business accounting – Page 2 – Cooper Mann Consulting

January 28, 2014

Why Accounting in the Cloud?

Business owners and managers need to keep close control of their financial data. They need to know where they stand at all times, and having information available to make business decisions is essential. When the financial information is in the office but the owner isn’t, how can wise decisions be made without access to supporting data? They can’t, and that’s a problem. The solution is simple: work in the cloud.

A cloud computing model properly applied to accounting and bookkeeping systems helps businesses of any size keep their financial data and accounting applications in a safe a secure environment, yet accessible to those who need it. By locating the business applications and data in a protected central location, access to programs and data sets can be provided to authorized users regardless of location or computing platform. For a small business owner, this means that working from home or on vacation can be as productive as working in the office. In larger businesses, cloud-based accounting means the accounting department, CFO and financial advisers might all access the same financial records and applications no matter where they work from.

Cloud computing and hosted application models applied to accounting and bookkeeping represent a viable option for managing, securing and providing access to critical financial information. Businesses outsourcing their accounting or bookkeeping work find that cloud based approaches offer workflow and process efficiencies to help get the necessary information in the hands of those who need it, quickly and efficiently.

Keeping accounting and bookkeeping systems safe yet available, providing business decision makers with the flexibility of accessing their financial data from anywhere and at any time is a highly valuable service. Accounting and finance professionals can act as the trusted adviser to their clients, providing important business insight and information, with guidance in developing cloud computing and online accounting approaches being among the benefits the firm offers. Working closer with clients allows professionals to produce better, more accurate and insightful results. Cloud computing models remove distance barriers and allow professionals and their clients to work more collaboratively with applications and data than ever before.

Many firms are just recently discovering the relationship between technology adoption and business competitiveness. Those that embrace new computing paradigms gain the ability to meet client requirements in innovative, efficient and timely ways while those that do not adopt these new models continue to struggle, unable to communicate value and differentiation in their service offerings.

There are some recognized truths in business, and one is that is isn’t what you know but who you know. Another truth, an understanding that is just now being fully recognized, is that it’s not what you do, but how you do it that matters. Accounting and bookkeeping for business is absolutely an area where cloud computing and the wise application of technology and service can improve cost efficiency, accuracy and turnaround times, allowing the firm to provide a higher level of service to clients. Accounting in the cloud is a technology-enabled approach which propels the firm into an entirely new range of capabilities and potential service offerings, reaching higher levels of performance and profitability.

Joanie Mann Bunny Feet Make Sense?

January 21, 2014November 10, 2017

Efficiency and Value with Cloud Accounting

For some accounting professionals, the problem is finding a way to provide services that are valuable to the client, and doing it in a way that makes it profitable for the provider. Outsourced and online accounting models are the answer, employing innovative tools in the practice and with clients: tools and resources necessary to get more informed and run the business better.

accountingCloud

With online accounting solutions the firm is able to increase profitability with the range of services offered, often adding clients and work without hiring more personnel. Online solutions allow professionals and their clients to work from anywhere at any time, providing both with the freedom to focus on core business capabilities (and lifestyle).

Reducing the requirement for sophisticated on-premises technology may mean providing everyone with the ease of use and security of server-based computing models, which is among the benefits of a cloud IT approach. Centralizing and managing applications, protecting valuable data resources, and streamlining business processes are among the benefits to be achieved with an outsourced, managed application hosting solution. Businesses who outsource their IT management often realize an increased capacity to do business simply by leveraging the cloud to make the current working models more efficient and effective.

Leveraging mobility and real time access is also about increasing the overall range of opportunity to deliver value. Contractors, employees and clients all find improvements in getting the information they need when it matters, and the firm finds a greater agility in meeting client demands and expanding service offerings.

Cloud computing and online accounting solutions have proven the viability of anytime, anywhere working models, and professional accounting practices of all sizes and orientations are realizing the benefits of working closer with their clients by applying them to the engagement.

