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Thinking of Moving to Cloud Accounting?

28th Mar 2024
Brought to you by
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Award-winning cloud accounting software for multi-company businesses.

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The landscape of accounting has been reshaped by the rapid adoption of cloud-based solutions, particularly evident among start-ups and SME’s. The allure of eliminating upfront software costs and shedding the burden of IT infrastructure has made software-as-a-service models the new norm. Yet, while the benefits are clear, navigating this transition can be daunting. In this guide, we'll delve into the top five considerations to bear in mind before embarking on your cloud migration journey.  

Here are 5 key considerations to think about before moving to the cloud

1. Consolidation out-of-the-box or not?  

When considering software for consolidation, you have two main options to weigh. The first and often simpler choice is to select a cloud accounting solution that already includes consolidation functionality. Alternatively, you can purchase a separate consolidation module and integrate it into your chosen cloud accounting software. However, this second option presents potential drawbacks, including additional software costs, integration challenges, heightened training requirements, and the added complexity of managing another software provider. Additionally, it's vital to recognize that each solution undergoes continual upgrades and development, which may result in compatibility issues in the future. Other crucial factors to consider when assessing consolidation within your accounting solution include its ability to handle multiple currencies, consolidate entities with complex ownership structures, and integrate additional data such as Business Intelligence alongside financial information. 

2. Multiple currencies 

 As a larger organisation, you may well be managing overseas subsidiaries or dealing with overseas suppliers or customers. For some smaller cloud systems this may well present challenges, particularly when it comes to multicurrency consolidation. Some cloud accounting solutions however now offer functions to manage these scenarios very well. You need to check if the solution allows subsidiaries to operate and report in their own currency and that you can then convert to your base currency for consolidation. You also need to check how the system handles inter-company transactions in multiple currencies as well as the treatment of currency gains and losses.  

3. Scalability for future-proofing  

One of the primary advantages of the Software as a Service (SaaS) model for cloud accounting is the automatic upgrades, eliminating the need to worry about installing new versions on-premise. Typically, you can seamlessly operate on your chosen cloud solution as long as your business needs remain relatively stable. However, what happens when your Management Team decides to expand aggressively, such as acquiring an overseas competitor, entering new markets, or adding distribution depots? The crucial question to consider is the scalability of your accounting software. Can it easily accommodate the addition of new entities, sales outlets, warehouses, and other expansions? Furthermore, as your business expands, you may experience a significant increase in transaction volumes each year. It's essential to assess whether your chosen cloud accounting software can effectively handle this higher workload, or if it will begin to encounter performance issues over time. 

4. Stock Management  

Again, as a mid-size company, you could be managing multiple warehouses in multiple locations, each with multiple sub-locations and stock-bins. Many cloud accounting solutions do not provide stock management functions or provide only very basic functionality. Remember also that you could need your solution to manage stock and prices in multiple currencies. A fully integrated stock management feature should integrate fully with sales and purchase order processing and the General Ledger.  

5. Business Intelligence Out-of-the-Box or not?  

Business Intelligence and analysis are increasingly crucial management tools for enhancing business performance and ensuring survival in today's competitive landscape. BI tools facilitate tasks such as creating key performance indicators (some of which may be nonfinancial) and presenting them to management for consistent visibility and focus. However, managing remote entities or locations poses challenges in maintaining visibility of these indicators, especially when comparing and benchmarking performance across different outlets. Achieving this task requires centralized control of key performance indicators to ensure consistency across the organization. Similar to the consolidation feature, there are two options: purchasing a separate BI solution with associated costs, training, and upgrade disadvantages, or investing in an accounting solution that includes BI functions. While some cloud accounting solutions offer excellent business intelligence features, they may struggle with consolidating BI data for a comprehensive group-wide performance analysis. 

Summary 

Transitioning your accounting practice to the cloud holds immense potential for streamlining operations and enhancing efficiency, particularly for start-ups and small businesses. However, navigating this journey requires careful consideration of several key factors. From consolidation options and handling multiple currencies to scalability, stock management, and business intelligence integration, each aspect plays a crucial role in ensuring a smooth transition and future-proofing your operations. By understanding and addressing these considerations, you can confidently embark on your cloud migration journey, ensuring your business keeps up with technological advancements in today’s agile and competitive business environment.  

Hungry for more?  

Get the complete guide on "Moving Your Group Company to Cloud Accounting" by downloading our eBook. Discover expert advice on the essential factors to consider when transitioning your accounting practice to the cloud.  

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About AccountsIQ  

This article is brought to you by AccountsIQ, scalable cloud accounting software for midsize companies looking to switch to advanced accounting software. Built for the cloud, AccountsIQ is in use in 85+ countries by over 20,000 users and is now the solution-of-choice for many the world’s leading accounting practices.  

For further information on how AccountsIQ might work for your growing business please feel free to contact us and we would be happy to discuss your needs.

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