Accounting is about much more than just managing numbers in a spreadsheet or other application. It is also about nurturing client relationships, aligning revenue recognition and billing with service delivery and ensuring that your overall approach to managing company finances is setting everyone up for optimal project profitability.
Given this central role of accounting in every professional services organization's day-to-day activities, reliable and versatile financial software is essential. Moreover, the growing adoption of mobile devices such as phones and tablets in the workplace means that accounting tools should be flexible, with the ability to be delivered on-demand, over the Internet, for the completion of specific tasks.
Cloud-based accounting software provides precisely this: convenient access to comprehensive functionality. However, many SMBs are still only getting started with cloud solutions.
- A 2014 survey from Software Advice found that 16 percent of its 151 unique respondents used cloud-based software, compared to 46 percent that relied on on-premises tools.
- More than half of the surveyed organizations reported that they would consider a move to the cloud, citing confidence in its reliability and security.
- While security was the top concern, the report's coordinators pointed out that cloud solutions are often safer than traditional ones because the cloud service provider handles all updates and maintenance.
It may be simply a matter of when, not if, professional services firms warm to adopting cloud-based accounting. Let's consider a few ways in which it can help improve organizational efficiency.
1. Freedom to separate specific accounting tasks
Organizations routinely have to perform revenue recognition, conduct billing and undertake project accounting. Each activity has far-reaching implications for the company. For example, project accounting helps identify sources of revenue leakage, along with opportunities for optimization, in everyday operations.
Cloud-based accounting streamlines otherwise complicated manual processes.
That said, doing them all in a single go isn't always the best approach in terms of accuracy. Instead, it's usually better to have the option to separate each workflow and perform it only when the need arises. Time tracking, revenue recognition, etc. can all be done at the ideal moments with cloud accounting software.
2. Real-time visibility into business information
Capturing time and expenses can be a real drag if done manually and/or after the fact. It ends up being time-consuming and not always that accurate. What's needed is automated data capture that allows for information to be pulled into an integrated system for real-time analysis.
"Automated data capture allows for real-time analysis of business relationships."
In practice, this setup allows for better client relationship management. With timesheets integrated into your cloud financial software, you can know, for example, how many hours have been logged on a project and where your consultants could be best utilized in the endeavor.
3. Improved collaboration across the business
The automation and real-time character of cloud-based solutions open up many possibilities for using data in all departments of the business. Since cloud software is so easy to access and use, it can help remove the informational silos usually associated with spreadsheets and on-premises accounting systems.
The finance department can become more than just records-keeper. It can turn into a partner in the business, capable of offering insights on the efficiency of daily operations.