Although Cloud accounting has been around for over a decade, it is surprising that Advanced’s research findings showed that only 20% of finance teams use the Cloud to maintain their accounting records.
This is hugely inefficient due to legacy accounting tools being unable to leverage automation technology such as bank feeds. These legacy accounting systems require finance employees to spend more time maintaining records manually, alongside the risk of data being entered inaccurately.
Historically real-time data was a “nice to have” rather than a necessity. However, the darkening economic conditions require companies to take action now to support compliance requirements and enable senior team members to demonstrate agility, by responding to opportunities and threats with accurate financial data.
Struggles to access real-time data
Advanced’s survey showed that 60% of the accountants questioned don’t use software to gain a real-time view of important metrics. This struggle is further highlighted by 26% saying they found accessing accurate data / information as the biggest challenge they face.
Surprisingly, those surveyed don’t appear to be aware that the answer to generating real-time data, Cloud accounting, is right under their nose.
The variety of Cloud accounting vendors on the market, suitable for newly formed companies through to enterprise-level businesses, enable large swathes of bookkeeping to be automated.
This includes extracting data from receipts and purchases and matching bank transactions to invoices. Benefits include freed up time (from significantly reduced manual processing) and up-to-date ledgers.
Cloud adoption needs to be increased
It is widely assumed that most businesses have moved onto Cloud accounting software. However, the survey findings revealed that only 20% of teams had switched from on-premise solutions.
As more than two-thirds of respondents work for businesses with more than 250 employees, larger companies may lag behind SMEs due to being tethered to legacy on-premise software.
The urgent need to move to the Cloud is highlighted by 67% of respondents revealing they had to manually match up at least 500 invoices over the last year. This is hugely inefficient, and it isn’t surprising that this group finds it challenging to access accurate and timely data due to processing being reliant on human capabilities rather than automated, streamlined processes.
However, we may be at the precipice of rapid change, as 43% of respondents plan to incorporate the Cloud to manage their financial processes within the near year. It will be interesting to come back and review the findings from 2023’s survey to see whether surveyed companies follow through.
Power insights with business dashboards
Once Cloud automation capabilities have been fully leveraged to produce accurate and real-time data, the output can then be used to improve business performance.
By using the Cloud, finance teams become freed up from processing transactions and can instead spend their time on value-adding activities such as strategy. This is in line with the priorities of finance employees, with 75% indicating their number one priority over the next 12 months is to either provide higher quality information to the board for improved decision-making (50%) or to become more strategic (25%).
Creating business dashboards that present company-wide KPIs is a practical first step towards fulfilling these requirements. Commonly used KPIs include data points related to revenues, profitability and forecast cash flow balances. Digital businesses can also blend operational and accounting data to generate lifetime customer values and acquisition costs.
Finance teams can develop data analysis skills by defining and setting up KPIs. The output from dashboards can then be used to present at board level to provide insights on strategy and partner with different functions across the business.
Use real-time financial data to look forwards
Real-time data enables finance employees to look forwards and plan for a range of different scenarios.
With a predicted incoming recession on the horizon, the impetus for companies to move to the Cloud to automate and speed up the availability of finance data is more pertinent than ever.
Large businesses considering making the change should take comfort that many others have already made the leap so shouldn’t be fearful.