Moving your Group Company to Cloud Accounting? 5 Things to Think About before you do.

Transcription

1 Moving your Group Company to Cloud Accounting? 5 Things to Think About before you do.

2 Introduction Online accounting has evolved such that it has definitely become the norm for most start-ups and small businesses to use the software-as-a-service model for their accounting software. The key economic logic behind this strategy is of course, the elimination of up-front software costs and all the IT and infrastructure costs associated with traditional on-premise software installation. As well as lower IT costs, the cloud accounting model brings many other advantages such as 24/7 access, improved collaboration, flexibility, scaleability, and speed of deployment. Naturally, not all cloud accounting systems are the same and, as might be expected, the focus of market activity has been by large cloud accounting software providers on attracting smaller businesses. So where does this leave the Finance Director or Financial Controller of a mid-size company with a number of subsidiaries looking to move to a cloud accounting solution? Here, we provide just a few points worth thinking about when considering your move. We don t propose to cover the basics such hosting and security, compliance, and basic accounting issues for which you will have your own requirements. The assumptions are that you have a number of entities or cost or profit centres in your Group organisation and that you have between 50 and 250 employees.

3 1. Consolidation out-of-the-box or not? There are essentially two options to choose from when considering software for consolidation. Firstly, and probably the easiest option is to select a cloud accounting solution that offers consolidation functionality right outof-the-box. The second option is to buy a separate consolidation module and bolt it on to your chosen cloud accounting software. The disadvantages of this second approach are potentially: additional software costs, integration difficulties and associated costs, additional training needs and of course the time and effort required in dealing with a second software supplier. Also, and what is often forgotten, is the fact that each solution will continually upgrade and develop their product and this creates the risk of up-grade induced incompatibility in the future. Other issues to consider around consolidation as part of your accounting solution are: - The capability to handle multiple currencies (see 2 below), - The consolidation of part-owned entities or entities with complex ownership structures. - Consolidation of other data such as Business Intelligence data in addition to just consolidating financial data. 2. Multiple currencies As a larger organisation, you may well be managing overseas subsidiaries or dealing with overseas suppliers or customers. For some smaller cloud systems this may well present challenges, particularly when it comes to multicurrency consolidation. Some cloud accounting solutions however now offer functions to manage these scenarios very well. You need to check if the solution allows subsidiaries to operate and report in their own currency and that you can then convert to your base currency for consolidation. You also need to check how the system handles inter-company transactions in multiple currencies as well as the treatment of currency gains and losses.

4 3. Scaleability for future-proofing One of the key advantages offered by the SaaS model for cloud accounting is that upgrades happen automatically and you don t have to worry about installing new versions on-premise. Under normal circumstances therefore, you can work away on your chosen cloud solution as long as your business needs don t change too much. What happens however, when your Management Team decides they want to purchase an overseas competitor? Or they want to enter three new markets? Or add two new distribution depots? The question to ask yourself is how easy is it for my accounting software to scale with my business. Can new entities, sales outlets, warehouses, and so on be added easily? Also as a growing business, you might be adding significant volumes of transactions every year. Will your cloud accounting software be able to manage the higher volume of transactions or how soon will it be before it starts to creak? 4. Stock Management Again, as a mid-size company, you could be managing multiple warehouses in multiple locations, each with multiple sub-locations and stock-bins. Many cloud accounting solutions do not provide stock management functions or provide only very basic functionality. Remember also that you could need your solution to manage stock and prices in multiple currencies. A fully integrated stock management feature should integrate fully with sales and purchase order processing and the General Ledger.

5 5. Business Intelligence Out-of-the-Box or not? Business Intelligence and analysis is rapidly becoming a critical management tool to help improve business performance or in some case ensure business survival. The key tasks supported by BI tools are the creation of key performance Indicators (some of which may be nonfinancial) and their presentation and reporting to management for consistent visibility and focus. However, with management of remote entities or locations the challenge of maintaining visibility of key performance indicators increases. This challenge is further complicated by the need to compare and benchmark performance across entities or outlets. This becomes an impossible task without some form of central control of key performance indicators to ensure consistency across the organisation. Much like the consolidation feature there are two options: Purchase a separate Business Intelligence solution with the same cost, training and upgrade disadvantages. Or purchase an accounting solution that includes business intelligence functions. Some cloud accounting solutions provide excellent business intelligence as part of their solution but struggle when it comes to consolidation of business intelligence data for a group- wide picture of performance. About AccountsIQ This article is brought to you by AccountsIQ, cloud accounting and consolidation software for midsize companies looking to switch to advanced accounting software. Built for the cloud, AccountsIQ is in use in 23 countries and is now the solution-of-choice for many the worlds leading accounting practices. For further information on how AccountsIQ might work for your growing business please feel free to contact us and we would be happy to discuss your needs. sales@accountsiq.com UK: Europe: +353 (0) (low call rate)