Cloud accounting is really about improving the profitability of the accounting practice while delivering higher levels of service to the client. The movement of information from one place to another; translating data from one form to another – these are the processes representing the cost and inefficiency in the practice, and are specific areas where a collaborative, online approach may introduce new service efficiency and value.

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Make Sense?

It is worth noting that “cloud accounting” and online accounting models do not necessarily require the use of a SaaS solution. QuickBooks Online, Xero, Freshbooks – these are new small business offerings that exist purely on the web. QuickBooks desktop editions can be “cloudy”, too, when they’re hosted by an authorized QuickBooks hosting provider. The point is not necessarily to use web software, but to approach IT management and systems from an outsourced perspective, allowing for centralized management and administration and delivering secure remote and mobile access. The systems should facilitate the working model, not force it.

January 14, 2014

The Productivity Paradox: Accounting for Returns on IT Investments

There has always been somewhat of a struggle between the IT department and “management”, much of the difficulty existing with the need to demonstrate clear returns on investments for IT purchases. Unfortunately, expenditures in information technology are often the result of short-term views of long-standing problems, applying “solutions” that do not fully address the requirement or which do not deliver the productivity or performance gains expected, particularly in a dynamic and rapidly changing business environment. The assumption is that a wise investment in information technology will result with improved profitability and performance. Demonstrating this on paper is not always easily accomplished.

There is a great deal of research on the subject of accounting for returns on IT investments. Some of this research describes “The Productivity Paradox”, referring to early studies on the “relationship between information technology and productivity, and finding an absence of a positive relationship between spending on IT and productivity or profitability”. [1] Previous to the emergence of cloud computing and widely available remote and mobile technologies (and now possibly even more with the prevalence of available options), businesses invest heavily in IT infrastructure and applications which deliver nominal benefit to the business when measured against the cost of acquisition and implementation. Heavy IT investments are made with little or no measurable benefit to profitability, even if operational performance improvements are created. In many cases, the difficulty in “proving” benefit from information technology investments rests with the lack of information relating to impacts in non-operational areas, such as with investors, auditors or analysts.

The early research has become a foundation for making the argument that accounting professionals should be more directly involved in determining the value and impacts of IT investments – due largely to the fact that accounting professionals are generally familiar with the variety of formulas and approaches which become relevant in measuring the effects of IT purchases. Information technology spending will result in short-term impacts, but will impress on the business over the longer view as well. With a foundation in accounting principles, valuation and analysis, and accompanied by IT knowledge and experience, management accounting benefits from an improved ability to recognize the relevance and value in IT implementations even where no direct profit improvement is visible.

Can difference in firm performance be explained by differences in IT investments? — Can differences in firm performance be explained by differences in IT investments?

Emerging technology models are having huge impacts in business capability as well as risk, and this new paradigm requires that accounting professionals apply their skills to understanding more fully the influences from and results of IT spending in the enterprise.

Having a basis for studying valuation and recognizing the good and bad of focusing on various key measurements (return on assets vs equity vs sales vs investment…) is essential in developing a “formula” for predicting impacts of and potential returns from IT spending, and solving the puzzle that is the productivity paradox.

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[1] Journal of Information Systems Vol. 16; “Returns on Investments in Information Technology: a Research Synthesis”

October 24, 2013June 12, 2018

Growing Up: Software buying decisions throughout the business life cycle

There are two certainties in life – death and taxes. While both are unavoidable, at least the taxes issue can be managed. Managing taxes and business finances in general takes detailed information. Considering how most small businesses get their start with business bookkeeping and accounting, it’s no surprise that information gathering becomes one of the most time-consuming and frustrating tasks around tax time. Fixing the problem from the beginning and implementing a system to manage the detailed information the business needs on an ongoing basis is key to avoiding the rush as well as building a business information framework that might span the life of the business entity. Yet fixing the problem for this year’s tax information gathering is relatively simple compared to figuring out how to format, retain, and continuously collect and compile new data for analysis throughout the life of the business.

