
Should You Move Your Accounting to the Cloud? Here’s What You Need to Know
Now is the time for companies to start preparing for the changes to FASB Lease Accounting Standards set to go into effect in January 2018, says Avison Young Principal Sean Moynihan in April’s issue of CFO. The changes will require companies to begin recording leases on their balance sheets, including computer equipment leases. The information technology research firm Gartner predicts that this will force more organizations to consider moving IT to the cloud.
Before making the leap, there are a few fundamentals you should have in place, starting with getting your accounting system ready for the move.
Organize Your Bookkeeping System
Forty percent of small business owners say bookkeeping and taxes are their worst hassle, according to a recent SCORE survey. Poor record-keeping is a major problem for many small businesses, adds bookkeeping provider Accounting A La Carte. The problem this creates for cloud migration is that if your books are messy when you migrate them, you’ll just be creating a virtual duplicate of the same mess.
Pre-empt this problem by making sure your bookkeeping system is organized:
- Establish your filing categories and file naming system.
- Document your filing procedures.
- Create a records catalogue.
- Make a checklist of records you need to maintain.
- Decide which records you will be moving to the cloud.
Evaluate Your IT Needs
The average cost of leasing a 1 MW data center is $45.9 million for a seven-year lease term, according to the latest report from the real estate services company CBRE, helping account for Cisco’s projection that over three-quarters of data center workloads will be shifted to the cloud by 2018. However, whether or not moving to the cloud will save you money depends on your company’s individual situation and needs.
In some cases you may wish to move your entire infrastructure to the cloud, while in others it might be more efficient to only migrate your accounting system. Assess your overall IT situation as well as your accounting software to determine what makes the most sense for your business. Also check if your IT staff is ready for a move — according to the online payroll service provider SurePayroll, once you move to the cloud, your IT department will have to focus more on processes and client service than on infrastructure maintenance.
Map Your Accounting Workflow to the Cloud
In 2014, 40 percent of consumers reportedly used a mobile payment app, up from eight percent the previous year, according to a Walker Sands 2015 Future of Retail study. If you’re planning on moving your bookkeeping to the cloud, streamline the efficiency of your workflow by mapping out how your payment processing solution will pass on data to your accounting software. Similarly, map out how you plan to pass on any other important financial records, such as employee travel expenses, which can be scanned in from mobile devices for faster processing.
Search for Software Solutions
While sorting through some of these preliminaries, begin searching for your accounting software solution. Former KPMG senior manager Gene Marks provides an expert perspective on the Sleeter Group’s roundup of popular small business cloud accounting solutions, which include QuickBooks Online, Xero, and others. As Marks observes, most cloud-based applications are strong on fundamentals such as invoicing and general ledger posting, but not all solutions include advanced features and customization options. Be sure to do your due diligence before making a decision.
Photo Credit: Image provided by Social Monsters with permission to use.