Why your business needs the cloud

Cloud Accounting seems to be the buzz word at the moment and some of you may still wonder why your business needs the cloud?

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From time-to-time I write for other publications as well and I thought it would be appropriate to share a case study that we published on the MTS Holdings blog end of 2016. This case study highlights the transition we as an organisation has gone through evolving into a fully cloud based accounting practice. During the last  two years we have not only ourselves Get in the cloud, but we have assisted close to a hundred of our clients to do the same. Many of whom have achieved similar or even greater greater gains in efficiency and profitability!

Happy reading and please feel free to leave any questions or comments in the comments section below!

Why your business needs the cloud

There has been no time in history where it has been more exciting to start a business than right now.

Business owners across the world marvel and quiver simultaneously at the mere speed at which technology is changing the face of how we do business…so as business owners: “Do we fear or embrace the pivotal role technology will play in our futures?”

Personally, we would like to think of ourselves as early adopters and in an attempt to stay ahead of the competition, we pride ourselves on our forward thinking culture. It therefor came as no surprise when I walked into the office one morning and uprooted everything we’ve been accustomed to for so long, when I said: “Guys, I don’t yet know how, but we need to get in the cloud!”

Nigh on two years later, as we look back on the journey we have been on, we can unequivocally attest to the fact that it has been absolute blood, sweat and tears. But without even giving it a second thought, it was hundred times over worth the effort.

At the time of writing this article, we have managed to:

• Increase our practice efficiency by close to 40%
• Decrease our staff requirement by 40%
• Gain absolute clarity as to whom our ideal clients are, and
• Adjust our marketing efforts accordingly
• Automate close to 85% of our receivable – and payable cycles

We made many mistakes during this 24-month period and although it was a tedious process to go through, we would otherwise probably not have arrived at the point we find ourselves currently

 

Trying to figure out what our “new cloud version” looks like

After dropping the bomb that morning, we immediately got to work. As a big picture thinker myself, one of the saving graces for us was that we managed to obtain a clear picture of what we envisaged this new cloud based practiced looked like, what its core services would be and how this influenced our value proposition.

We quickly realized that we cannot simply think about how the transition would impact us as an organization, but that equally important, we needed to understand how this would influence our clients and the way we serviced them. If there was no mutual benefit, we were dead in the water…

Our initial efforts were subsequently concentrated around those elements we identified as being critical to us transforming to a cloud based practice, but also at the same time, streamline the way in which we interact with our clients. Without delay, we moved our own bookkeeping and accounting to a cloud based platform. The same platform we envisaged at the time to on-sell to our existing customers. We gained immense insight into the logistics, the day-to-day requirements and the business processes needed to effectively manage your company’s finances in the cloud. What better way to get the practical know-how under the belt, than to be your own guinea pig? Two years later we find ourselves listed as one of the few accredited advisory firms and consult with clients on a national level.

What we underestimated from happening through this process, was the mind blowing discovery of how many opportunities there were on the back of moving to the cloud, to automate or greatly decrease the effort many of the other business processes entailed.

We found that there are so many digital service providers in the online marketplace, that we could overnight enjoy the successes of a more streamlined practice. More importantly, it unlocked opportunities for us to immediately start adding new value added services on top of our core service offering.

Through the careful selection, testing and implementation of certain key pieces of software, we managed to among other things,

• Manage our practice and its workflow from anywhere in the world and in real time,
• Automate recurring billing cycles,
• Have work-in-progress integrated automatically into the accounting software
• Automate our receivable cycle
• Access our document server from anywhere and on any device
• Virtually automate the bookkeeping of our company accounts
• Manage our own finances on the go and in real time.

As we continue to evolve, we question everything in our business on an ongoing basis. This results in us always investigating new and/or better ways of doing things.

 

Leave no client behind

Through the significant change we ourselves underwent, we kept reminding ourselves that we are not alone in this endeavor, but that our most precious commodity is invested as much as we are – our customers. We were able to look at the roll out of any new software from another angle as a result. If it does not add to our bottom line AND make our clients lives easier at the same time, it is probably not the software we should be using. Our clients subsequently partook in this journey which was primarily ours, but as they could see the benefit they would receive as a result, it was one of patience and understanding. This could so easily have had the opposite effect had we taken one-sided decisions that only benefited ourselves.

