Certainly, no-one needs reminding that technology and individual accessibility is developing at an unprecedented pace, nor that finance is the backbone of all business activities. So why has cloud accounting, a not-so-new pairing of finance and technology, been getting all the attention recently?
Perhaps it is because for the sector once considered slow-to-change, the adoption rate of cloud accounting is remarkable. In the last five years, more than 30% of businesses have moved their accounts to the cloud, with many reinventing their business procedures to fit the new way of working. It is of little surprise then, that there has been an influx of cloud accounting providers looking to move into the SME market. The providers range from micro-businesses offering the ultimate convenience, online-only services to market-leading businesses looking to attract businesses previously considered too small for their services.
Way of the future
Automation has been a key player in remodelling how the businesses complete their finance functions. Historically, finance has been impervious to change, but recent attempts to innovate the client experience have been successful. It is estimated that 80% of businesses already perform operations in the cloud, and this figure is expected to rise to 90% by 2017. New technology has meant businesses cease to require in-house financial experts, instead they can outsource their accounts and redistribute the resources to client-facing work.
Financial technology (FinTech) innovators continue to disrupt the accountancy market. Rather than questioning the whole service provided, the innovators have focused on the intersection between client frustration and the areas of profitability for market-leading firms. With automation of manual processes rising as the software capabilities increase, some businesses might have to relinquish some human contact, which initially might seem counterintuitive. Yet consumers’ demands are changing and greater value is given to an integrated experience and prompt communications.
Changing how businesses work
The inevitable move towards the cloud invites the reinvention of the way businesses process data and engage with clients. The cloud accounting software opens the business processes up to a level of integration not previously known. Where once data was entered into spreadsheets, these processes are now automated, with the data pulled into dashboards providing business health insights.
Cloud accounting should no longer be met with anticipation, but rather expectation of efficiency and growth. The advantages of automation are apparent, but the greatest advantage is the ability to increase efficiencies to free time for contact and business development. Alongside this, SMEs can no longer survive if they have an insular culture of protecting their products and services. Instead businesses must encourage a culture, similar to that of the tech start-ups generating the software, of openness and sharing to achieve a mutual aim. Similarly, the time saved from automating processes should be used to competitively evolve the business’ offering and respond to customer demands by achieving distinction rather than exclusivity.
This should be more achievable with the ubiquity of the internet, which promotes speed and collaboration. An open culture and collective working should encourage a workforce ready to implement new working structures and improve capacity.
Strategic use of data
Cloud accounting might be making business structures flatter, but business intelligence is reaching new depths. Levels of connectivity and accessibility to devices is higher than ever and this has contributed significantly to the abundance of real-time data. Accurate data and the ability to drill-down into datasets facilitates more frequent and detailed insights to inform financial decisions. Where the value of cloud accounting was once efficiency and automation, it is now the strategic insights it can provide. Dashboards that provide instantaneous health checks for businesses have become integral to the business toolkit and achieving greater effectiveness as potential issues are identifiable earlier.
Keeping up with competitors
With consumer trends changing with each software update, it is essential for businesses to keep up-to-date with market dynamics. The ability to collate data across platforms opens businesses to draw insights from a wider dataset. For example, Microsoft’s Power BI enable datasets from a variety of platforms to be integrated to create benchmarks and inform targets. Further to this, the development in technology has considerably reduced the hurdles facing new entrants to the market. Such that incumbents have sought to collaborate with new start-ups to better understand the strategic advantages they have established and to access the market from a new perspective. Whilst, cloud accounting cannot inform a business about competitor activity, it permits a level of flexibility and scalability which enables responses to competitors’ actions to be enacted effectively.
Appealing to the new generation of businesses and business owners
It almost goes without saying that preparing a business for the future requires some consideration of the future business owners. Millennials, an influential segment of the market, are clearly defined from older generations by their purchasing behaviour. Where once buyers wanted immediacy and affordability, millennials want authenticity and a seamless integrated experience. For some businesses, introducing cloud accounting might not be a revelation, but the effects of refocusing the business strategy with insights and analytics can surely only create the optimal environment for growth and improved customer experience.
Up in the cloud
It is apparent that this is not simply a market trend that will be phased out in a few years; cloud accounting is here to stay. Some commentators think this might be the fourth industrial revolution; the gap between the physical world and the digital world closing as technology becomes the business-enabler. Access from anywhere at any time, working in a coffee shop or an office, whether the business is a global brand or a newly-established SME; cloud accounting is the future of business. As it becomes an integral technology for businesses, one wonders if a business falls behind with one aspect of technology, does it risk losing its place in the market. So to those not already working in the cloud; the benefits will far outweigh any anticipation and concerns. And to those in the cloud, bet you haven’t looked back down.
As featured in Elite Business Magaine, author: Rachael Potter.