In order to understand how to address the problem, it is important to understand the evolution of business accounting. Not how the concepts or practices have evolved, but how technology has (or has not) been applied to certain problems, and where the gaps are.

Starting Up

The first things a new business owner generally does is get a business license, get a computer, and run down to the discount store to buy a copy of QuickBooks or maybe Microsoft Excel. Now, this business owner isn’t necessarily prepared to properly handle the accounting for the business, but he understands that he has to do something. Keeping a check register, at the minimum, lets him know how much money is in the bank. And that’s what it’s all about for the small business person – cash flow and cash availability. But the focus on the checkbook frequently causes the business to postpone implementing deeper, more beneficial processes.

With a focus on the checkbook, the business manages cash by counting payments out and receipts in. But the nature of the payment or the receipt is the true question that must be answered and accounted for. It is surprising how many businesses still keep ledger cards – those manual 3×5’s in a box – where customer and vendor information is kept. It is a simple method, and provides the business a way to keep individual account records. But the fact that this detail information is not part of an integrated system creates a greater potential for lost or inaccurate data. Further, the greater the volume the more difficult and error-prone managing the information becomes.

It is at this point that the business seeks to find a more comprehensive means to manage the additional business data. This is another buying decision the business owner must make, introducing a new system which can handle the additional activities around accounts receivable, accounts payable, inventory and sales orders, etc. The business was already keeping track of products or services, customers and vendors. But here we are at a step where new systems and processes must be introduced. Although a belated effort, this after-the-fact implementation of customer, vendor and item tracking now establishes the means to manage more business activities as part of an integrated system.

The difficulty comes in loading the historic information and learning new systems. Depending on volume, the quality of the manually kept data, etc., it may be determined that historic transaction details are not to be entered. So, the business moves forward with a better system for managing business activities and data, but loses the value of the early transaction detail.

Volume and Growth

The business has implemented an accounting system which helps to keep track of customers, vendors, items, and cash. More detailed processes are introduced as the business requirement grows – offering perhaps more specific information on costs of certain products, or summaries of customer purchases or item sales activity. This data provides a much more informed basis for business decision-making, but also impacts the systems as the volume of data to be managed grows.

Growth may present itself in many ways – growth in the number of products or services offered, growth in the number of transactions processed regularly, growth in the dollar value of transactions, or growth in the number of employees who need access to the system. All of these areas impact the ability of the system to continue to support the business requirements. Quite frequently, a certain “density of data” is reached and the current system is not able to efficiently manipulate and manage the volume. Here again is another buying decision. Can the existing system be expanded to handle the additional volume? Or must a new system yet again be introduced? The business process requirements may not have changed, but the earlier choice of systems may cause a forced change simply due to business volume or number of users.

The frustrations of changing business systems are compounded the further into the business life cycle the change comes. Much of the historic intelligence of the business is derived from the earlier days of operation; data which reflects the stages and activities of the business over time. When a business reaches a point where data volumes force a systems change, a worst-case scenario occurs: The volume of historic data is too great for the current system, and loading it into a new system takes a huge amount of time and effort. Unfortunately, this task often proves too daunting for the company, so again valuable historic detail information is lost and summary information is loaded into the new system.

Operationally Specific Systems

As the business matures – and in order for the business to mature in a healthy manner – specific and detailed information must be captured and analyzed. Systems which take a broad view of the business, offering only general information and process support, frequently do not supply the business with the levels of intelligence truly required. For example, a manufacturing business needs to fully understand and manage the manufacturing processes and materials supply chain to ensure profitability and consistent product quality. A retailer needs to know which products sell in which markets in order to ensure product stock and availability to key customers. And all of this information is time-critical if the business is to make necessary adjustments in time to benefit from them.

This level of detail can only come from a system which incorporates a certain specific orientation towards the operational processes of the business. The fact of selling a product to a customer is an activity which gets recorded, but the additional details of the customer location, pricing levels, purchasing levels, salesman, inventory item, and warehouse location tell the rest of the story. Over time, the business owner can then better understand customer purchasing habits, inventory item turnover, supplier dependencies – a wealth of business intelligence. This data is then used to assist the business owner or management in determining the specific activities or actions necessary to keep the business moving forward and improving performance.

