The focus of last week’s blog on data backup using a cloud computing solution was the first of many where I will focus on online business solutions that might help run your business more securely and efficiently using cloud technology.
More frequently than not these days, there is something in the news about cloud computing and online solutions for businesses. The cloud has fundamentally changed the way companies operate their businesses especially when it comes to IT functions like email, software applications, desktop computers, servers and security. But have you considered how this technology might apply to accounting?
Paying made easier
By now, most of us have made the switch to online banking for personal accounts and we now understand the time savings and ease of use that come with doing so.
Simple tasks such as checking your account balance, scheduling recurring payments or transferring funds all eliminate the need to spend time traveling to the bank. Rather than the traditional method of writing a check, mailing it and then waiting for the payment to clear your account, online banking provides us access to wire funds immediately and returning real time accurate account balances. A process that used to take 30 minutes can now be accomplished in five minutes or less.
The checkbook is not dead
The 2013 AFP Electronic Payments Survey, underwritten by J.P. Morgan Treasury Services, found that 50 percent of U.S. companies continue to make payments by check. Although the number is down from 81 percent from 10 years ago, respondents identified a number of reasons why companies are often reluctant to adopt electronic payment methods:
- 82 percent experience difficulty convincing customers to pay electronically
- 74 percent have difficulty convincing suppliers to accept e-payments
- 71 percent found a shortage of IT resources for implementation
- 70 percent have a lack of standard format for remittance information with 66 percent acknowledging a lack of integration between electronic payment and accounting systems
Old fashioned costs
According to Bank of America, after factoring in the cost of checks, shipping, and most important, employee time to write, mail and reconcile checks, businesses are spending between $4 and $20 per check.
In addition to the costs associated with this outdated payment method, the costs of delayed receivables can also cost businesses money. The results in the international survey, Atradius Payment Practices Barometer, report that the average turnaround for payment by U.S. businesses is 41 days. However, Xero, the global leader in online accounting software, announced that when businesses used online accounting software and invoicing, payment time was reduced to 29 days.
Time still equals money
Timely payments are an essential ingredient to job creation and economic growth and is the most common complaint from America’s small business owners. According to the article A New Strategy to Drive Small Business Growth by the Small Business Administration, entrepreneur Maurice Brewser said, “If every client paid him on time, he would expand tomorrow to New York and Los Angeles and create dozens of new jobs.” While recognizing the importance of timely payments, the SBA joined the White House to announce the launch of SupplierPay, a program that will help small businesses and their corporate partners improve the cycle of timely payments.
It’s easier than ever to transition to an online accounting system that will securely allow access to your accounts from work, home or on the go and help your business receive payments faster. If you’re slow to adopt cloud accounting because of the popular reasons mentioned above, maybe it’s time to reassess. The cloud is changing the way businesses operate every day.