Cloud computing and Cloud hosted accounting solutions are no longer mythical IT jargon. Every accountant on the face of this planet certainly knows about Cloud accounting, its many benefits, and are also aware of it significant impact on traditional accounting practices.
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Most individual practicing accountants have made the jump to the Cloud and have also brought along their clients to the Cloud. However, many accounting firms are still skeptical about adopting the Cloud and Cloud accounting practices. This results in such accounting firms losing out on modern business models which promise higher efficiency and productivity.
But there’s a few more intrinsic issues at play, which are not always apparent to many early Cloud adopters, and failure to avoid or at least mitigate these issues may result in sudden increases in expenses, failure to retain skilled employees, and continued use of archaic accounting practices.
1. Not Staying on Top of Receivables
Getting paid is an indescribable rush, but keeping track of all of your receivables is not so much fun, though. Whenever an invoice is generated, a receivable ticket is simultaneously created to validate that a customer owes you or your business money. And as soon as you receive the payment from the customer’s end, that specific receivable shall be assimilated with the invoice and mark it as paid. In real life, however, it is easier said than done. Many practices delay this task of assimilating the paid receivable with the actual invoices, and a few of them just get lost or forgotten.
Proper management of your receivables is absolutely necessary to ensure that you cash flow metrics stay healthy and provides accurate financial statistics and insights. It also ensures that come tax time, you won’t have to un-jumble and update a whole year’s worth of receivables. There is a plethora of accounting software out there like QuickBooks from Intuit, which simplifies the whole process and allows CPAs to utilize their time productively elsewhere.
2. Improper/Incomplete Documentation of Expenses
Most businesses and organizations often forget to document their expenses, operational and otherwise. This results in grave accounting and tax related issues later on. Properly documenting and archiving all expense related receipts, enables business owners as well as accountants, and other stakeholders to make heads and tails of expense details and sort out any mistakes and redundancies.
3. Indistinguishable Personal-Business Finances
Business owners, especially SMB owners often make the grave mistake of using their personal as well and their business accounts together for operational expenses and whatnot. This gives rise to a whole lot of terrible accounting and tax related issues. The best way to avoid this issue to keep your personal and business accounts as far away from each other as possible and using the respective accounts for their respective purposes. This also helps keep both your personal and business accounts in order and helps create clean and easy to manage financial accounting.
4. Keeping Up With Client Demand
With changing times, client demands are also changing rapidly. The adoption of the Cloud and Cloud hosted services has profoundly changed the dynamics of accounting and accounting services in the past couple of years. Clients nowadays ask for lighting fast bespoke services, that are tailor made for their niche business and operational protocols. This has created a situation where accounting and accounting professionals have to constantly keep adapting and evolving to meet client demands.
5. Not Seeking Professional Help
The worst mistake in accounting is to not hire professional CPAs for the job. Accounting and tax related services are somewhat of a specialization and require immense knowledge of finance, tax rules, and accounting to properly manage the accounting aspect of a business. Always go for an experienced CPA to handle all financial tasks, as even the minutest of mistakes in accounting, can lead to a humongous debacles in the future.
So, here are the top critical mistakes in cloud accounting today which should be avoided at all costs to ensure a healthy and productive accounting engine , powering your business to financial stability and growth.