Small business accounting has changed in subtle and not-so-subtle ways. That statement should come as no surprise to anyone reading this article. Surprising to many, though, is the sheer volume of changes we have seen over the past decade. Both at a macro-level and a detailed level, these changes provide new opportunities for small businesses to improve their accounting functions in many ways. Read on to learn about two of the primary drivers of the changing face and pace of small business accounting.
The Move to the Cloud
Almost certainly, the most noteworthy shift in small business accounting has been the migration to Cloud-based accounting options. Cloud-based solutions such as QuickBooks Online, Sage 50cloud, Sage Intacct, Xero, Wave, Zoho Books, along with others, offer many opportunities for small businesses to leverage the Cloud as a strategic asset. And small businesses are responding in large numbers. In fact, most accounting solution providers now indicate that sales of Cloud-based solutions outpace those of traditional, on-premises applications. So, how does the Cloud potentially improve accounting for small businesses? Let us consider at least four potential advantages associated with Cloud-based accounting for small businesses.
Cloud-Based Solutions Continue to Roll-Out New Features
First, most developers are investing heavily in their Cloud-based accounting solutions relative to their on-premises deployments. In fact, in many cases, the Cloud-based options now have a more robust feature set than their desktop counterparts. Further, developers can roll-out enhancements and upgrades to the solution without small business team members needing to install any software because of the Cloud-based deployment.
The Cloud is the Network
Second, the very nature of Cloud-based solutions means that the Cloud is the network. With today’s decentralized workforce – including work-from-home environments – this factor means remote workers can easily access their accounting solution from practically any location, so long as there is an available Internet connection. Further, small businesses can typically provide their external accountants and others with log-in credentials. In turn, these trusted advisors can access the business’s books quickly and easily, without any troublesome exchanges of data files.
Reduced Dependency on Local Hardware
Third, Cloud-based solutions reduce a small business’s dependency on local hardware, such as desktop computers and servers. After all, these are cloud-based solutions; therefore, team members need access only to a device with a suitable web browser and an internet connection. Moreover, in the ever-changing world of mobile apps, most solution providers now offer robust mobile apps allowing team members to access critical data from their smartphones and tablets.
Reduced Costs Often Yield a Higher ROI
Fourth, in many cases, you can acquire these Cloud-based options for small businesses at price points that are less costly than traditional, on-premises implementations. This point is particularly true when you factor in savings associated with reduced dependency on local hardware. In combination with productivity increases resulting from deploying the Cloud-based solution, most small businesses adopting this strategy improve the return on investment associated with their accounting platform.
Ecosystems of Integrated Applications
In addition to Cloud-based deployments, the second primary driver of small business accounting’s changing face and pace is the nearly limitless number of integration options now available. It has not been that long ago since “integration” meant importing data from or exporting data and reports to Excel. Today, those options still exist, but so many more are available to extend the small business solution’s functionality.
Bank Feeds Cleared the Path for Integrated Applications
One of the earliest innovations attributed primarily to Cloud-based accounting solutions was bank feeds. With bank feeds, you can integrate your bank accounts to your accounting solution so that as transactions clear the bank account, they automatically download into the application. At that time, user-defined rules can automatically categorize the downloaded transactions to the appropriate account in the company’s chart of accounts. Further, for transactions already recorded in the accounting solution, the bank feed process can often match, effectively clearing them from the bank reconciliation. Small businesses that choose to use bank feeds benefit from time savings, improved consistency and accuracy in the accounting records, and nearly automatic bank reconciliations.
Example of Other Integration Options
For example, consider the number of small businesses that sell through e-commerce platforms such as Shopify, WooCommerce, Magento, and others. Virtually all the leading Cloud-based solutions integrate with these and many other e-commerce platforms. Among other items, these integrations typically allow you to download sales transactions from your e-commerce website into your accounting solution, eliminating the need to enter data manually.
Similarly, most leading Cloud-based accounting solutions can integrate with many of the top reporting and business intelligence platforms available today, including Power BI and Tableau. This type of integration facilitates real-time, interactive reporting of critical metrics without manually re-keying data into the reporting solution.
Other examples of tools that you can typically integrate with Cloud-based accounting solutions include:
As you can see, integration options abound for most of the Cloud-based accounting solutions available today. These third-party solutions facilitate customizing and extending your Cloud-based accounting solution’s utility to seamlessly become the “hub” of all business activities without requiring significant manual intervention. As more become aware of these integration options, expect to see small business managers move quickly to adopt them.
Similarly, most leading Cloud-based accounting solutions can integrate with many of the top reporting and business intelligence platforms available today, including Power BI and Tableau. This type of integration facilitates real-time, interactive reporting of critical metrics without manually re-keying data into the reporting solution.
Other examples of tools that you can typically integrate with Cloud-based accounting solutions include:
- Bill payment applications,
- Customer Relationship Management tools,
- Data synchronization tools,
- Employee expense reporting solutions,
- Payroll and human resources solutions,
- Project management tools,
- Sales tax tools, and
- Time tracking and billing solutions.
As you can see, integration options abound for most of the Cloud-based accounting solutions available today. These third-party solutions facilitate customizing and extending your Cloud-based accounting solution’s utility to seamlessly become the “hub” of all business activities without requiring significant manual intervention. As more become aware of these integration options, expect to see small business managers move quickly to adopt them.
Summary
The face and pace of small business accounting have forever changed. With the popularity of Cloud-based platforms and improvements in “digital plumbing” that facilitate third-party integrations, today’s solutions offer compelling options for managing and growing a small business. Moreover, moderate price points, reduced hardware costs, and improved efficiency and productivity come together to yield a generally higher return on investment than traditional solutions. As you consider how to move forward with your accounting and business management platform, take advantage of the changing face and pace of small business solutions to reap the rewards for you and your team.
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