To date, we have converted 90% of our clients to the cloud also and have already started to see the impact it has had in their businesses. Not only are they themselves now working more efficiently as well, through the online collaboration between our respective offices, they have taken a greater sense of ownership in the financial success of their business. Rather than simply reporting historic figures, we overnight cemented our roles as business advisers instead.

 

Beware of, but embrace the double edged sword 

It is important to note that this process wasn’t all smiles for us – we soon bled after being struck by the double edged sword…you see, not all clients liked this new firm we became. We were no longer a 100% fit for a 100% of our clients. Not all our new processes suited all our clients needs. As a result, we had to say goodbye to some of them. And obviously it had an adverse impact on our bottom line. It would for most businesses.

The end result however was profound.

We always thought we knew who our ideal client was. But right under our noses we never realized that this persona was changing as a result of whom we’ve now become. So we started to get frustrated when dealing with certain clients. Customers that used to be some of our model clients all of a sudden became quite tedious to service. And this wasn’t their fault. They weren’t the ones that changed – we did!

As soon as we came to this realization, the proverbial angels descended from the heavens and we saw the light. As a result, we were immediately in a position to end these relationships on a good note, and start to focus our marketing efforts on the new ideal client persona. Because this persona was now so crystal clear, everyone in the organization now knew on the drop of a coin whether we’ll be on-boarding a prospective new client or rather referring them to some colleagues. This clarity did contribute to the efficiency of our processes, but more so assisted us with greater insight into the needs of these clients and better understanding what their indispensable requirements from us as outsourced business partners are.

 

The future is what you want it to be

There is a reason why people compare the effects of the global digital uptake to that of the industrial revolution – it is here to stay and the pace at which it changes is merciless. We are subsequently faced with new challenges. Challenges for which we may not yet be able to “Google” the solution. This means that for those of us that choose to embrace this rapid change, we need to be relentless in our willingness to change as fast as technology does.

The beauty of how far technology has come, is that each business out there has the opportunity to dream, paint the picture that they envision and make it a reality in a relative short space of time.

So the only advice we can leave you with?

Dream vividly…continuously question everything… take quick action!

The post Why your business needs the cloud appeared first on Out the Blocks | Small Business Accountants @ R2,750 p/m.

10 Questions to ask your Small Business Accountant

A small business accountant can be a tremendous asset to your business. For this new found relationship to work however, two-way communication is paramount. Ask your small business accountant these 10 questions to better understand your new business partner.

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In today’s business world, the relationship between accountants and their clients has changed so dramatically. Accountants play a bigger part in your business success than ever before in history. If you let them, Accountants can become an indispensable resource and partner to your business, advising on a whole range of headaches such as the overall  health of your business, HR issues, taking on a new partner or better managing your cash flow. But only if you let them! We are all in search of this new generation accountant to become a perfect fit for our business…

The only way this new found relationship will reach its full potential is when you realize that you have to accept a certain level of responsibility and that you communicate your expectations in advance but also understand fully what will be expected from your business and by when.

We regularly encounter clients that expect ALL communication to come from their accountants. As with all strong and healthy relationships however communication is key and this one-way communicating relationship is doomed from the start unless the other party comes to the table. Many other clients realize the importance of this but don’t really have a frame of reference of what accounting comprises to ask the “right” questions.

So when I came across this article by KIM LACHANCE SHANDROW, it seemed like the exact type of information I had to share with our audience. In the below mentioned excerpt from the original article, Kim discusses the 10 questions every client simply has to ask when working with their small business accountant.

10 Questions to ask your Small Business Accountant

1. What’s the best way to contact you and how often should we be in touch?

This might seem like too simple a question, but clear, effective and frequent communication is the key to a healthy, beneficial relationship with your accountant. Establish early on how often you’ll connect, either in person, on the phone or online (via a video chat app like Skype, Google Hangouts or Facetime). Decide together if you’ll meet weekly, monthly or bimonthly.

