The Association of Chartered Certified Accountants (ACCA) recently came out with a report last month showcasing technology’s role in the future of finance. The report concludes that technology can revolutionize finance and accounting.
Technology has played a role in Accounting and Finance for numerous years. Originally, most software was targeted to large enterprise due to its cost and complexity. The cloud drastically changed the landscape by bringing enterprise type technologies to the SME market. Now 80% of CFOs have cloud as part of their technology roadmap. Here are the benefits technology brings as identified in an ACCA survey of CFOs:
Improving efficiency and productivity – 70%
Creating new value for a business – 53%
Reducing costs – 33%
Improving communication internally and externally – 20%
Improving quality and standardization – 20%
As technology advances the above numbers will even be higher. Software companies have already begun to use artificial intelligence and machine learning.
Even though the returns can be great, it is important to be cautious about guaranteeing huge returns or overnight results. The report warns CFOs to use caution about where, when, and how they do or do not implement new technology.
A Technology Roadmap is Key
Technology is not automatically the solution. You need to understand your business goals and processes. Automating a bad process doesn’t fix anything. Implementing the wrong technology can be catastrophic and can possibly lead to employee turnover and insurmountable costs.
Companies shouldn’t rush into a decision, but also there is a lot of risk in not embracing technology and being left behind. The solution is to create a defined technology roadmap. A technology roadmap is a document which outlines the plan to reach short-term and long-term goals through the use of technology solutions. This type of roadmap typically provides key information which helps organizations make better decisions around technology investments.
Technology roadmaps are often driven by IT. However, it is important for CFOs and other business executives to be involved. They are the ones that understand short and long-term goals. Lavoie CPA continuously studies and evaluates technology. We also have the business acumen to apply the right technology correctly. Need help with a technology roadmap or software evaluation, give us a call.
Small and medium-sized businesses (SMBs) are often driven by a passion or cause – not spending hours on accounting and financial management.
SMBs face many financial challenges that affect cash flow including hiring new employees, increasing profits, employee healthcare, growing revenue and properly managing expenses.
Fortunately, technology has changed the game for SMBs. In the last decade, new technologies have enabled SMBs to compete with large enterprises.
Technology is only part of the equation. Accounting as a Service (AaaS) is a hybrid solution that combines services with software; thus, the client can enjoy the benefits of professional expertise and leading cloud technology. This lays a great foundation, allowing companies to focus on revenue generating activities. They are able to focus on future growth instead of being stuck analyzing the past.
10 Benefits of Accounting as a Service
Real-time visibility to your business performance via dashboards
Reduce financial risk
Be audit ready at all times
Improved process flow and automation
Eliminate staff turnover
Reduced IT headaches (upgrades and maintenance)
Integration with your other applications to eliminate information silos
Outsourced Accounting or Accounting as a Service (AaaS) provider can be the catalyst to take your organization to the next level. For some SMBs, accounting is not looked at as a strategic function of the organization, but it should be. It also shouldn’t take focus away from growing your core business. Lots of SMBs don’t consider Outsourcing. Here are 5 main reasons why.
1) They think it is too expensive
By using Accounting as a Service, you have access to shared service center. Providers have put a lot of investment, thought, and execution into their model and have staffed accordingly. With an AaaS provider you now have access to a full accounting department that often is less expensive than one full-time FTE. This doesn’t even figure in technology costs that come with the service.
2) It is the same as bookkeeping services
Bookkeepers are responsible for recording daily financial transactions. Controllers are responsible for financial reporting, internal audit and internal controls. CFO are responsible for financial planning, financial data analysis and strategic planning. By relying only upon a bookkeeper you are stuck looking in the past and cannot see into the future to effectively make critical decisions for your business. AaaS providers ensure daily transactions are done correctly but also greatly reduce risks and provide necessary forward-thinking strategy to help growth your business.
3) We can just do the same in-house
For most SMBs it is hard to justify the expense of having a bookkeeper, controller, VP of finance and CFO. All positions have importance. You don’t want to pay a senior level person to do daily transactions and you definitely don’t want to ask an entry level person to manage financial risks.
4) We cannot have any finance staff in-house
Often AaaS providers work with internal staff to fill voids. Yes, providers can function as the entire finance department but often work with existing staff to help maximize their production.
5) We have more control and stability by utilizing in-house staff
Employees turnover and training are always on the minds of companies. If you don’t have a defined professional develop plan for each employee, you are at risk of losing your top talent to other opportunities. By using an AaaS provider you eliminate the risk of employee turnover. You also will not miss a beat when people people are out sick, on vacation, or on leave.
According to a recent report by Adaptive Insights, CFOs want their employees to spend less time on collecting and preparing data and more time on forecasting and analysis. The survey revealed that financial planning and analysis (FP&A) teams are currently spending 53% of their time on reporting and data gathering alone.
“Reporting, whether it’s on actuals or forecast or planning should be quick. We shouldn’t be spending a lot of time on that,” says Jim Johnson, CFO of Adaptive Insights. “We should be spending much more time on the model that’s supporting it. The predictive analysis, the key performance indicators and the stuff that is really important for the company.”
There is a good reason why employees should spend more time on analytics. Oracle found that businesses who were effective at integrating financial and operating data, using analytics in processes and utilizing predictive analytics outranked their peers by 70% on profit and revenue.
How Can You Improve Your FP&A Process?
