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HPC Blog

July 1, 2016 at 7:30 AM

How to select the right cloud accounting solution?

Xero and Other Cloud Apps, Outsourced Accounting


So much to think about, so little time....

Use this outline to save time finding the right cloud accounting solution according to your needs.

I have talked with thousands of business owners in initial conversations about cloud accounting solutions. If there is one thing I have learned, it is that while business owners and accounting providers can leverage cloud technology to do things faster and better, it certainly has not made the decision making process for most business owners easier.

You could spend hours, days or weeks searching almost infinite possibilities between different software and providers, and then months trying to set it up. Setting up a cloud accounting solution could mean a million different things, and given all the options and valuable time involved, you want to make sure you go with the RIGHT solution.

Don't waste your time! Demos, testing, and countless conversations with online accountants may never get you where you want (or ought) to be. Following these steps will guarantee to save you time, and ensure that you will have more meaningful conversations with any advisors or software companies you talk with or look at.


Follow these steps and I guarantee you will save your time, and will have more meaningful conversations with any advisors or software companies you talk with or consider.

First Step - Evaluate Yourself 

You can't search for the right tools or explain your needs until you truly evaluate what it is you want. This DOES NOT mean you have to think like an accountant. You just need to think about how things are managed now, and what would be the ideal solution. 

NOTE: Click To Expand Topics

  • How is your bookkeeping being done now? What about your taxes? 
    • Software - not just bookkeeping software, but any other software that has a financial impact (point of sale, payroll, project management, CRM, etc. should all be considered).
    • Processes - ongoing accounting, year end tax process, is it just reports and forms, or are you getting advice and value?
    • Who's involved - it might be just you, maybe you have a bookkeeper or long time CPA. You need to consider their role now, and how they'll fit into the new solution.
  • What are you trying to solve or accomplish by going to the cloud?
    • Cutting costs and time. More efficiency?
    • Industry specific integrations or solutions to save time in your business not just your accounting - maybe it is just the accounting (for now).
    • More visibility, mobile capabilities, more timely financials, etc.
    • Is it simply a better way to do your books and reports yourself, or are you looking for systems, ongoing help, and business or tax advice?
    • What else do you want or need?
  • What's going to work for you?
    • You have a budget - what does it leave for software, help with setup, and any ongoing help, support or advice? What would you include in your accounting budget now - current tools, staff, the dollar value on you or staff's time?
    • Technology - the tools that work best for your needs or industry will affect you and your staff. Having an all-in-one solution, or a tech stack with 5 customized, integrated add-ons could make a huge difference to you personally, your team, and it may affect your vendors and customers too. 
    • Personality and experience - are you good with technology? What about your accounting expertise or past experiences? These things are extremely important when deciding where to focus your efforts and what type of provider and workflow would work best. 
    • Service level - self service, or outsourced model. How much help do you think you need or want? Think now and long term too.
      • DIY Accounting in the 21st Century Doing it your-self is an option, but in my experience that is a worst case scenario. You could get help on just the setup, with some basic support for a simple bookkeeping system - so it's done right and you know exactly how to use it effectively and efficiently to get some ROI on your time and money invested in your new online accounting system.  
        • You will probably end up in the middle.
      • Full Service Accounting in the 21st Century You could also go with a full service provider and work with a one-stop shop - where you can have all the tools, support, reconciliation, bill-pay, invoicing, payroll, tax planning, advice, virtual CFO services, and much more than accounting or bookkeeping all wrapped into your engagement. You can have a concierge level service with a suite of tools and team of people collaborating with you and your team in real time.

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Step Two - Educate Yourself

Once you have a better idea of what you have now, what you want, and what you think might work best for you, it is time to do some initial homework. 

  • Where to start? 
    • Find a solution, not a tool or company - one way to do this is to ask your colleagues, your accountant, and searching on industry specific forums. However, you are still going to have to do some research on tools and providers to help you.
    • Finding the technology - while reviewing software, you want to focus on the features and benefits, and maybe sign up for a free trial, if available. However, don't spend too much time as you, nor the software reps in many cases, are going to be able to help you fully evaluate the tool for your big picture and long term needs. 
    • Find an advisor - once you find a handful of tools or options you think will work well, you want to find some experts to help you fully evaluate the options you are considering. We'll dive into this in Step 3 below.
  • Resources to get you started: 
    • Xero - this is our preferred small business accounting tool, and they have some great educational resources with diversified add-on and partner directories.
    • Industry specific forums - your peers have faced your challenges before and chances are they have valuable advice or feedback on how to solve and aid your search.
    • WhichAddOn.com - great resource for insight on accounting add-ons and solutions.
 

