business bookkeeping and daily process support. Larger organizations typically employ accounting and bookkeeping departments and/or in-house personnel, and rely on outside accounting professionals for higher-level work. Small businesses, on the other hand, want to hand off much more of the core bookkeeping and checkbook management functions to their public accountant. This creates a volume of fairly mechanical work which can be burdensome and not terribly profitable for many CPA firms. But this level of work is of significant value to the small business owner, and thus the value of outsourcing to the accounting professional should be clear.

CPA firms started to step away from bookkeeping activities (this is in the 1980’s or so), reserving their time for compliance, audits, and other engagements referred to as the “higher level work”.  As business accounting became more complex (largely due to advances in information management technologies as well as accounting and tax regulations, which generated a LOT more detailed information to “account” for), many professional firms saw a need to focus on their core offerings, and not on the lower level bookkeeping and record keeping activities.  As a result, the emerging cottage industry of bookkeeping service providers grew in power and numbers, and came to represent a critical intermediary between the CPA and the small business owner.  Truly, bookkeepers and software consultants are often the folks who help to automate the processes, capture the information, and organize the data so that it is useful to the accountant.

The issue that revealed itself was that small businesses started to pay more attention to the technology and business solution advice and direction of their bookkeepers and consultants than the advice of the CPA.  In a lot of cases, the CPA kept an arm’s length from the business, concerning themselves with their tasks, and not paying significant attention to how the data is collected or controlled.  As long as they got the data, that was OK.  As the reality started to set in, that bookkeeping and information management consulting also delivered the “higher level” accounting work, CPAs once again sought a means to gain more direct participation in the client business… but through a somewhat less direct manner than previous.  Now, partnering was revealing itself as the means to more fully engage the business, and the bookkeeper or consultant, in the overall accounting value chain, resulting with the delivery of work as well as value back to the accounting professional.

The enabler of this value chain, where the accounting professional, the bookkeeper, and the business owner can all work in concert without limitations in systems or based on location, is the cloud.  Providing standardization in terms of data platforms and integration, offering mobility and device independence, and combining resource management and access into a comprehensive approach to solving business problems is enabled through cloud technologies and connected solutions and services.

For many, this concept of fully technology-enabled business seems frightening, like a loss of control or individual accountability.  But it’s important to recognize that, as things become more complex, the opportunity for specialists is always created.  In the ever changing world of technology, it’s a dangerous approach to believe that you can be all things to all people, just as in accounting or tax.  You can’t be a specialist in every area, so you specialize in your niche, do it better than anyone else, and outsource/partner to get the rest done.  This is a philosophy of the cloud, and it’s working.

The true value of outsourcing, whether it is a small business outsourcing their bookkeeping and accounting to a public accountant, an accounting professional outsourcing bookkeeping work to a bookkeeping provider/partner, or those businesses outsourcing information technology management to cloud solution providers, the end-result can include improved focus on the core business, greater agility in embracing and adjusting to new strategies, improved quality of information through attention to process and control, and a much higher level of value delivered to all participants in the value chain.

Make Sense?

J