Implement a Dynamic Planning Process
First of all, your business need to incorporate a FP&A process that allow for flexibility. Rolling forecasts, for example, is one way to ensure you are adapting to market forces. Since rolling forecasts ultimately is an approach where you add or drop data on a rolling basis, you consequently have real-time insights to your performance against your predictions. APQCreported that an organization can save a median of 25 days on the annual budgeting cycle by using rolling forecasts.
“It makes no sense to use a 19th-century tool to manage 21st-century company in a volatile global economy,” argues Steve Player, a program director at the Beyond Budgeting Roundtable. “In the old days, the CFO sat in the back of the ship recording what happened. Now, the CFO stands on the bridge looking forward and adjusting for variables.”
Traditional annual budgets have limits. They often take too long to prepare, and when completed the data is already out of date. Rolling forecasts offer continuous updates to your data and a longer horizon with data up to 12-18 months ahead. Thus, you have much more accurate data and reliable insights. This, as a result, allows you to take more strategic decisions about your business.
Collaboration among employees and management is crucial for your business. First, they help you realize your goals, but they can also aid in reducing hidden costs. According to research byCEB, hidden budgeting and forecasting costs may prevent companies from realizing their full potential of investments in FP&A improvements.
How do businesses encourage collaboration? There’s one simple answer. Leverage technology. Cloud-based software is a great solution for companies that have data that needs to be shared and aggregated by more than one employee. In addition, cloud software also allows for employees to access the same data from virtually anywhere. Finally, most cloud-based software providers offers integration with other enterprise systems, which allows you to have one source for your performance management.
While you may think your business is doing well enough, your competitors are advancing by implementing better FP&A processes like the ones discussed above. Don’t wait, instead, invest in FP&A processes that will help your business achieve outstanding results and reduce hidden costs.
If you haven’t already, it is time to consider switching over to the cloud.Gartner recently released a report on cloud computing where they predicted that by 2020, a corporate “no-cloud” policy will be as rare as a “no-internet” policy is today. In order to stay competitive you need to stay ahead of the technology curve.
Not convinced you need to make the switch? Take a look at the following signs that indicate you might need the cloud.
1. You want to upgrade your software
Businesses with on-premise software need to maintain it with upgrades, troubleshooting and updates. This becomes rather expensive and time-consuming since you need to train employees, test systems and also implement the upgrades. Switching over to the cloud can reduce your costs, save you time and improve your efficiency. Cloud software is upgraded by the provider and without additional costs for you.
2. You want fast deployment
On-premise ERP systems are notorious for long implementation times. For larger systems and corporations it can take months to fully deploy the system. A cloud ERP system is quite the opposite. Since the ERP system is delivered via the Internet, deployment is almost instant.
3. You want to integrate your systems
Do you work with multiple software systems and wish they could all be integrated? Your wish can come true! Cloud software systems are inherently open and allows users to connect to other systems to allow for collaboration. For example, Sage Intacct, an ERP cloud-based software, allows integration with other providers such as Adaptive Insights, Bill.com and Avalara.
4. You want to increase employee collaboration
If you have multiple employees working with the same data,you might be in trouble. Having multiple versions of data can not only be time-consuming to fix, but you can also end up with a major financial loss. Off-premise software systems allows employees to access the data they are working with simultaneously and in real-time. Thus, you eliminate the possibility of having multiple versions spreadsheets.
5. You want to scale
This might be one of the first things you hear about the cloud. On-premise software can get really expensive if you’re growing at a fast pace, making it difficult to scale your business. On the other hand, with the cloud, you can request more functions, space or users and get them instantly.
6. You don’t want to spend your budget on IT, but rather your core products
It doesn’t make sense to manage your own on-premise servers and develop your own portals if IT is not your core competency. Nonprofit organization, for example, will benefit from investing their budget on their mission and cause rather than an IT department. Cloud software allows businesses without IT knowledge to operate without owning their own IT equipment. Rather, all you need is access to Internet and a device.
7. You have a mobile workforce or multiple offices
As Internet access increases worldwide and remote work continues to be a trend in the workplace, having remote access is becoming more important. Cloud software makes this a reality as you can access your data anytime, anywhere and from any device with Internet connection.
On Tuesday, Sage Group, a U.K. based technology company, announced that they are acquiring Intacct Corporation. It is thelargest ever acquisitionby Sage, who will be purchasing Intacct for $850 million. The transaction will close within the next few weeks.
Going forward, Intacct will be known as Sage Intacct,and according to Sage, Intacct’s management team will stay the same and continue to be in charge “thereby ensuring continuity for customers, partners, and employees.”
Strategic consolidation is a way of life in the software industry, as is true in many other industries. But, this combination is exciting because it means more innovation and more paths to efficiency and the next level. Sage and Intacct have branded the acquisition as “the combination that delivers the first and last cloud Financial Management Solution your business will ever need”.
Some advantages that will result from this acquisition are:
Current customers (of either companies) will now have access to additional resources and product functions as a result of the combination
Sage will further their reach in the US market
As pointed out inDiginomica; “Intacct gets close to top market dollar for its IP in the sense the sale price is equivalent to around 8.8x revenue, a price it could not get in today’s IPO environment”
In thepress release by Sage, the CEO of Intacct, Robert Reid said “We are excited to become part of Sage because we are relentlessly focused on the same goal – to deliver the most innovative cloud solutions for our customers”.
In conclusion, this acquisition is a good thing. The combination of two of the leading companies in cloud accounting and financial management software will bring innovation and efficiency. As a result, customers will have more options for leading solutions that supports their business. Thus, everyone involved ends up benefiting.
Read more about the acquisition here, and find the full press releasehere.