Step Three - Finding the Appropriate Help

Once you've had a chance to evaluate and educate yourself you should be ready to reach out to get the help you need. The better you understand your own needs and can define and communicate those needs, the easier it should be to select some providers and have meaningful discussions on how they can assist you.

  • If you don't need it, don't talk about it or pay for it
    • Basic needs and self service - if you think your books are simple, you are probably right, and maybe you can manage them yourself or with the help of staff. However, you will still benefit from talking to an expert to help with setup and training, and ongoing support is always a good option to have when it comes to new technology and accounting.
      • You may be able to work with a smaller bookkeeping shop, a company that specializes in integrations and setups, or maybe even seek the help of a contractor with particular experiece, skills or certifications.
      • You probably don't need a full service accounting firm - that is unless you want tax and compliance help, or have growth plans and scalability concerns.
      • Focus on training and setup - outsourcing can always come later. Doing it the wrong way WILL cost more money and time in the long run.
      • You can get these types of lower cost, one-time services via Xero 'Cloud Integrators' page, or through a marketplace like UpWork.com too.
    • Accounting and ongoing 'maintenance' - an all-in-one accounting solution like Netsuite is going to require custom setup and ongoing help whether you like it or not - but it may be everything you need in one place. A system with Xero and a tech stack of integrated add-ons will allow for more flexibility with a lower cost, but will still require help to fully implement, integrate, and then support in the long run. If you are doing more than basic bookkeeping, you really ought to budget for setup fees, monthly maintenance/support, and possibly some monthly software subscription costs.
      • Companies like Netsuite are going to support their software with trained experts, and bundle everything. Which might work well for you. 
      • Xero 'advisors' all have different levels of 3rd party app and industry expertise, as well as team sizes and offerings. They can advise you on the whole solution, not just Xero, and then help implement and support you on a custom solution.
      • Bookkeeping companies that do not provide tax work are a great fit here. Their main focus will be efficient systems and technology, and providing the services, support, and advice you need to setup and run your back office. They are also likely to work with your accountant or CPA, rather than replacing them.
      • Cloud tools are updated constantly with new features, and an expert who works in these tools everyday will continue to help you take advantage of the new bells and whistles to create value for you, your staff, and their company.
      • Bookkeeping, accounting and back office - once you start relying on a custom system to run your business you need a partner to help. You can't afford to have you or your staff stuck trying to process invoices, payroll, bills or making sure things are synced or matched correctly. You should have a trusted resource to make sure your back office is always running as intended and to monitor and reconcile activity, if not help process business transactions and completing part or all of your accounting for you.
      • You can find bookkeeping and back office services through Xero's 'Bookkeeping Directory' or via other directories based off the tools you have in mind.
    • Full Service Providers - when you know you want the back office automation, but also want pro-active tax, business, or virtual CFO advice you know you don't just need a bookkeeper. However, you should be able to get all of this under one roof, similar to the complete solution approach we offer at HPC.
      • With real-time reports you can get real time advice. If your tax preparer isn't going to adopt your new system, they probably aren't going to be able to provide advice. Also, preparers and VCFO's that work in the cloud are used to leveraging technology, and have experience working with multi-state, or cross-border companies, as well as experience across multiple industries which means better reporting and compliance advice.
      • If you have investors or specific financial reporting requirements then a bookkeeping company isn't going to cut it, and having a VCFO and experienced CPA team is going to provide a lot more value - especially if they work under the same 'roof' and on the same tools as your accounting and back office team.
      • Companies like this will have a lot more resources, combined experience, and answers for you. With this option will come a spike in cost, but if you truly need tax, business advice, cash flow forecasting, and things beyond bookkeeping it is well worth it. It may be a lot less expensive to have a concierge level service than you may think too.
      • You will receive a whole different perspective on your business when you have tech savvy full-service accounting firm. They don't just look at automation and accurate, timely reports, instead it's about internal controls, pro-active tax planning, budgeting and forecasting, business management meetings, custom reporting, entity and tax structure, consolidating financials, and even things like insurance and other business services. 
      • You can have it all if you want it, and it doesn't have to cost $100,000/year either. However, if you don't need or want it, then you should probably focus on a bookkeeping partner and how you might be able to collaborate with your current tax preparer or CPA in the mean-time to ensure you can at least have an easy way for them to help keep you in compliance.
      • You can find full service providers by going to the Xero 'Accountant Directory' or you can talk with us directly. If you don't plan on using Xero there are plenty of shops out there that provide these types of services using other tools.
  • Tips for getting in touch with an advisor
    • Give all the info you can before, or at the beginning of your initial call - this will allow the advisor to understand your goals and help them respond accordingly so you know whether or not they are a good fit or if it is worth a phone call and your time to discuss.
    • Current and intended systems, service level, your industry, and what you want should all be clearly communicated.
    • Look for industry specific advice - it's amazing how much time you can save when someone can suggests some specific business tools and/or best practices. Industry expertise is a must if you are looking to overhaul the back end of your business and getting the best advice.
    • If you feel like it's not the right fit, be honest and explain why. This could save time and needless follow up emails, or it could help re-align both the advisors value proposition and/or how you think about your needs.
    • Don't expect the whole solution to 'click' on your first call, and even though you have some preferences at this point try to keep an open mind.

