Successful businesses, no matter how small or large, are able to focus, like a laser beam, on what’s important: innovation, customer service, growth, company culture and winning against their competition.
Finance and accounting, while critical to business operations, is often urgent, but not important. Yet so many executives like you allow themselves to get distracted from these critical success factors by responding to inquiries, tracking down missing checks, making sure the books get closed accurately and reconciling accounts.
If you are looking for better ways to focus on growing your business you should consider outsourcing your finance and accounting operations. Here are seven key benefits of outsourcing accounting and finance.
- Be more efficient– For one week, keep track of how you spend your day. (You can easily accomplish this with a free tool called toggl. http://toggl.com ) How much time do you spend each week on finance and accounting? If it is more than 1 – 2 hours a week…it’s too much. You should be spending your time improving operations, better serving customers and growing your business. Removing the daily distractions of accounting will help you do this.
- Reduce costs – Outsourcing your accounting eliminates all of the costly taxes and fringe benefits associated with full and part time employees. You pay one fixed monthly fee for everything. Research has shown that outsourcing accounting can save up to 40% in monthly costs, when you consider the salary plus taxes, supervision, vacation and health insurance.
- Eliminate fraud –Most small businesses have one accounting person that does everything….sends out the bills, collects and deposit checks and reconciled the bank account. When these duties are not separated, you increase your risk of fraud. A recent Association of Certified Fraud Examiner’s study showed that the most common victims of fraud are privately owned small businesses with less than 100 employees with an average fraud amount of $147,000. Outsourced accounting provides you with the checks and balances, as well as the oversight that you need to prevent fraud.
- Highly qualified and experienced staff – By having a team of accountants and CPAs work together to take care of your books, you can take advantage of their significant accounting, tax and compliance expertise which is all included in the monthly cost. By outsourcing you will automatically stay ahead of and comply with the myriad changes in income and sales tax and reporting laws.
- Ability to scale – By outsourcing finance and accounting, scaling your business becomes easier. Rather than distract yourself by hiring additional finance staff, outsourcing grows automatically with your business. You can focus on hiring the best people to sell your products and service your customers…which goes right to the bottom line.
- Improve cash flow – Outsourcing provides you with access to cloud based tools and technologies that will help you get paid faster and manage payments more effectively. At the simple click of a mouse, you can see an up to minute analysis of your cash.
- Better Manage Your Business –What type of information are you receiving today from your finance system? Most importantly, how timely is it? When you get last month’s financial on the 20th of the following month, how do you support decisions in the beginning of the month? Outsourcing provides you with real time information on all aspects of your business, not just financials, with the click of a mouse.
While many aspects of traditional accounting remain the same, where this process is managed has changed drastically. Cloud accounting is becoming a strong suitor in the market of finance technology, and is quickly rising up the ranks of favorite choice for CFOs, COOs, CEOs and CIOs that want to streamline their business.
Why are so many accounting professionals choosing to move to cloud-based accounting? Here are the top five reasons.
- Rapid growth. Business is booming, and corporate officers need the ability to keep up with real-time financial information about their company. The automatic updates bring banking and the ledger together in real-time.
- Low maintenance. With a system that is only set on the computers in the workplace, businesses find that they have to keep throwing more people into the mix to keep up with the changes that constantly need to take place in their system. The ease of not having to buy, store, and maintain software is a breath of fresh air that helps the accounting department work more efficiently.
- There is only one version. If there is a glitch in the system, the vendor can fix it for all customers simultaneously. Say goodbye to the long waits on the phone when the system isn’t working properly.
- Payroll is streamlined. The ability to seamlessly and immediately integrate payroll information into your finance system will provide you with real time insights into one of your larger costs.
- Access anywhere. The top reason so many are turning to cloud based accounting is that it can be accessed anywhere with internet access. on any device….PC, MAC, Tablet, Smartphone.
To learn more about what cloud accounting can do to help your business run more efficiently, please contact the Cloud Accounting Blog.
For many years, CFOs were burdened with antiquated finance systems that had one core focus, closing the books and producing a set of historical financial statements for the month.
In many companies, finance and operational systems, such as manufacturing, customer service, payroll, time and expense and project accounting were run on completely different platforms. This created significant silos of information that too often could not be easily combined into a unified view of the company.
For any type of ad hoc or operational reporting, CFOs had to rely heavily on the IT department that was tasked with maintaining, supporting and backing up all of these disparate systems. Too often IT was far too busy to be able to turn around these requests in a critical time frame.
How did finance respond? Spreadsheets. However, too often these spreadsheets were filled with errors.
In fact, Ventana Research estimated that thirty five percent (35%) of all spreadsheets used in corporate finance had errors. You can download the full Ventana Research report here.
With the advent of new tools and technologies available through cloud accounting, the role of the CFO has transformed from a reporter of past results to a strategic resource. How?
- Real Time Insights – cloud accounting systems are real time, providing up to the minute data
- Seamless Integration – all critical operational system feed data into the finance systems in real time so that all operational results and metrics can be seen at all times
- Robust , User Driven Reporting – financial and ad hoc reporting tools are easy to use and enable finance users to easily develop critical management reporting
- Workflows – help streamline previously inefficient manual processes and reduce errors
- Dashboards and KPIs – provide real-time metrics for Board level and upper management, so that the CFO can proactively inform, rather than reactively respond.
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For companies that sell physical goods, recognizing revenue on sales is very easy and straightforward. Depending on the shipping terms, once the product is shipped or received by the customer, the revenue and costs for those goods are recognized.
However, if your business sells software, services or other intellectual property, then the rules, as well as the accounting for revenue recognition, can be a nightmare. There are a myriad of revenue recognition standards that must be applied over the period of the contract or agreement. Most importantly, many companies are not aware that these rules are expected to undergo substantial changes over the next few years.
Revenue recognition is a significant problem for Software as a Service companies (SaaS). They process hundreds or thousands of orders every month. Each element of their contract, including subscriptions, support and professional services must be accounted for and tracked separately. Many times, these orders can span three to five years.
Faced with these challenges, how do the majority of firms we speak with handle their revenue recognition? Spreadsheets.
Read more on the Cloud Accounting Blog