The old adage, if it ain’t broke, don’t fix it, is often the rationale for hobbling along with that old accounting system. But with the availability of cost efficient cloud accounting and financial solutions, such thinking could be holding your organization or your company back from significant benefits that include cost savings, productivity improvements, real-time business insight, and even increased revenue.
With new cloud technology fast-becoming mainstream, timing has never been better to migrate or upgrade from legacy accounting systems. Whether your existing accounting system is entry-level QuickBooks, or an enterprise-level (ERP) system, cloud solutions deliver impressive benefits and advantages that can no longer be ignored. (*Sources: Gartner, Saugatuck Technology, Forrester Research)
Following is a list of the 5 signs you need a new cloud accounting system, along with further explanation.
5 Signs You Need a Cloud Accounting System
- Too many manual processes
- Inadequate reporting
- Costly system maintenance
- Integrating accounting with other business systems
- Growth and change
One of the most obvious signs that your existing accounting system is obsolete is the ongoing need to re-key data into the accounting system. Often, this involves staff using Excel spreadsheets outside of the system for workarounds in reporting, expense reports, purchase orders, and other processes. Such manual tasks are often repetitive and time consuming, draining staff productivity and ripe for automation.
As companies grow, products and services become more complex, and so do revenue management and billing requirements. Entry-level and most traditional mid-market accounting systems are not designed to handle this increased complexity, and many organizations are forced to use manual spreadsheets to manage such processes.
Manual processes also affect the next sign of accounting system obsolescence, reporting.
Old, entry-level legacy accounting systems affect reporting in both the timing and the quality of information available. For example, a QuickBooks user took up to 45 days for month-end close. After implementing a cloud solution, month-end close was reduced to a few days, with multiple entities.
Real-time reporting is often not possible with entry-level and legacy accounting systems. By definition, web-based software-as-a-service (Saas) accounting solutions provide anytime, anywhere, remote and even mobile access reports, and role-based dashboards.
New accounting solutions incorporate both a multi-dimensional General Ledger and an embedded reporting and analytics engine. This allows companies to more easily analyze real-time consolidated and local financial and operating metrics across their business with the ability to drill down in real time to supporting details.
With new cloud solutions, reporting is facilitated by a library of pre-configured, industry-specific financial templates with built-in best practices charts of accounts, financial processes, reports, dashboards and much more. Templates easily map your existing charts of accounts, automatically creating all of your account hierarchy structures and giving you extensive financial reporting out of the box.
On-premise legacy accounting systems incur significant expenses for annual maintenance fees, along with ongoing IT infrastructure upgrades, both hardware and software. No question, IT staff resources are required, including outside consultants for support and report development.
The following is a list of ongoing maintenance required for on-premise accounting systems:
- Applying Fixes, Patches, Upgrades
- Performance tuning
- Rewriting customizations
- Rewriting integrations
- Upgrading dependent applications
- Maintaining/upgrading hardware
- Maintaining/upgrading network infrastructure
- Maintaining security
- Maintain/upgrading databases
There is a growing need to integrate accounting with other business systems like customer-relationship management (CRM), salesforce automation (SFA), payroll, expense reporting, invoicing, business intelligence, and other operational systems. In addition, there might be requirements for category-specific systems (project accounting, fundraising, associations, sales tax and ecommerce, manufacturing, supply chain, and many others).
Ideally, such integrations can be automated, and tie together the applications to give their end-users and executives a “holistic” view. With new cloud solutions, API’s and connectors can replace extensive and expensive programming required of legacy ERP systems.
Growth and Change
Organizations change over time, most often by growing larger by adding multiple offices or entities, international locations, remote users and stakeholders. This can lead to complex multi-currency, consolidation, and reporting requirements.
With growth comes the need for more complex requirements like revenue deferral and recognition and expense allocation. Can your old system handle multi-currency or multi-entity requirements? Does it support multiple business entities and on-demand financial consolidations? Can your old system adhere to tighter accounting and regulatory compliance standards?
Many legacy accounting systems cannot scale easily to accommodate the increasing complexity of a growing organization without adding manual processes and additional costs.
So Many other Signs
In addition to the “5 Signs” identified, any given organization may experience many others. From auditors concerned about financial controls, to data security, system backup and data recovery, and unfortunately, fraud.
Increasing regulatory and compliance requirements, such as Sarbanes-Oxley and the tightening GAAP guidelines, are forcing many businesses to demonstrate greater “auditability” and “traceability.”
Visibility and streamlined reporting have never been more critical. Companies need to be able to make prior period adjustments and easily view the change history to appease financial auditors concerned about today’s stricter regulations.
Want to Know More?
If any of these signs apply to your organization, it’s time to understand your options. To learn more, download our FREE webcast presentation titled, “Signs You Need a New Accounting System,” which was broadcasted on April 30, 2014 at 1:00 PM ET. The presentation provides key benefits of using cloud accounting solutions along with a whitepaper on upgrading your accounting system to the cloud.