2. How can you help me prepare for (and survive) tax season?

Untangling the time-sucking tedium of tax prep is often the number-one reason small businesses hire an accountant in the first place. You’ll want to ask yours which tax credits and deductions you should claim. Also ask him or her if there are any new tax laws you should take advantage of to maximize write-offs.

“Tax opportunities, such as the R&D credit, accelerated depreciation, including tax forgiveness and outright grants or refundable credits, can even be applied for as part of the tax return process,” Katz says.

He suggests that you get answers to all of your tax questions long before the tax submission deadline. To avoid the year-end rush, get your small business accountant involved in helping you gather all of the necessary accounting documents and data all throughout year. 

3. What are some topics I should consult with you about on an ongoing basis?

A skilled accountant should get to know you and your business well enough to regularly keep you aware of – and swiftly and appropriately react to – an array of factors that could affect your bottom line, for better or for worse. 

Your accountant should be well-versed in several disciplines, “including but not limited to GAAP [generally accepted accounting principles], corporate and individual tax, retirement planning and financial planning,” Katz says.

He or she should also be open to assisting you in weighing the financial ramifications of certain decisions, like whether or not to hire an independent contractor or a full-time employee, buy or rent an office space, or rent or lease a company car and much more.

Your accountant should also work collaboratively with you in a way that makes it easy for you to consider and understand which actions you need to take now and in the future, ideally without the usual confusing accounting jargon. “If an entrepreneur in unable to develop that type of relationship with her small business accountant, it may be time to look for a new one,” Katz warns. 

4. How can you help me grow my business?  

A qualified accountant absolutely can help small-business owners expand over time, that is if they have the right groundwork in place with you, Katz says.

To grow, you must start with a financial model that is “honest and built on a granular basis from the ground up.” Remember to update your plan on a monthly basis (or ask your accountant to) with actual results. Doing so can help you hone in on opportunities for growth in your market.

5. How can you help me better manage my cash flow?

Properly projecting your business’s cash flow is as essential as creating an effective mission statement and living up to it. Tedious, detailed flow projections aren’t easy to wrangle, but that’s what you have an accountant for.

Your small business accountant should be able to help you develop an organized, effective cash flow model that allows you to adjust your operations in ways that help you survive shortfalls, as well as improve receivables and manage payables.

6. What is my break-even point? 

Your small business accountant should be able to analyze a number of metrics to calculate whether your business is making a profit or a loss. Knowing your break-even point is crucial to determining your business’s pricing structure and profitability. Once your accountant helps you identify yours, you should have a strong estimate of how many products or hours of service you have to sell to cover your costs.

7. Can you assess the overall value of my business?

Your accountant should be up to the task of estimating your company’s fair market value in excess of your tangible assets. He or she should start by examining your financial plan and then execute a discounted cash flow (DCF) analysis, a common but effective valuation method. 

Another way your small business accountant can help nail down your business’s value is by deeply understanding what you do and the industry in which you operate, Katz says. “In so doing, an accountant can help the entrepreneur understand which aspects of the comparable companies drive their value, and can work with the entrepreneur to steer the company toward maximizing those aspects of their business.”

8. Can you help me review and negotiate business contracts before I sign them? 

This is a common question for small business accountants, one that’s probably better to ask your attorney.

“An accountant should not practice law without a license,” Katz says. “They can work collaboratively with your attorney to add color and tax to commercial issues with which the attorney may not be experienced.”

9. What are some special considerations for my particular industry?

Businesses in different industries come with their own unique accounting issues. Your accountant should be knowledgeable about the various ones that specifically apply to yours.

For instance, if you own a startup that builds wearable tech, your accountant should be well-versed at identifying tax opportunities specific to the emerging technology industry, like potential R&D, facilities and training tax credits, as well as applicable manufacturing and sales tax exemptions, etc. 

10. What are some common mistakes that I should avoid when working with you?

Not being 100 percent honest with your accountant is the worst mistake you could make, Katz says. “The truth will come out, either in the planning stage or in front of the SARS auditor.”

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How to Choose the Best Cloud Accounting Software for Small Businesses

Firstly, you should determine your business needs. The more you need, the more expensive it is likely to be.