In the end, it is the demonstration of well-defined processes, deep insight into the business operational metrics and financial performance, and the ability to effectively and accurately report on this information that creates a basis for provable business value.

No Best Answer

When looking at the business accounting and finance systems available in the market – particularly considering those which have earned a level of market share – there are visible gaps – big ones. This is clearly reflected in the numbers, where Intuit QuickBooks leads in the small business market, but has no reciprocal in the midrange or enterprise markets. QuickBooks fits into that early space, where the business is just starting out and, maybe, extending into keeping more detailed customer, vendor and item information. MS Excel is also a winner for very small and new businesses, as the spreadsheet is a simple and easy solution to creating an electronic check register. But there comes a point where a business has requirements that extend beyond the ability of the small business software. Sometimes, the mere thought of change is so abhorrent (usually based on a bad initial implementation experience) that the business attempts to use the software far beyond what it was built to handle.

Other application makers offer systems that have a number of small business features, but that also offer more in-depth or complex capabilities to handle the growing business. These systems, too, have a great potential to be outgrown, and can be costly implementations which handle only a portion of the business life cycle.

Larger, module-based systems and frameworks offer a broad range of functionality, integration, and data management capability. They typically address more – and more detailed – business processes, and can scale to very large sizes. But the cost and complexity of these systems is often the barrier, and given that there is no clear seed product (small business version of the big business software), the upgrade path is unclear and problematic. Given the huge gap between the “typical” small business system and the upper-levels in the enterprise applications catalogue – the transition from very small to very large software is not likely to be made in a single step.

Losing intelligence with each step

Each stage of business requirement typically drives to a buying decision. This buying decision is met with angst, as considerations include not only cost, but data conversion vs re-loading, new process or system design and setup, user training, proofing the system (running parallel?) and a host of other issues, not the least of which is the business benefit to be derived.

The emergence of SaaS solutions and multitenant web applications has compounded this issue, as there is a tendency for such solutions to provide only list data and other easily exported data. Transaction information and details are frequently unavailable for export to another solution, or the data may be exported but not necessarily in a meaningful form.

Small Businesses should be particularly concerned about whether or not the solution will fit the needs of the business for an extended period of time and through a variety of business conditions. The small business should also determine if there is a way to continue use of the solution (or transition from the solution) if the solution or the provider stop meeting the needs of the business. Small business owners are particularly at risk, because the SaaS solutions oriented towards small business users often don’t have the on-premises options that some of their enterprise counterparts offer. And small businesses are the ones who are most likely to need to transition to another solution as the business grows. Further, the small business user often lacks the technical knowledge to manage the conversion effectively, and doesn’t typically employ skilled in-house IT personnel to handle it for them. The result: consulting dollars get spent, just to retain the data the business already has. http://jcmann.blogspot.com/2009/11/salvaging-business-intelligence.html

If information is power, too many businesses are losing that power when they migrate from one software product to another – they are losing valuable historic information by leaving transaction and other detail data behind when they convert from one system to another. This should be an area of focus and key discussion point when any change to systems is considered. After all, the insight and business intelligence gathered over the years was likely instrumental in helping the small business grow up to become a successful big business, and will continue to be important for years to come.

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October 17, 2013

Accounting Professional Value is Insight and Advice, Not Just a Hosted Server

Back in the late 90’s, when the application service provider model was first established, a number of providers recognized how beneficial it would be for public accountants to use hosted applications to work more closely with their accounting and bookkeeping clients. Seeking markets which would rapidly adopt a hosted application model, these providers focused on hosting small business accounting solutions such as Intuit QuickBooks desktop products, and then sought participation by the largest addressable communities of users working with those products – QuickBooks ProAdvisors, bookkeepers and accountants. The idea was that the community of QuickBooks professionals would benefit by bringing their clients onto the hosting platform, and service providers could sell to one professional and gain a bunch of small business users. It made sense, too, as it allowed the professional to have a single service and login that allowed them to access all their client QuickBooks company files. The client could log in to the system, too, delivering remote access and managed service benefits to the client, as well. But there was a catch, and it didn’t fully reveal itself until recently as cloud-based applications and true SaaS applications began to gain market adoption.

