Cloud accounting has its feet on the ground

By Rod Drury, Chief Executive, Xero

 

 

For small and medium sized businesses, integrating their installed software applications has always been a "nice to have" but completely out of their reach.  With the upfront investment of the initial software, spending a further $20,000 or so on the integration just doesn't add up for these cash strapped businesses.

But with the evolution of cloud services - where software applications and data are stored remotely and accessed over the internet rather than loaded on the PC, smaller businesses are reaping the benefits.  With cloud services, businesses don't need to make substantial IT investments to deploy, manage and maintain physical hardware like email servers and a range of business software.  It has enabled even the smallest businesses to access the kind of technology previously only available to much bigger companies.  There's a plethora of practical business applications that are now available and accessible 24x7 allowing them to transact and conduct business like their much larger counterparts.

More small businesses moving to the cloud

While back in May 2009, when Forrester Research estimated that as few as 2% of businesses with fewer than 100 employees were using cloud computing, they also reported that another 37% were interested in learning more about it.

In the intervening eighteen months, this interest has translated into a growing number of businesses moving to this new paradigm.  This shift naturally impacts the companies that look after them.  Businesses like accountants and advisors are also addressing the move to the cloud and how they service their clients.

Of course whenever a new approach to doing business comes along, there is generally a lot of hype and a tendency for people to split into two camps.  Enthusiast or sceptic. And in the accounting profession, this is no different.

On one side of the ledger, a growing number of accountancy practices are fast adopting web-based applications.  While on the other, the status quo is being fiercely defended, as firms try to preserve the tried and tested processes, concerned about transferring from on-premise software to online.

 

 

 

 

It's all about leveraging the Internet to retain clients, enhance service delivery, increase partner productivity and overall practice profitability.

Clearly accountants have the potential to be big beneficiaries of move to cloud accounting.  As customers become more focussed on cost - and aggressively price practice against practice to get the lowest hourly fees, the ability for accountants to pass on the cost benefits of single ledger transparency, accessibility and availability is highly attractive.  It also gives the accountancy practice the ability to spend more time adding strategic value to their clients' businesses.

Accountants can use the inherent flexibility to empower their clients, while transforming their own practices and driving profitability from services that cannot be marginalised on cost.

Using web-based applications gives accountants the opportunity to collaborate more effectively with clients and work more efficiently with live financial data and reports.  Wherever they are and when it's convenient for them.  It also means travel downtime be reduced, and the finance team can work together and access the same data even when they're away from the office.

Best of breed integrated solutions

Of course, even in the cloud, there's a huge difference between an integration-ready solution and tapping into one that's already integrated. One that's integration-ready means that a business still needs to invest in the integration with other cloud applications.  Whereas, one that's already integrated gives you immediate access to different unified applications.

At Xero we're working with best of breed application vendors from the cloud to integrate their solutions with our accounting platform.  The result of which will be solutions that enable SMEs to use highly sophisticated and relevant applications that previously only large companies could afford.  All with no maintenance and management costs.

These solutions include HR and employment relations management and compliance from Workforce Guardian, and inventory management from unleashed, amongst others, all unified with financial and accounting data for real-time visibility and control.

Business owners want more from their accountant than an annual tax return. They want real-time insights into their businesses, and a better understanding of which of their processes make money and which don't.

As a first cab off the rank, we're bringing the full transparency of payroll data into the mainstream accounting system.  In this way we give small and medium sized businesses clear visibility around payroll costs - employee costs, expense costs, annual leave and compassionate leave costs all unified with the accounting ledger.   This integration provides a granular level of information to help businesses manage their risks.  The integration with payroll allows businesses to see how they're managing the biggest cost to their business in relation to their overall business accounting. Furthermore, building on this integration with payroll, Workforce Guardian customers can also access and view their employee documents from this platform.  So all employment contracts and agreements generated using the Workforce Guardian service along with the comprehensive suite of HR policies, processes, flowcharts and HR forms are all accessible from the one space.

Momentum building

Running an accountancy practice today is more vulnerable than ever before to the pressures of competing on cost and achieving lower margins.  For practices to succeed in driving growth it is essential to have a clear view of the marketplace and understand client needs.

As momentum builds in the move to cloud computing, as an accountant and trusted advisor, it's the right time to evaluate and implement cloud offerings in your own practice to build long term value.

 

 

 

Disclaimer

This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice may be necessary in particular transactions or on matters of interest arising from this article. Workforce Guardian Pty Ltd (www.workforceguardian.com.au) is not responsible for the results of any actions taken on the basis of information in this article, nor for any error or omission in this article.