If you are running a business, it is a good idea to use cloud accounting software (online) to help you with day-to-day accounting. One of the biggest advantages of cloud accounting software over regular desktop based software is that is always easily accessible from anywhere in the world (provided that you have internet access).

Also, you do not have to worry about updating your software or backing up your data, as these things are taken care of automatically. Depending on the size of your business, you should look for different things in a cloud-based software.

Firstly, you should determine the needs of your business and the size of your budget. The more your business requires, the more you will have to pay. The wider range of options you will get (things such as expense tracking, recurring invoices, payroll services and automatic past-due billing) all add to the price.

However, if you own a small business, between R300 and R450 per month should be enough. Also, some providers offer free or trial versions of their software. These versions limit the number of options you can use of let you use the program for several days before deciding if it is the right software for you.

“Your business needs the best cloud accounting software it can afford!”

Sign up for your free 30-day trial here!

Depending on your needs, you may not even need accounting software. However, if you do require some of the following features, then cloud accounting software can be a great asset for your business. Always remember that software alone can’t guide you on how to better manage or grow your business, so ensure you get the professionals on board. You may want to read: “How to hire a small business accountant?”

• If you have many clients, accounting software can be extremely helpful, because it lets you organize a database of customer information (their purchase histories, credit terms, and all kinds of other information).
• If you do not know much about laws and regulations, cloud accounting software can easily help you with this and make sure that everything you do is legal and in compliance with the generally accepted accounting principles.
• If you are just starting out, it is much easier to work with accounting software from the very beginning. If you are running an older business, it will be much harder to implement all the spreadsheets and ledgers.

However, we do offer a free conversion of your Pastel data to the cloud by clicking here!

Accounting software saves time, especially if you are looking to grow your business. The less time you have to spend dealing with accounting, the more time you will have for everything else.

If you are still not sure if you are in need of cloud accounting software, here are some of the things that it can help you with:

• Of course, basic accounting services are provided. The software does income and expense tracking, it generates financial reports, it takes care of invoicing.
• They save a lot of time because they automate a number of processes. They provide services such as automatic billing and outstanding invoice follow-ups.
• If you hate wasting your time doing tax preparation, this type of software is a must-buy. Not only does it automatically do tax calculations and tax reporting, it also prepares all the necessary information so you can easily e-mail it to your accountant.
• If you are busy and do not have enough time to sit down and take care of accounting yourself, accounting software seems tailor-made for you because it offers mobile access on your smartphone or tablet.
• Doing manual accounting can quickly overrun your office with tons of papers. However, by using a program, you can, for example, add a receipt to expenses simply by taking a picture.
• You can save a lot of money on bookkeeping as many of the repetitive tasks can be automated
• You do not have to input many of the transactions yourself, for instance, automatic bank feeds retrieve transactions directly from your bank account.

As you can see, there are many reasons why you should not stick with old-school accounting. The technology is developing faster and faster, and accounting software (especially if it is cloud based) has made such progress that there is no reason to not utilize its many advantages.

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How to Hire a Small Business Accountant

These steps will help you find a professional small business accountant to help navigate the maze of tax issues facing your small business.

For most small businesses things tend to change so rapidly and every rand counts, so if you don’t know where you stand on a monthly basis, you may not be around at the end of the year. And while using do-it-yourself accounting software can help monitor costs, the benefits of hiring good small business accountants extend far beyond crunching numbers. Potentially, they can be your company’s financial partner for life, with intimate knowledge of not only how you’re going to finance your new office space, for instance, but also how you’re going to finance your daughter’s education.