The problem actually started to reveal itself as more businesses elected to adopt hosting services. There’s a saying amongst the QuickBooks hosting providers that “nobody uses just QuickBooks”. Saying “nobody” uses just QuickBooks is a bit of a stretch, but the reality is that numerous businesses use other applications and software solutions in addition to their QuickBooks product. Sometimes these products integrate with QuickBooks and sometimes they don’t, but it is not often that a business utilizes just the one software solution. At minimum, there are likely email or productivity tools in use, too. The point is that the QuickBooks hosting providers – those hosts focusing on providing service to QuickBooks accountants and small business clients – realized that the number and variety of applications desired by their customers would grow very quickly, as would the variety of needed implementation models. The unfortunate solution of the time was to just put it all on the same environment.

The original selling message to the QuickBooks consultant and accountant markets was that they should get all their clients on to the hosting service, and then the accountant could benefit from an “economy of scale”, making the cost of the overall delivery lower. Further, by grouping the firm and the clients into a single hosting environment, it would make application and data sharing easier. Both of these messages are true, but putting the firm and its clients into a single environment – with the firm as the “sponsor” and front line promoter of the service – began to have impacts which were not clearly foreseen.

Accounting professionals and consultants changed the nature of their relationship with the client, going from trusted advisors to technology and solution vendors.
Client business technology needs were placed as secondary to “enabling” the working relationship between the accountant and the small business client.
Attempts to fully satisfy client technology requirements overburdened and impacted the environment, reducing overall service quality and satisfaction and diminishing the value of the scale economy (as well as the clients’ perception of their accounting professional).
Firms structured their processes to support a single technology and operating model, and found difficulties in adopting new strategies or solutions.

In concept, having accounting professionals and their clients all working seamlessly together in the same systems sounds great. For some firms, a cloud server packed with all the firm and client applications and data enables an entirely new business and service model, which is very cool and it actually works (for some firms and their clients). But the problem – a problem which may not be fully revealed in the short term – is that the various businesses involved, from the accounting practice to each and every client, has different business needs and operates as a unique organization. While there may be fundamental similarities, “the devil is in the details” as they say, and a single platform or hosting solution is unlikely to really work well for all. Even more potentially damaging, the perception of the trusted advisor who is now viewed as a vendor of IT services or software erodes the value of the client engagement and the potential for the firm to deliver greater benefit through their core offerings. A business owner is more likely to change vendors of IT service than they are their trusted accounting or finance professional. And they’re also more likely to change IT service providers if the provider cannot deliver exactly the application or service desired. When the accounting professional is perceived to be the IT service provider, the lines are blurred and the client ends up attaching their loyalty to a software product or business solution instead of the accountant advisor OR the IT provider.

With SaaS and native web-based applications being broadly adopted by small businesses, the opportunity for firms to engage with clients in different ways and with different solutions started to break the one-size-fits-all hosting approach. Professionals found that empowering their clients by supporting properly fitted solutions which work for the client business delivered the opportunity to become more operationally and strategically involved with the client business. Deeper operational and strategic involvement with the client became the means to drive increased value in the engagement and services offered and delivered. The client business was able to benefit from the involvement of their trusted advisor, regardless of what platforms or systems might be in place.

Accountants and bookkeepers are recognizing that the previous model of aligning the practice with a particular software product or delivery system may not be the best approach to building and retaining the customer base. With new business accounting and bookkeeping solutions emerging regularly – and gaining broad market adoption – and as more and more varied cloud based services and solutions are applied to various business problems – professionals will further recognize that their value is not tied to a cloud server, a single small business accounting solution, or to any particular technology. The value of the accounting professional is not in the software they support or the server it runs on. The value of the accounting professional is in the insight gathered and advice provided – services offered which help support better business management, growth and profitability.

