By L. Gary Boomer, CPA.CITP, CGMA
When Scott Cook founded Intuit 30 years ago, Quicken and QuickBooks soon followed, and a new industry was formed to help emerging small businesses and organizations automate their bookkeeping and accounting. Today, the Internet and online capabilities are transforming small businesses and how they do their accounting.
Thirty years ago most accounting was done manually, on paper. QuickBooks transformed accounting for small businesses by moving it from paper to the desktop. Now we are going through a transformation that allows new players with improved processes to enter the market. Will Intuit be able to innovate and hold off the new competitors, or will companies like Xero that provide online or cloud accounting for both clients and accountant practices gain significant market share?
No matter what happens, in my opinion the winners of the accounting wars will be accounting firms and their small business clients. Why? With a collaborative platform, small businesses will be able to focus on their vision and growth, not on accounting. Accounting firms will be able to capture transactions digitally and provide higher-value CFO and planning services with accurate and timely information.
Here are 5 ways online accounting will benefit small businesses:
1. Improved Cash Flow and Cash Management. Cash is king in any business, but especially in small business. Today’s online systems connect to financial institutions resulting in less data entry and increased accuracy. ACH payments and receipts reduce credit card fees and speed up collections. Invoicing is also automated and collections happen faster through secure email than the obsolete postal service.
2. Focus on Business Growth. Most entrepreneurs prefer to focus on business growth, not on accounting, tax and administrative duties. Online accounting makes it easier for accounting firms to handle multiple levels of service:
- Level 1 – Transactional (bookkeeping, tax and reporting)
- Level 2 – CFO Services (budgeting, cash flow and financing)
- Level 3 – Planning (Strategic, Succession, and Technology)
3. Data Security and Privacy. Most small businesses use desktop systems and are vulnerable to the lack of backups, viruses and less than acceptable computing practices. With online accounting, service providers manage the infrastructure and backups.
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