by Upen Shah
Let me begin by asking how many of you have moved from flip phones to smart phones. It will be safe to assume that most of you have. Now, think about why you moved – not because the smart phones provided better phone service. The overwhelming reason for the move was the number of applications available on smart phones that provided value that was simply not available on flip phones. Over time, the value of these applications grew to such an extent that smart phones that did not offer ‘apps’ lost their value (just ask Blackberry!). We are now in an era where the phone part of the smart phone is just another app alongside many other apps.
What happened to the smart phone industry in 1990’s is happening now to professional services – especially with accounting services. Several established players as well as new startups, such as Intuit, Sage Simply Accounting, FreshBooks cloud accounting and Xero are offering cloud accounting options (as opposed to traditional desktop based “software in a box” model). While desk top software still forms the bulk of the market, the trend is moving more and more towards the cloud. For example, Intuit’s QuickBooks Online now has more than 1.2 million users – up more than 49% from previous year, while Xero has 600,000 users (1). This trend is going to accelerate as the industry moves towards its growth stage.
For small and medium business (SMB) owners, the benefits of moving to the cloud include the ability to outsource the bookkeeping and accounting functions instead of hiring an in-house bookkeeper /accountant. With no upfront costs for IT infrastructure, software purchases, document storage, etc. moving to a cloud accounting solution is a very affordable option. Cloud Accounting offers a pre-built, pre-configured solution that’s operational from day one. Traditionally, the small business owners have struggled with their ability to pay for hardware and software costs, to keep pace with changing technologies, securely storing and managing documents, ensuring compliance with tax laws and payroll regulations. Cloud accounting with integrated apps for document management, payroll, inventory and much more solves these problems easily and inexpensively. In addition, cloud accounting provides state-of-the-art data analytics. Availability of up-to-the-minute financial data, profit/loss picture, effective budgeting and forecasting and analytical capabilities puts SMBs at par with large enterprises.
Two other trends that will make the switch to cloud accounting more compelling: ability to access the accounting software from your mobile phones and the growing number of applications that integrate with cloud accounting software. QuickBooks Online has more than 2000 applications (1). This will be the critical tipping point for cloud accounting. A good number of SMB owners, especially sole proprietors, don’t have an office, while others conduct more and more business outside of their office. The ability to review and manage their finances while on the go from their mobile phones will be of extreme importance. Applications that manages receivables, payables, payroll, time tracking, inventory and many other functions will form the backbone of a system similar to apps on a smartphone and provide value that few can imagine right now.
Remember, these technological changes are not restricted to accounting services only. Just look at the wrist watch industry – where new so called smart watches from likes of Apple, Samsung, Pebble and Fitbit are replacing wrist watches that can measure your heart rate, how many calories you’ve burned, how long and how well you slept, tell you that who is calling your phone and help you make calls and of course tell you the time. The relentless march of technology will continue to transform businesses for the foreseeable future. It’s for you to decide whether to join and benefit from the cloud revolution, or just fight or ignore it. Just remember, you cannot do today’s job with yesterday’s technology and be in the business tomorrow.
(1) Intuit sheds its PC roots – New York Times –April 10,2016
Upen is a tech-savvy cloud accountant with a passion for helping small and medium businesses achieve financial success. You can contact him at email@example.com