Since accounting software manages cashflow and is at the crux of any given organisation, it follows that the most valuable – and therefore most vulnerable – information is stored there. Keeping one’s business software up to date should therefore be of the first priority, not only for the efficient management of a company’s finance function, but because trends in cybercrime and the need for more accurate reporting are becoming more prevalent.
Entry level accounting software and legacy systems offer little protection from ransomware, bugs, data loss, or the slowing down of operations. Furthermore, if employees are not being freed from the constraints of laborious admin, then peers within the marketplace have a distinct competitive advantage in terms of being able to dedicate time and resources to other things.
Of course, there are any number of accounting platforms which can be implemented cheaply and quickly, but it can be difficult for finance leaders to define exactly what they need in an increasingly crowded market. Furthermore, what most providers fail to mention is their limitations when it comes to total cost of ownership; the inadequacies one typically experiences with a starter or entry level accounting system, which can only ever bring your business so far.
Usually offered at a discount, many such software packages are not built for scalability. Often, they will not provide cloud-based or hybrid data storage, with businesses instead having to rely on inefficient and unsecure on-premises storage methods. This is a huge problem for start-ups in particular, 50% of which according to the CBI, never leave the beginning phase of their business and scale to reach the mainstream market.
From Start-up to Scale-up. How to Find the Right Finance System for GrowthBy AccountsIQ
This also causes enormous issues for mid-size companies once they plateau, and perhaps start developing ambitions to expand geographically, widen their customer base, and merge with or acquire other businesses. These same companies discover that they don’t have the flexibility required to scale, and become reliant once again on manual accounting methods, or find that separate departments have become siloed.
From an entry level perspective, it may be simply a case of switching to a platform which is a little bigger in size; something which offers ease of consolidation between different parts of a business. That cross-departmental, or in the case of M&As, cross-company offering is vital if any business wants to keep things clean and consistent.
Speed and scale
Having previously served as group financial controller at document management specialist Kefron, AccountsIQ’s head of onboarding, Sinéad Brennan, has a particular appreciation for what businesses require to ensure their accounting software is up to scratch. Stakeholders need quick implementation and scaling up from legacy software/systems; from companies who have acquired or merged with others and added new businesses to their portfolio, to businesses expanding into new territories or regions.
“Not only do M&As create cultural differences within organisations, they create new legal entities which need to be incorporated into the everyday running of business,” Brennan says. “If those same businesses don’t have the right software, that copper-fastens departmental siloing, which of course is counter-productive to scalability and success.
“Companies therefore need to be conscious at all times of taking a group approach to scaling, bringing new operations and employees under the one umbrella, and having software conducive to that scalability and growth. For any number of purposes, it’s vital for management to see metrics like profitability and reporting at a glance. Audit, for example, or collating deliverables and results for shareholders.
Before the right accounting software became available, consolidation had to be handled manually; prepped using tools such as Excel, which is prone to human error, overly-complicated, easily misplaced, and time-consuming.
With robust accounting software, companies are now able to save two to three days on long-term processes, according to Brennan. This is down to things like the automation of complicated calculations which previously would have been the responsibility of finance managers, having a view over all individual entry data, and the storage of information in one easily accessible place. Ease of accessibility is of course key, not only for improvements to efficiency within a given role, but for seamlessness of integration into a business’s API.
Demand for cloud
Automation makes particular sense for businesses dealing with a higher volume of transactions. That is, the more successful they become. With entry level systems, Brennan says, the most frequent problems experienced by organisations are that they start to see reporting issues once success begins to build.
However, given that less refined accounting practices become ingrained within an organisational structure over time, one might expect that there would be a reluctance about moving away from dependency on spreadsheets and on-premises storage.
Not so, says Brennan, who has seen a real appetite across multiple industries for the benefits offered by cloud-based accounting software; something that handles complex consolidation calculations, intercompany FX, and API integrations with ease.
“I sense no reluctance whatsoever for people to remove inefficiencies from their day to day,” she says. “When you’re not caught up doing laborious, needless admin, it allows you to divert your time and resources more efficiently. Even in things like training, where people would’ve been required to learn about spreadsheets and pivot tables and so on. If software is doing that for you, then you can channel more time and energy into areas of the business that need it.
“A key part of alleviating that fear for customers is the fact that some cloud-based software companies provide an integration service. For example, our reps spend time getting to know more about your operating systems, embedded practices and staff capabilities before we even get near installation of software, so that we know exactly how to optimise our open API and slot into your day to day seamlessly.”
She points to areas like the technology, investment management, and renewable energy sectors as being particularly suitable for cloud-based accounting software, as these areas are more likely to experience M&As between businesses and the consolidation of franchises across multiple geographies and time zones.
The key point to remember, Brennan advises, is that if your business feels as though it has outgrown laborious manual practices, or is being held back by entry-level accounting software, then it is time to consider investing in something more robust, with the flexibility to allow efficient scaling and growth. For small to medium size businesses in particular, this is crucial for taking one’s business offering into the mainstream and not failing before the business has had a chance to expand.