Is Online Accounting Right For You?

meeting with owners about how to file their taxes

Online accounting is a great option for many businesses. But is it right for yours? Let’s take a look at some of the benefits and challenges of working in the cloud.

The Opportunity

A good accounting system adds value to your business, not cost. Yes, you have to be compliant with stakeholders and the CRA, but our goal is to design performance based accounting systems that highlight factors that have the greatest impact on your success. Cloud systems work well for this as they tend to be more nimble and allow for easier collaboration than the desktop equivalent.

Better, timelier information to run your business

  • Increased automation reduces time spent on transaction processing. Think of what you could do if you freed up some cash or staff time.
  • Information feeds from your bank or other business management apps are usually daily, giving you a current view of what’s going on in your business. Waiting for bank and credit card statements, then manually entering data means your performance information is at least a month out of date.
  • You can access your business data from anywhere with internet. This gives you the freedom to monitor your business when travelling and potentially offer your staff some flexibility to work remotely.
  • Online accounting systems link in to other business operation apps, providing further opportunities to streamline your processes and work remotely.

Improved work flow and communication with your accountant

  • Online accounting systems allow us to access the information we need without having to ask you for it. The ability to monitor your books throughout the year helps to reduce errors, process returns efficiently and identify opportunities for improvement.
  • If you or your staff have a concern or a questions, we are a few clicks away from being able to see your issue and help you quickly resolve it.
  • Automated processing allow us to shift our focus to things that matter to your success. Whether that be tax planning, business planning or better performance reporting, the goal is to provide real value for your dollar.

Software benefits

  • You are always on the latest version, with no upgrade costs
  • Additional users are free with your Xero subscription
  • You can invoice clients and record expenses on the fly from your phone or tablet
  • You can access your business information from anywhere with internet
  • Online accounting software is reliable. Xero has bank level security with uptime of 99.9%
  • There are many affordable business management apps that integrate with online accounting software allowing for a complete operating system tailored to your business.

It’s not all sunshine and roses

While we usually recommend online systems, sometimes they are not ideal. When you consider making the switch, here are some things that might make you think again.

  • Switching to a modern accounting and business management system is a transition. It takes time, resources and some patience. We believe that the benefits are worth it, but it is important ensure that these changes occur at a time that works well for your business.
  • Sometimes, the integration of data between business apps and online accounting software is not as robust as we would like. In these cases, we have to determine if the workaround negates the benefits of an online solution.
  • Business complexity. Online systems tend to focus on the small and medium sized business market, but size might not matter as much as complexity. A manufacturer, for example, may find online tools don’t give them the kind of customized information they need to support their particular operation.
  • Your industry is old school. These systems work best when your clients and vendors are adaptable to technology. We once worked with someone who had suppliers that still used a typewriter and clients that wouldn’t accept emailed invoices. It is tough to gain all of the efficiency benefits that an online system can provide when you are still tied to snail mail.
  • You use a credit union for business banking. Currently, most credit unions in Canada aren’t set up to allow for automatic data transferring to online accounting software. Presumably, this will change over time but for now, this means that transactions have to be imported, diluting the benefits of an automated approach to accounting.
  • Privacy concerns. This is different from security. When we talk about privacy, we refer to the accessibility of your data by government. If this is important to your business, then your best protection is to find a Canadian online software provider that stores data on Canadian servers. This limits your choices which might mean that an online accounting solution is not for you. Why would you care? Because data stored in Canada by a Canadian owned cloud service provider is subject to Canadian privacy regulation. Otherwise, your data is subject to the privacy regulations of another country. For instance, if your data is stored on a server in the US or if your cloud service company is owned by a US organization, it is subject to inspection by the US government under the Patriot’s Act. Every business should assess the potential impact of this prior to adopting a cloud solution.
  • Security. Even though Xero and some other online business management tools offer bank level security, in today’s world there are no guarantees that your data is 100% safe.

The tools available to manage your business in the cloud are expanding at a rapid pace and those that are already available are constantly improving. If you are to explore whether the move to the cloud is right for your business, get in touch. Compass Accounting is happy to help.