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Why Your Firm Needs Cloud Accounting Software

Why Your Firm Needs Cloud Accounting Software

Jul 13, 2020 | By Isaac O'Bannon | 0 Comments

Topics: accounting software, Cloud Software

Over the last two decades, the technologies accounting firms rely on for serving clients and for firm management have transitioned from programs installed on desktop computers, to servers, to software-as-a-service, and finally to the cloud. In fact, some cloud technologies have been around as early as the late 1990s, but they have finally taken a prominent place in professional practices as core systems.

In its 2018 survey of accounting professionals, the AICPA found that about 56% of accounting firms use a cloud-based tax or accounting system, up from about 25% in 2015. Furthermore, the majority of firms recommend their small business clients use a cloud-based bookkeeping system. This shows firms appreciate the ability to dig into live client data from their own offices — whether producing financial reports, assisting in payroll runs, helping fix sales transactions, or providing other services.

Many firms, however, have yet to realize the benefits the cloud can have. If your firm is among the late adopters, there are several compelling reasons why you should make the shift as soon as possible.

The Cloud is More Secure than Your Office

In the early days of the movement to cloud-based programs, there was a common concern about security issues. And rightly so. The life and value of an accounting firm is not only in the sensitive financial data it helps clients to better understand, but in the trust those clients place in the firm to safeguard that information.

With periodic stories in the news about data breaches, it’s natural to be concerned for your own data, and that of your clients. But those breaches almost always involve the largest of companies, which make juicy targets for the data thieves —who will spend years attempting to breach a target. But these data thefts occurred before the invention of the cloud, and they will continue to strike physical computers, as well.

For firms that continue to use server- or desktop-installed accounting and tax systems, there’s still the risk of the total loss of this data in the event of fire, theft or major storm, as well as potential unauthorized access if the computers are stolen.

The cloud is much more secure — if the technologies are used correctly, following proper practices., The cloud also offers greater backup for the most likely threats to your data, which comes from fire and theft. This means that even if a fire wiped out your office in the middle of tax season, you could buy new laptops and be serving client again the next day.

Advanced security tools can also be implemented to negate the likelihood of unauthorized access to client or firm data. Developers of cloud programs also implement strict controls that follow the SOC 2 standards.

Digital Workflow Increases Efficiency

In years past, clients would visit their accountant with paper files or a disc of their company’s books, likely in some format that was only usable if the firm also used that software. With hundreds of small business and individual clients using different systems, it caused hundreds of lost hours per year just transferring the data, or manually entering it, into the accounting firm’s software. And that’s before any actual valued service was provided, such as write-up, reconciliations or corrections.

The same was true of tax engagements: The client would bring in paper-based forms, which the firm would then have to manually enter into their tax system. This was also a tedious waste of time and could result in significant data-entry errors. Even so-called scan-and-fill systems weren’t much better since they could only be as good as the quality of the documents and the scanner.

Businesses and individuals have been living in a digital society for many years, even if they are still printing the occasional document. There is, however, no reason to rely on paper-based documents and manual data entry. Businesses using cloud-based bookkeeping programs can export their data into common file formats, and savvy accounting firms using cloud-based accounting and tax systems can easily import data directly into those programs.

Less Manual Data Entry = Better Accuracy = Improved Productivity = Greater Profitability

Digital workflows also allow firm management to easily check in on the status of engagements and projects, see where the firm is most profitable, and optimize firm resources.

An added benefit is the potential integration options between cloud-based accounting and tax systems, and email and client portals. These allow one-click (or no-click) sharing of files with the clients. (“No-click” means that systems can be set to automatically post client returns or financials to their portals when they are completed.)

Instant Access to Live Data

With offline accounting systems and manual processes like Excel spreadsheets, your firm’s accounting data lives on a shelf (even if it is on your computer). It is old and starts to collect virtual dust starting one minute after a report has been produced. That’s because non-live data is a static snapshot of performance at that date and time. On the other hand, cloud-based systems offer constantly-updated reporting and metrics, allowing firms to be proactive instead of reactive.

Furthermore, cloud-based accounting systems provide much greater interaction between systems, allowing users to drill down from client billing into client histories and details, as well as productivity and profitability measurements. This interactivity can extend to firm and client financial accounts with live data feeds streamlining reconciliation processes.

Additional features, such as AI-enhanced reporting, give firm management even more insight into key performance indicators.

Not Just “Anywhere/Anytime,” It’s “Where You Want/When You Want”

Perhaps a better way to state it is: It’s Everywhere/All The Time. Every article touting the benefits of the cloud notes the advantages of being able to access work and data from wherever the professional is, whether at home, the office, or a client’s office (or how about the golf course!). And while that is still a major benefit, so are the accompanying features: Being able to meet with clients virtually anytime you need to and being able to collaborate at the most convenient times via file sharing and document portals.

This convenience is a two-way street. At the same time it allows firm management and staff to have anytime access, it gives the same benefit to your clients. With the right cloud technologies, you can give clients access to their reports or files, which they can retrieve when it’s most convenient for them. In turn, this allows your staff to get back working on client data as soon as it’s available. Giving your clients back some of their free time is a valuable benefit they receive as a result of using your firm.

Attract Better Firm Staff

A 2019 Deloitte survey of Millennial professionals and their younger Generation Z colleagues, shows these groups place more value on being able to work from flexible locations and during flexible times. Evolving your firm in a way that also enables it to be more attractive to highly skilled staff is important to the future of your practice.

Conclusion

With more professionals expected to continue working from home even after the coronavirus situation ebbs, it’s imperative that firms have technology that lets their workforce access their full accounting and client management systems from wherever they may be.

Power of Core
The Author

Isaac O'Bannon

Isaac M. O’Bannon is the managing editor of CPA Practice Advisor and has been advising accounting and technology firms for 20 years.

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