Before you hire one though, make sure you understand the four basic areas of expertise in a general accounting practice:

1. Business advisory services.Since a small business accountant should be knowledgeable about your business environment, your tax situation and your financial statements, it makes sense to ask them to pull all the pieces together and help you come up with a business plan and personal financial plan. Accountants can offer advice on everything from insurance to expansion (how will additional capacity affect operating costs?). Accountants can bring a new level of insight, simply by virtue of their perspective.
2. Accounting and record-keeping.These are perhaps the most basic of accounting disciplines. While it makes sense for many business owners to manage their day-to-day records, an accountant can help set up bookkeeping and accounting systems and show you how to use them. A good system allows you to evaluate profitability and modify prices. It also lets you monitor expenses, track a budget, spot trends and reduce accounting fees required to produce financial statements and tax returns.
3. Tax advice. Small business accountants that provide assistance with tax-related issues usually can do so in two areas: tax compliance and tax planning. Planning refers to reducing your overall tax burden. Compliance refers to obeying the tax laws.
4. Auditing. These services are most commonly required by banks as a condition of a loan. There are many levels of auditing, ranging from simply preparing financial statements to an actual audit, where the accountant or other third party provides assurance that a company’s financial information is accurate.

Choosing a Small Business Accountant

The best way to find a good accountant is to get a referral from your attorney, your banker or a business colleague.

While accountants usually work for large companies, SAIPA members (Professional Accountants) work for a variety of large and small businesses. Don’t underestimate the importance of a Professional Accountant. This title is only awarded to people who have passed a rigorous nationally standardized test and also require 3 years’ post-graduate work.

Once you have come up with some good candidates, it is important to determine how much of the work your company will do and how much will be done by the accountant.

Accounting services can be divided into three broad categories: recording transactions, assembling them, and generating returns and financial statements. Although the first two categories require a lower skill level than the latter, many firms charge the same hourly rate for all three. This is why it’s important to determine exactly what work you want an accountant to handle.

The next step is to interview your referrals. For each, plan on two meetings before making your decision. One meeting should be at your site. The other should be at theirs. During the interviews, your principal goal is to find out about three things: services, personality and fees. Here’s what to ask in each area.

1. Services:Most accounting firms offer tax and auditing services. But what about bookkeeping? Management consulting? Estate planning? Will the accountant help you design and implement financial information systems? A Professional Accountant may offer services that include analyzing transactions for loans and financing; preparing, auditing, reviewing and compiling financial statements; managing investments; and representing you when dealing with SARS.Although smaller accounting firms are generally a better bet for entrepreneurs, they may not offer all these services. Make sure the firm has what you need. If it can’t offer specialized services, it may have relationships with other firms to which it can refer you to handle these matters. In addition to services, make sure the firm has experience with small business and your specific industry.

2. Personality:Is the accountant’s style compatible with yours? Be sure the people you are meeting are the same ones who will be handling your business. At many accounting firms, some partners handle sales and new business, then pass the actual account work on to others.When evaluating competency and compatibility, ask candidates how they would handle situations relevant to you. For example: How would you handle a SARS audit seeking verification of VAT input tax expenses? Listen to the answers and decide if that’s how you would like your affairs to be handled.

   Realize, too, that having an accountant who takes a different approach can be a good thing. Just be sure that the accountant doesn’t pressure you into doing things you aren’t comfortable with.

3. Fees:Ask about this upfront. Most accounting firms charge by the hour. However, others work on a monthly retainer. Get a range of quotes from different accountants. Also try to get an estimate of the total annual charges based on the services you have discussed. [Click here to see how our fees are structured]Don’t base your decision solely on cost, however, as an accountant who charges higher hourly rate is likely to be more experienced and able to work faster than a novice who charges less.

   Also be sure to ask for references – particularly from clients in your industry. Call them to find out how satisfied they were with the accountant’s services, fees and availability.

Make the Most of the Relationship

After you make a choice, spell out the terms of the agreement in an engagement letter. The document should detail the returns and statements to be prepared and the fees to be charged. This ensures that you and your accountant have the same expectations.

Also, hold up your end of the agreement. Don’t hand your accountant a shoe box full of receipts. Write down details of all the checks in your check register, whether they are for utilities, supplies and so on. Likewise, identify sources of income on your bank deposit slips. The better you maintain your records, the less time your accountant has to spend and the lower your fees will be.

It’s a good idea to meet or at least speak with your accountant every month. Review financial statements and go over problems so you know where your money is going. Your small business accountant should go beyond number-crunching to suggest alternative ways of cutting costs and act as a sounding board.

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