Cloud Software Considerations For Accounting Practitioners

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Get your wallets out. Software prices are going up as accounting automation arrives, and software companies become more valuable by the day.

Whether the software connects with an online payment gateway like Stripe, Paypal, eWay or some other transfer agent, it becomes more useful to the user as they become more acclimated to online payments.

The major online systems, Xero, MYOB, Intuit, Reckon, Sassu and Sage all have API’s that developers are using to integrate their systems with each other, and it’s showing up in their stock valuations and as targets for acquisition.

Sage was acquired by Salesforce.com (or, was it the other way around), MYOB was bought by Archer Capital in 2008 for $437 Million and sold it just three years later for $1.3 Billion, and Xero hit the US market in 2013 with a $1.6 Billion valuation with just 71,000 paying customers, just six years after their launch.

Between these payment transfer agents and the recording softwares are small apps (or applications), that provide connectivity. These apps are sold as standalone applications, or as add-on modules as part of the different accounting applications.

These apps can be categorized as those that collect information, such as recipts, invoices aand point-of-sale (POS) applications, or that perform a specialized function such as customer relationship management (CRM) and inventory.

This online connectivity increases the ability of different applications to exchange information and simplifies the process of keeping the major applications up to date.

This online connectivity increases the ability of different applications to exchange information and simplifies the process of keeping the major applications up to date. Click To Tweet

In order to maximize this connectivity, firms suchas MYOB are working towards an API-centric system to allow for rapid growth as add-on’s come to market.

These add-on’s push inforation from scanned receipts and documents into the accountants choice of accounting software. The best known of these ‘pusah’ applications are Receipt Bank and Shoeboxed. These apps for instance, use rules to process scanned or downloaded transactions into the accounting software, posts the transaction to the accounting software and attaches a PDF copy of the underlying scanned document, providing a complete audit trail from original document to journal to ledger to financial statement.

The same is true for the POS applications, such as Vend, Kounta and other POS apps that push the days sales directly into the accounting software, replacing the manual end-of-day cash to Z-report reconciliation.

Connectors also include invoicing and job management software. Small business owners and employees can fire off an invoice from their smartphone using Service M8 or SimPro and have it automatically recorded in their journal and ledger also.

Then there are the special purpose apps, such as ones that update static information such as vendors names and addresses, employee records and new customer’s data.

This allows sales, purchasing or payroll departments to have the most up to date information at all times, eliminating the errors that creep in each time information is reentered manually.

Inventory control is enhanced as apps add the muscle to basic accounting applications in order to handle complex inventory and costing systems. Apps such as Dear Inventory, Unleashed, TradeGecko and Cin7 are filling the gap for plumbers, wholesalers and smaller importers.

For these users, the app becomes the control poing while the compliance and financial reporting is left to the accountant. While the accountant enhances their reporting and analysis with apps such as Fathom, Spotlight and Futrli to draw the data from the accounting software to populate graphical reports and dashboards, bypassing the manual entry copying and pasting, or even keypunching, into Excel spreadsheets.

For these users, the app becomes the control poing while the compliance and financial reporting is left to the accountant. Click To Tweet

As the field becomes more competitive, and as online accounting software becomes more integrated with specialised apps, the more valuable it becomes to its users, and the more dependent the users become to it, pushing the valuations of the application providers and software vendors.

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