Understanding the Costs and Risks of Accounting Technology
Understanding the Costs and Risks of Accounting Technology
There’s no doubt that we live in the age of a technology boom. New apps emerge daily to solve very specific issues in all aspects of business and life. It’s an incredible time especially for entrepreneurs and small business owners. In this post, we look at some of the costs and risks of accounting technology.
A Little History
First, think back to the evolution of accounting tech. In the early days, accounting software programs were designed to handle specific accounting and business processes. For example, business used separate programs for invoicing, accounts receivable, inventory management and accounts payable. The outputs of these programs transferred to the general ledger in the form of journal entries. In this “best of breed” era, businesses bought the best program for a specific purpose and worried about the integration later.
Fast forward and fully integrated systems evolved. Many accounting software companies acquired and integrated the stand-alone software solutions. The acquired solutions were built into the software as “modules”. This created scalable accounting technologies to handle all aspects of a company’s business.
For small businesses, system costs may have been prohibitive and “Service Bureaus” stepped in to offer accounting systems. Service bureaus pioneered what we call outsourced accounting today leveraging the costs of the computer hardware and software.
In recent years, we’ve migrated from fully integrated software solutions back to individual applications designed for specific business tasks. The difference today, is the open API (Application Programming Interface) environment. With open APIs, software companies easily share data giving other apps access to the data.
Combining open APIs to the “Cloud” creates an incredible sharing of data and integration of information from multiple applications across all aspects of business small and large.
How We Help
Our COMPASS – Complete Outsourced Monthly Processes and Accounting Service System is designed, to manage the risks of software and business processes for our customers.
We have the opportunity to meet with businesses that vary in their use of technology and process design. Many small businesses have migrated to the cloud however, many continue to maintain desktop technologies. For businesses using a desktop version of accounting software we often hear, “I tried the online version” and it didn’t work. That may have been true when you first tried it, but today that online version has most likely surpassed the features and benefits of the desktop version.
The maintenance risks and costs are a good reason to look to the cloud or online applications. Desktop software requires users to download and install updates for new features or patches. Users must monitor and install updates for desktop products. Companies must also inform internal users of the changes.
Ever had to apply an update during the work day? Yeah, it’s a costly to kick your entire team out of the system to apply an update. Cloud or online versions of software push improvements and updates out without disruption.
Today, the costs of maintaining desktop products is generally more costly than cloud-based products.
While many desktop apps integrate with online banking and other applications, the integration takes extra steps. The processes are more involved and certainly less seamless than the online products. These more involved processes create risks of duplicating data in the process along with additional costs due to being less efficient.
Within our tech stack, Dext (ReceiptBank), Bill.com, Payroll Relief and Fathom integrate with both desktop and online versions of QuickBooks. The difference is that integration with desktop versions requires the installation of an app on the desktop and additional steps to sync data. While integration with the QuickBooks online takes fewer steps and generally happens automatically at a regular occurrence.
Integration costs for desktop products is considered to be more costly than with cloud-based products.
Technology changes so rapidly and new features are released almost daily. Companies maintaining technology in-house risk overlooking new features or failed implementations.
Accounting technology is often capped by the experience and knowledge staff. The role of accounting and bookkeeping is changing just as fast as the accounting technology. Unless companies monitor the accounting technology features and updates, they risk falling behind. Companies must also consider the cost in training and developing accounting and bookkeeping staff. Someone once said “It’s what you don’t know that will hurt you.” This is so true when it comes to accounting technology.
The costs of implementing new accounting software features are generally higher for companies maintaining their own accounting technologies. Monitoring, implementing and training costs are often underestimated by small businesses. Outsourced providers leverage knowledge and know-how across multiple customers reducing the risks while continuing to implement the latest features.
It’s an exciting time for small business technology and accounting. Small business owners and managers should consider the risks and costs of managing accounting technology in-house.
- Maintenance and upkeep of desktop systems is generally more costly than cloud-based systems.
- Desktop systems are less suitable to outsourcing limiting a company’s use of accounting technology to the knowledge and experience of internal resources.
- While integration of applications is available for both desktop technologies, cloud-based versions are generally easier to implement and maintain.
- Accounting technology features are changing very rapidly. Companies must monitor, evaluate and implement new features or risk technology and processes lagging behind in technology and processes.
These are just a few of the considerations when looking at the risk of maintaining accounting technology. Our COMPASS – Complete Outsourced Monthly Processes and Accounting Service System is a scalable comprehensive solution. Find out how COMPASS can mitigate the risks of your accounting technology. Call us today at 844-309-4930 or contact us.