Cloud computing has revolutionized the way small businesses organize and manage every stage of the accounting process, from time sheets to expenses, accounts payable and receivables to reporting and taxes.
And while we call it cloud computing today, very soon it will simply be known as the way we all do business. FreshBooks, for example, already boasts 5 million small business users, while Intuit boasts 1.3 million QuickBooks online users.
If you’re thinking of making the switch to an online, cloud-based accounting system, here are some tips and considerations for choosing the right software and making the transition.
Why Make the Switch to Online Accounting Software
With their anytime/anywhere availability, online accounting software offer small businesses some major advantages over to traditional desktop accounting tools. Here are a few advantages to online accounting software:
- Cost savings. Avoid the costs associated with expensive business accounting software (cloud-based systems range from $0 to $40 per month depending on your needs and number of users).
- Reduced complexity. Small business cloud accounting software is specifically designed with simplicity of use in mind and is a great fit for business owners with little or no experience, as well as more seasoned pros.
- Access your books from anywhere, as long as you have an internet connection. Most systems are also mobile-ready and can be accessed on tablets, smartphones, as well as PCs.
- Multiple users can collaborate and work on system data simultaneously. All changes are saved to the cloud – instantly. And, because of the inherent mobility of these systems, you can invite your accountant, financial advisor and others to access your books remotely. Leave notes for your accountant within the system and collaborate more effectively with those who are there to help you succeed!
- Simplified, worry-free IT. Because the software is stored and managed in the cloud, IT tasks (fixes, upgrades, data back-up) are managed by the vendor (this alone is a huge time and cost saving for any small business).
How to Evaluate Online Accounting Software
There are many options when it comes to choosing online accounting software. So where do you begin? Your accountant is a great starting point for getting valuable advice on which one to choose and can ensure you get the functionality you need, within your budget.
Typical features of online accounting systems include:
- Estimate and invoice generation
- Multiple online customers payment options
- Online payroll and payroll tax filing
- Inventory tracking
- Expense import tools and tracking
- One click financial reporting – accounts aging, P&L and tax reporting, balance sheet generation, and more
- Dashboard reporting that provides a window on your business health, red flags and key actions
You’ll also want to pay attention to the capabilities offered by the software’s extended community in the form of add-ons (think of them as the accounting world’s equivalent to smartphone apps) – more on this below. Finally, find out how easy it is to migrate off the platform should you choose to change your vendor. Likewise, what happens to your data once you terminate your contract?
For a useful comparison of some of the leading applications designed to meet both the budget and the needs of a typical small office or small business, check out these 5 Top Picks for Small Business Cloud-Based Accounting from CIO.com.
Plan Your Switch from One Accounting System to Another
If your existing desktop software is available as an online version, it’s likely that the switch will be fairly seamless, but there are some best practices that are worth building into your transition plan:
- Get Familiar – Take advantage of free trial offers and tutorials to familiarize yourself with the software before making the switch.
- Run Parallel Systems – If you already have an accounting system, it’s worth running the two side-by-side for a few months until you’ve got the hang of the new system.
- Plan your Go Live Date – The first day of your business’ fiscal year is a clean transition point since you’ve closed the books on last year’s transactions and most of the data won’t need to be altered. If January 1 is a stretch for you and your staff, pick a clean cut-off date such as after your taxes are filed.
- Prepare your Data – Make sure your data is clean, taxes are filed and records reconciled.
- Build a Checklist – Create a checklist of the data you’ll need to enter or import such as client and employee information, accounts receivable/payable reports, cash expense categories, bank feeds, etc. If you are moving from one system to another, take advantage of available import tools where you can and consider bringing in your accountant or hiring one for the duration of the transition.
And of course, set aside time to practice.
Use Add-Ons to Build a More Robust Business Tool
As you start to get more familiar with the system and your needs evolve, you might want to consider incorporating add-ons. These third party tools are designed to augment your cloud software in areas such as CRM, project management, payroll, even marketing. For example, if you want to send marketing emails to the contacts in your accounting system, you can incorporate third-party add-ons that integrate popular email tools like Mail Chimp, Constant Contact, and more. Each vendor makes a point of touting their available add-ons, here are links to those offered by Xero, FreshBooks, and QuickBooks Online.
If you are looking for ways to be more efficient and bring greater financial insight to your business, making the switch to online accounting can be a real time saver and streamline many day-to-day financial management tasks.
Are you considering making the switch or have you done so already?