In Pursuit of Profit
Read our expert article below or sign up to get articles sent to your inbox.
Having clean books lays a foundation for smart decision-making and sound strategic planning. It is also crucial when applying for financing, pitching to investors, and keeping partners informed. A company that does not represent themselves truthfully with their financial data, even if it is an accidental misrepresentation, can miss out on growth opportunities or be faced with fines or penalties as a result.
But what happens when the books fall into disarray despite your best efforts to keep them accurate and close them in a timely manner?
Gig work can trace its origins to before the creation of the internet. However, over the last decade companies like Uber and Lyft have steadily led the push in the mass acceptance of the gig economy. In 2020 as lockdowns swept the nation, hundreds of thousands of new gig jobs became available virtually overnight thanks to Amazon, DoorDash, Grubhub, Instacart, and Shipt. The pandemic accelerated a shift that was already well on its way to becoming the next big trend in work.
But the quickly burgeoning gig economy was not isolated to takeout and grocery delivery. Professional gig work also grew exponentially as workers were laid off and left their traditional office jobs to manage personal responsibilities. According to a Harvard Business Review article on Thriving in the Gig Economy,
Approximately 150 million workers in North America and Western Europe have left the relatively stable confines of organizational life — sometimes by choice, sometimes not — to work as independent contractors. Some of this growth reflects the emergence of ride-hailing and task-oriented service platforms, but a recent report by McKinsey found that knowledge-intensive industries and creative occupations are the largest and fastest-growing segments of the freelance economy.
The last decade has ushered in a digital revolution across all business areas. However, many businesses are still dragging their feet when it comes to automating their accounting and finance activities. In fact, 58% of finance teams surveyed indicated that they do not feel their finance back office is “sufficiently automated.”
Despite a plethora of tools and platforms available to help streamline these critical business areas, it seems many businesses are stuck in the past, relying on manual processes for their daily accounting functions. But organizations can use automation to drive profitability if they understand its benefits and can identify areas where AI will help them the most.
This summer, the IRS began urging tax professionals to increase their security measures amid a storm of increased cyber-attacks. Through the first half of 2021, cyber-attacks against tax professionals had already outpaced the annual numbers for 2020 and 2019. And tax pros are not alone.
Cyber security has become a hot topic among all financial professionals over the last year as security attacks against businesses and individuals soared during the pandemic. Michael Cohn explains the recent rise in security threats when he says,
Identity thieves and fraudsters were particularly busy last year and this year taking advantage of the COVID-19 pandemic as many tax pros worked remotely from home and their firms were forced to lower their cyber defenses. The economic downturn also served as fuel for a variety of scams and schemes to steal money and identities.
So, how do you keep your financial data secure?
Whether your accounting team is employed in-house or outsourced to a third party, the question of whether it will return to the office or continue to work remotely is likely at the top of your mind. Nationwide many companies have returned the office, at least as part of a hybrid work model, but those changes have been the source of stress at various levels. With some workers wanting to go back, others desiring to stay home, and management tasked with keeping everyone happy and productive, this topic is causing friction across the board. But increasing employee satisfaction is not the only factor being considered.
More serious issues like financial integrity and risk management are also in jeopardy. Just like the concerns that arose when employees began working from home suddenly at the start of the pandemic, this transition to a permanent remote work pattern has many experts analyzing the implications for financial controls.
To understand how these internal controls can become compromised with remote workers, let’s examine the most important accounting controls in your business right now and discuss how you can strengthen them amid a remote work environment:
Automation improves ROI, enables scalability, increases collaboration, and develops organizational resiliency. And if that was not enough of a reason to go down the path of exploring your automation options, these days technology is cheaper, more robust, and easier to use than ever before. As a result, it is more ubiquitous across all industries, especially in technical professions like finance and accounting.
CPA and technologist, Aaron Benson explains, “I think that technology has finally infiltrated every aspect of what we do within the profession, and to be competitive and to move forward, you have to use technology.” In his interview at the 2019 AICPA ENGAGE Conference he further goes on to explain, “Most people use like 20–30% of the software they [could] use and leave everything else on the table.”
The 2020 pandemic caused significant change across the business landscape. CEOs and business owners were put to the test as they decided how to strategically navigate the effects of the pandemic. As a result, many business owners have realized certain aspects of their company’s financial operations may shift indefinitely.
As the practice manager for an accounting firm, I’ve been in a unique position throughout the pandemic because I’ve witnessed our client pool expand to include companies that would never have considered using a third-party accounting company to handle their accounting needs before. However, these business owners were put in a difficult position when in-person work was shut down and some key employees had to take time off for sickness or family obligations. Some lost their accountants to virtual school responsibilities, while others were forced to upgrade their desktop accounting systems to cloud-based versions so employees could collaborate remotely.
As a result, business owners have now experienced first-hand that their bookkeeping and accounting work can be performed remotely without having to sacrifice quality and efficiency. In other words, the same value can be realized whether day to day accounting is being performed remotely or onsite.
Let’s look at what business owners are telling our accountants, and what this means for the future of accounting and finance.
It is undeniable that top business performance requires the right financial tools and resources.
Having the right pieces in place provides better data and drives results. And while there are literally millions of online tools and apps and software programs for ecommerce companies to use, using the right financial tools can be the real differentiator between successful businesses and their competitors.
So, what kinds of ecommerce financial tools are essential?
Do you know how much time your company is spending on bookkeeping activities like accounts receivable (AR), accounts payable (AP), bank reconciliations, financial reporting, and reimbursements?
Or are you of the opinion that it doesn’t matter as long as it is getting done?
In many small companies these responsibilities fall to the business owners, adding another hat to the stack that they are already wearing. In these instances, it can be difficult to determine how much time is truly being spent on bookkeeping because it is being squeezed in throughout the day and week where there is room.
However, until you know how much time you and your employees are spending on bookkeeping and accounting functions, you will not be able to do an effective cost-benefit analysis to determine if it makes more sense to outsource these activities.
Additionally, knowing where you are spending your time means you will better be able to define the role you are looking to hire or outsource to get the right fit for your company, which works to improve employee retention – not just among financial staff, but among all employees. This kind of information can help determine whether you need a bookkeeper or an accountant and whether the role should be part-time or full-time.
The solution is to use time tracking software to keep a log of which activities are being done when and how much time it takes to do them.
Cloud accounting is accounting software that allows you to keep the books online for your business. Financial data is encrypted and then hosted on a remote server instead of in-house for greater accessibility.
With cloud accounting software (sometimes referred to as “online accounting software” or “web-based accounting software”) data is saved to the cloud and accessed by users on demand. In a nutshell,
Users subscribe to an online accounting software solution and move their books to the cloud. From then on, they can access their accounts from any web browser, or from an app on their phone. Most users connect the software to their business bank account, so that banking transactions flow automatically from the bank to the books. This saves them from a lot of data entry.
Some accounting software companies, like QuickBooks, have both desktop and online versions, while other companies offer only cloud-based options. The QuickBooks cloud-based software, QuickBooks Online, remains one of the most widely used accounting platforms year after year. However, companies like Xero, Zoho, Wave, FreshBooks, GoDaddy, 17hats have been growing in popularity recently.
While widespread accessibility is the primary reason companies choose to use cloud accounting software, there are many benefits to consider when determining whether cloud accounting is right for you.