This article was first published in the April 2017 Ireland edition of Accounting and Business magazine.

This article sets out some of the practical and basic benefits that my firm and I have encountered in the past three to four years not only in our own practice, but also with our client base as we moved to becoming an almost completely technology-integrated firm through the use of cloud software.

The driving force behind our new technology push was demand from our client base for timely and accurate financial data, coupled with the ability to analyse this data to gain more insight into their businesses. We also wanted to reduce the amount of paperwork and processing time we needed.

Companies that move to an integrated approach can gain significant efficiencies as well as the ability to analyse the business in detail through management reporting, as this article will explain.

Billing/accounts receivable 

Sending invoices via email to a correct email address direct from the accounting software has many benefits, including: 

  • no headed paper or postage costs, nor delay in delivery to the customer
  • certainty of delivery
  • fast payment as your client can tap on the invoice and pay with a debit/credit card or via options such as Stripe and PayPal 
  • the ability to chase overdue debts and send statements at the click of a button – since bank reconciliations are up to date, accounts receivable becomes real-time 
  • invoicing from your mobile or tablet at any time 
  • stock management system-linked invoicing underpins better ordering and less waste
  • project/time management system-linked invoicing moves work in progress to the invoicing stage more quickly and smoothly. 

Expenses/accounts payable

Technology now allows you to take photos or bulk-scan paper invoices and read the information. This means that supplier details, invoice numbers and expense details can be costed to the correct line on the ledger and VAT deductions made without manual intervention.

Invoices received via email can be forwarded to your software package, or you can give your supplier an email address that links directly to your software. The advantages are:

  • material time saving – especially in organisations that have a large number of suppliers 
  • easy storage – invoices can be stored electronically in the cloud for up to six years 
  • instant recall – any invoice from a supplier or cost line can be recalled and viewed on screen or printed in a matter of seconds from anywhere if you have Wi-Fi or internet access 
  • fewer errors – as there is no manual keying of data, the chance of error is drastically reduced. 

Bank reconciliation/transactions 

The best solution here is where your bank automatically feeds your banking transaction history to your accounting software, which in turn reads the information and matches each transaction with a debtor/creditor or remembers a historic transaction. The only action that the accounts department has to take is to verify the transaction. 

Banking institutions in Ireland are currently a little behind other countries in feeding information direct to third-party software, but it is only a matter of time before it becomes the norm. In the interim it is a straightforward process to download your banking transaction history to a CSV file and upload that to your accounting software, or scan bank statements with recognition software that prepares journals for use in various cloud packages. The main reconciliation benefits of cloud-based software are:

  • data entry time is reduced to a fraction of the time for a standalone package
  • keying/reconciliation errors are eliminated 
  • debtors and creditors are accurate and up to date 
  • it helps management accounting become real-time 
  • it offers more accuracy as to the financial position of the business.

Management reporting

For me the big win comes in reporting and analysis. The ability to create and build reports that give a clear and accurate picture of a business to the management team or board is where the real value-add comes. 

Management reporting allows decision-makers to set clear and specific key performance indicators (KPIs) that can be monitored and tracked. Consolidating financial data – whether for multiple locations or multiple organisations, or just better insight into a single entity – and being able to present that in meaningful dashboards with numerical and non-numerical data is a definite bonus. The flexibility to dice and slice the financial data has many benefits, including. 

  • the financial review of the business – whether weekly, monthly or quarterly – becomes more in depth and provides more certainty for decision-makers 
  • budgeting and comparisons to prior periods can all be performed faster 
  • the ability to create scenarios with three-way forecasting of profit and loss, balance sheet and cashflow 
  • a well-presented graph or chart can make reporting more visually engaging especially for clients who are not numerically inclined. 

How to migrate

For a successful migration and proper use of technology in your financial control function, you need buy-in from senior management especially the finance director/controller.

You are creating a change environment in moving away from what may be a function heavily driven by data input towards one driven by leaner technology that may eliminate a lot of current processes. The end result – more timely and accurate financial data for decision-making – makes the journey worthwhile.

The other obstacle at the start is choosing which software to use and when to migrate. In choosing your core accounting package, consider the following:

  • flexibility and ease in transferring data in from existing software – via CSV files usually 
  • ensure there is a large add-on marketplace for other software you may like your accounting software to link with – point of sale system, project management system, bank feeds, etc 
  • many software providers offer video content or regular training on how to use their software to best advantage. 

I would recommend moving over to any new system at the end of a VAT period so your first VAT report from new software will have the full history for that period. If you are keen to move and see the advantages, there is in truth no real need to start from a new year. With guidance and assistance, a number of our clients have comfortably made the move within the year. 

Alan Shaughnessy FCCA, partner, DFS & Co, accountants and business advisers