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August 22, 2013

Predicting Outcomes and Providing Guidance | Being Nostradamus| Proformative.com

I have a gripe with the accounting profession. My gripe is with the fact that accounting information delivered to most business owners is old news. Stuff happened, the professional properly recorded it and reported on it, you paid your taxes, and that’s that. Game over.

Once upon a time, accountants had to work with book ledgers, pen and pencil (mostly pen, putting that single line through incorrect entries), and stacks upon stacks of paper documents. Just keeping up with the process of recording transaction information, adding it all up (and making sure the footing totals jibe), and then summarizing the information into usable form took all the time available, and the focus was on the accuracy of the work – not necessarily the timeliness of it. With the advent of computers and computerized accounting systems, the process of creating and storing the data became easier, but the volume and nature of information increased and thus the complexity and time to process increased (the “everlasting gobstopper” problem.. it never really goes away).There isn’t any argument over the critical value and importance of that work. Every business owner understands that not properly accounting for business activities can mean increases in tax burdens, penalties and interest, and more. It’s good work… but what do you do with it? My intent is not to try to diminish the value of today’s approach to accounting. Rather, I’m trying to point out how the accounting profession could make a huge impact in today’s pathetic economy, help businesses get financially healthier, and help put the small/medium business market on a path to growth and success. It involves seeing into the future.

These days, technologies exist which facilitate acquiring the information (even in paper form), converting that information into digital data, and then actually interpreting the data to arrive at a transaction. Traditional software and cloud service providers alike are recognizing that mechanical data entry is passé, and do-it-yourself solutions for accounting and bookkeeping will rely upon “smart” engines which can read and properly understand what each scanned document means.

So – once the accurate data entry problem is solved… what’s the next logical step? Analytics! It’s only really possible now that online solutions have brought the business information to the accounting professional in real-time, and have allowed the accounting professional and the business owner to collaborate and share data faster than ever before. If information is power, we have a lot of power in our hands… but do we really know it? This is where BI (business intelligence) and analytics come in, and where the opportunity exists for the accounting profession to become a guiding force in rebuilding our economy.

What if an accountant could not only tell his client that the business lost money last year or last month, but that they’re going to lose money through this month and year if they don’t change their behavior? And, what if the accountant could run a variety of scenarios which would help forecast the most positive business outcome based on certain choices which could be made, or certain activities which could be handled in different ways? What if the accountant could help his client peer into the future, and get an inkling of what the business could look like if certain economic or business conditions continued… changed… ?

Maybe I’m a little overzealous when it comes to believing that the accounting profession could have recognized the economic trauma which was coming, or that they could have prepared their business clients for it. But I don’t believe I’m very far off the mark in believing that not nearly enough “analysis” occurs in the typical public accounting engagement, and even when it does… is the suggested path the right one? I would submit that BI is new enough to so many people that it may not be. Learning what the numbers are telling you is one thing… staving off disaster is quite another.

I would encourage all BI and Data Analytics fanatics to check out an article on CFO.com on this subject: That New Big Data Magic http://www3.cfo.com/article/2011/8/analytics_that-new-big-data-magic

A few memorable takeaways from the article:

“you may be spot-on about a problem, but the solution doesn’t magically appear out of the data.”

“what you do with [data] is a people-based activity, a skill base you have to mature. And it doesn’t come quickly.”

“CFOs have a gut sense that there’s money out there in all that data… The challenge is how to turn that data into new opportunities.” The good news.. is that new technologies are making it more economical to make sense of Big Data… The caveat is that those technologies will not provide those opportunities. That’s still up to the people who make business decisions.”

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reblogged from Proformative.com Being Nostradamus – Predicting Outcomes and Providing Guidance