CPA Practice Advisor - 5

FEATURE
AS A CPA, it's important that you stay on top of financial operations, trends and solutions, both for growing your practice and
better servicing your clients. One such trend that is within reach
and easy to adopt is cloud-based accounting. Today, traditional
forms of managing a company's finances with manual entry,
spreadsheets and general ledger software, are slowly becoming
a thing of the past. For most businesses and their accounting
partners, cloud-based technology can greatly simplify financial
operations, reduce risk, simplify audits and provide the peace of
mind that their data is protected.
Despite these benefits, adoption
still has a long way to go. A recent
survey revealed that 55 percent
(https://bit.ly/2Myl3In) of companies have neglected to implement
basic automation technology such
as online invoice approvals for
accounts payable, and another 43
percent on the accounts receivable
side are failing to send invoices
electronically or set up customers with self-service portals. The
study also reported that only 53
percent have a tool for automatic
journal entry creation and only 31
percent have automated revenue
recognition.
While these numbers are low,
not all businesses or firms are slow
to adopt cloud-based accounting
solutions. Current adoption can be
largely attributed to the increasing
popularity of the Software-asa-Service (SaaS) business model
- something that is not slowing
anytime soon. As an accounting
professional, it's likely that a growing number of your clients are SaaS
businesses. By 2020, more than 80
percent of software providers will
change their business models from
"traditional" perpetual license and
maintenance to subscription-based
models (https://gtnr.it/2kAKeMX).

And today, Forbes is reporting
that 84 percent of new software is
delivered as SaaS.
The nature of SaaS financial
operations makes automated,
cloud-based financial operations a must-have. Managing
the operations and finances of a
traditional business versus those
of a SaaS business are vastly different. As SaaS businesses grow,
their financial operations become
increasingly complicated, and traditional accounting methods leave
the door open for errors, take too
much time and simply don't work.
For example, mistaking cash for
revenue is a common pitfall. In
accordance with U.S. Generally
Accepted Accounting Principles
(GAAP), an entity cannot fully
recognize revenue from a contract
until the agreed-upon services
have been delivered. With varying
contract lengths, bundled services
and the occasional non-standard
service, SaaS businesses require
the ability and the flexibility to
recognize revenue in a manner
consistent with their agreements
and in accordance with GAAP.
The key to successfully managing the finances of a SaaS business
is automation. Cloud-based solu-

tions can eliminate the need to
re-key information or manually
enter data. They can automatically turn closed opportunities
into a GAAP-compliant customer,
contract, subscription, revenue and
invoice schedule, and that information can also flow automatically
into the general ledger system.
Most cloud-based solutions will
also allow you to present polished,
accurate revenue recognition and
financial metrics that will inform
operational decisions, streamline
audits and satisfy potential investors or buyers.
Cloud-based solutions also
mean that everyone touching the
financial operations of a business
is viewing the same information,
in real-time. This drives faster,
better decision making. Leveraging cloud solutions for managing
financial operations makes it easier
to access and maintain financial
data. Pulling data or reports
doesn't require laborious and timeconsuming email correspondence,
which is especially frustrating
when trying to meet deadlines
during the busy tax season.
By storing all of a company's
financial information in the cloud,
you'll minimize the risk of costly

OCTOBER 2019 ■

accounting errors. Everyone will
be accessing and working from the
same information so that re-entry
is not needed. This saves time and
minimizes the potential for error. It
also encourages collaboration and
sharing of information for greater
transparency.
When the time comes, storing
a company's financial information
in the cloud can take the headache
out of an audit. It will ensure all
supporting documents such as
contracts, addendums, statements
of work (SOWs), purchase orders,
vendor contracts, invoices, batch
deposit support and bank statements are organized in a central
place. This will create a proper
audit trail and allow you to quickly
provide samples requested by
auditors and avoid wasting time
searching through documents.
It's likely you've thought about
transitioning to the cloud. Taking
that leap is not only beneficial for
day-to-day operations, it also is a
way for accounting professionals
to work more efficiently, provide
accurate data and capture valuable
data that gives executives critical
insight into the business for making smarter decisions to grow the
business. ■
Tim McCormick is the Chief Executive
Officer for SaaSOptics, an affordable and
flexible subscription management platform for emerging and growth SaaS and
subscription-based businesses. Founded
in 2009 by entrepreneurs who lived the
challenges of running their own SaaS
business, SaaSOptics was developed as
a solution that can scale with a growing
business, providing the day-to-day financial management capabilities needed and
the auditing, reporting and analytics that
are critical for future growth.

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CPA Practice Advisor

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