November 30, 2020
By Yevgeniy Sukhenko, Senior Controller, Outsourced Accounting & Advisory Services
The COVID-19 pandemic only accelerated the inevitable for accounting departments around the globe. In March 2020, businesses and nonprofits moved to the cloud quickly and abruptly, whether the organization was ready or not. The days of operating an accounting department with only software housed on servers at the worksite are essentially over. With most accounting personnel working from home, organizations with an eye on the future have moved most of their key accounting software applications to “the cloud”. These include the organization’s main accounting system (GL package) as well as accounting-related third-party applications like time keeping, A/P management and others.
What does it really mean to work in “The Cloud”?
Before widespread implementation of cloud-based software, most of us were accessing a suite of applications from on-premises servers. This simply means a group of dedicated on-site computers (servers) would “serve” applications to your computer. In a cloud environment however, these servers are instead maintained remotely in “the cloud”, which means they are housed off-site at a cloud provider like Amazon Web Services or Microsoft. With cloud-based applications, your computer must connect via the internet to receive the data that the remote servers are providing.
Benefits of “The Cloud”
Cloud infrastructure offers a number of strategic benefits for your organization.
- Ability to work from anywhere. You can now access your financial data securely from anywhere with an internet connection. With remote workforce arrangements becoming more common, this is a necessity for most organizations.
- Enhanced security. Different cloud set-ups can have various security implications. With QuickBooks Online, for instance, the vendor protects your data and ensures consistent access to the application in exchange for a monthly recurring fee.
- Cost-savings. Cloud infrastructure saves your organization money by eliminating the up-front cost of dedicated servers. Cloud-based applications also allow your IT department to spend time on more strategic initiatives rather than application and server maintenance.
- Less stressful year-end audits. Imagine a quicker and more efficient year-end audit because the auditors can access the majority of the data and applications they need remotely.
- Integrated systems and data flows. Previously, a higher-tier package was required for your ERP system to handle HR management, procurement, payroll, etc. all within the system. Cloud-based systems allow you to choose from numerous applications that specialize in these areas and connect them either through native integrations or connector software like Zapier, Automate, and Integromat, for example. In doing so, your organizational data is closer to real-time and inter-connected. Redundancies in data entry are removed, and risk of human error is reduced.
- AI-enabled efficiencies. Because all of your data is now sitting in the cloud, it can be accessed by an artificial intelligence (AI) solution. As it learns your processes and procedures, the AI automates administrative data entry tasks.
These are just a sample of the benefits to working in the cloud. However, as we approach 2021 these benefits are becoming more a necessity than a luxury or innovation.
Moving to “the Cloud”
Those who are new to cloud-based applications may be surprised to learn that cloud migration is relatively quick and painless. Most cloud accounting providers provide checklists and easy-to-follow steps to ensure a successful data migration. Essentially, the move to the cloud is a transfer of your organizational data from in-house servers to the cloud servers – and most of the migration is handled on the back-end by your cloud provider and IT department. Many cloud applications are designed to be intuitive with an easy-to-navigate user interface. For example, most migrations from QuickBooks Desktop (QBD) to QuickBooks Online (QBO) for organizations with multiple years of accounting data can be completed quickly using their easy-to-follow migration tool.
Case Study: Client Transition to QBO and Bill.com
Before the COVID pandemic forced most of us to work remotely, GRF CPAs & Advisors (GRF) transitioned one of the firm’s clients (roughly $2.5 million 501(c)(6) organization with member dues, contributions, investments, and other income) from QBD and paper-based A/P management to QBO and Bill.com. Even though the client’s QBD file contained over 15 years of transactional data, the transition from QBD to QBO was completed efficiently and no issues were encountered during the data migration. The client was up and running in QBO minutes after the transition was finalized. Similarly, the Bill.com set-up was completed the next day, and the client immediately began notifying their vendors of the change to the A/P process (which was well received by their vendors). The client had to reconcile their starting A/P balance between QBO and Bill.com, but that process was completed shortly after the Bill.com set-up.
The integration of Bill.com with QBO has resulted in greater efficiency for the client including faster payment processing, easier vendor management, and more robust payment approval workflows. The client was also able to significantly reduce the number of internal emails regarding coding of A/P transactions in QBO with efficient vendor invoice approval and coding embedded in Bill.com. Finally, the transition to both QBO and Bill.com also resulted in a smoother year-end financial statement audit process. The client’s auditors can now review detailed transaction information – both for A/P (Bill.com) and other audit areas (QBO) – using their own read-only auditor user licenses for both platforms.
Before your organization considers migrating critical accounting applications to the cloud, leadership should consider a few key questions.
- Do we have a large number of paper-based processes (cutting paper checks, receiving mailed-in vendor bills, submitting paper timesheets)?
- Does the need for current financial data involve your accounting department spending a few hours or days working to update information in the system, preparing reports, and e-mailing you when the reports are ready for viewing?
- Is your accounting department focused primarily on producing backwards-looking financial reports as opposed to having discussions with the management team about the future of the organization?
If you answered “yes” to any of these questions, it may be time to consider moving your accounting system to the cloud. While most migrations are fairly simple and straightforward requiring minimal ramp-up time, it is still a good idea to work with a CPA firm that specializes in cloud implementation and accounting process efficiency. For more information on cloud-based accounting applications, and the processes and procedures necessary to make your accounting department future-ready, contact Yevgeniy Sukhenko, Senior Controller, Outsourced Accounting & Advisory Services at email@example.com.