The Big Step - Evaluate and Select Your Partner

You should speak with a few different experts, and they will provide ideas and advice to help you. What you thought you might need may have changed a bit now that you have been asked the right questions, and you are bound to do a little more research before you decide. Then hopefully once you decide you will be well on your way and won't have to go through this process again.

  • Expectations
    • You shouldn't be expected to know everything that the advisors you speak with know, and thus will have to educate yourself a bit more after you learn how they can help you.
    • You should receive an outline or proposal from each company you speak with so you can digest all the great info they shared. This will also help you make comparisons, and draw conclusions as to who and what might work best for you. 
    • Given the complexities, tools, and everything involved, it is more than likely that a second call or some email dialogue is needed to clarify the actual scope of work and what you are really getting.
    • Be sure to communicate your expectations and questions in regards to timing, payments, and the little things that could come back to haunt you now that you are getting closer to engaging some help.
    • These things take time, input and effort, and you should plan time for you and your staff to be involved once engaging a firm so that you can push through the initial implementation and make sure it is customized to your liking. 
    • Think about next steps and ask questions about the process. How will onboarding work - does it sound organized and easy? How much time do you think it will take? How does the billing work? Newer firms or contractors may have flexible or non existent policies on this stuff, where as more established and probably more expensive providers should have answers and processes for all of these things - another valuable thing to consider when it comes to you and your staff's time.
  • Advice before you make your decision
    • You get what you pay for. You cannot always expect a full-service solution for a low cost or through a contractor, and the more experience and value a firm has to offer the more expensive they are going to be - you pay for knowledge, proven processes and experience, and in return will receive an equitable amount of time saved and the increased probability of a successful outcome with a sustained long term solution.
    • The tools won't do it all. Your business is unique, and even a smart software like Xero will never be able to do all the work for you. A certain blend of accounting and technology expertise is what you're looking for - not just a tool.
    • Treat it like an investment. Not too long ago accounting systems and solutions cost a minimum of tens of thousands of dollars or required a full-time staff member. Now instead of one lump sum investment or having to hire and rehire staff solely to manage your accounting, you invest in a system and packaged solution with services with a fraction of the setup cost and usually a monthly or ongoing fee. You need to keep all your long term goals in mind, just as if you would if it were a huge long-term investment - which it is given the time involved and that the value, cost, and options of the solution you pick now will vary over time. What is it worth to have it done right and be with the right partner from the beginning?

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Conclusion

Messing around with accounting and technology is a terrible use of your time, and can slow you down if it is not setup or managed properly. Regardless of your budget, there is someone who can help you save time, select the right solution, and help you get your accounting system off the ground and into the cloud. 

I have worked in the cloud since starting my accounting career, and have been on the low-cost bookkeeping side, as well as the all-in-one solution now with HPC. There is a big difference in what we offer and do for our clients versus the resources I had to connect prospects with at some of the past bookkeeping firms I associated with. 

A full service solution is not the best for everyone though - a fact I am more than happy to share with some prospects I speak with. So the important thing is to identify what you really want and need, so you can clearly communicate who you are and what you want. Then the process of finding, fishing for, and engaging the right resources for your perfect accounting solution will be much easier.

You will save time finding help, and with the appropriate tools and help, you will save exponentially in terms of time and money when it comes to setting up and maintaining a cloud accounting and overall solution for your company.



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Matt Nyman

About Matt Nyman

As HPC's Client Success Manager, Matt helps connect our clients and prospects with the right tools, processes, team members, and overall solutions offered by HPC. He speaks with hundreds of business owners a year to help determine their needs and how HPC and/or their partners can help.