Blog Credit: Scott Beaver,November 8, 2022 (Must-Have Features and Capabilities for a Cloud Accounting Solution | NetSuite)
Companies just starting out tend to have limited revenue, a handful of employees, and few expenses, so they can often get by with spreadsheets and an entry-level accounting package. Over time, however, as new products and services are launched, additional sales channels are opened, and sales increase, keeping track of revenue, expenses, liabilities, and assets — not to mention owner equity — becomes more challenging.
Hiring more people in accounting helps for a while, but eventually, those rudimentary systems and processes begin to inhibit growth because they don’t provide the insights, flexibility, or efficiency companies need to remain competitive.
Continuing to rely on a system that doesn’t meet the needs of your business is a no-win proposition. Ultimately, if you’re forced to use spreadsheets for accounting tasks your current software can’t handle, you’ll struggle to provide the detailed reports your colleagues really want. If your staff spends much of their time on data entry, or the system doesn’t support your governance, risk, and compliance objectives, it’s time to look for a new solution.
While evaluating financial management software might not be at the top of your bucket list, finding a system that fits your business will give you more control over your finances. A cloud-accounting solution will not only provide you access to the features you’re looking for, it will reduce IT overhead and increase flexibility by allowing team members the ability to work from anywhere, at any time.
Cloud Accounting Essentials
What you should look for in a cloud accounting solution depends to some extent on your business model. A service provider, for instance, will need robust revenue recognition capabilities that an ecommerce retailer probably won’t. That said, however, the core requirements are the same for most companies.
A rock-solid general ledger. The general ledger (GL) is your company’s financial backbone. It should map to the structure of your business so it’s easy to track where cash comes from and where it goes. The traditional way of doing this, using complex account codes, is cumbersome, limits what can be tracked, and becomes harder to manage as companies grow.
When evaluating cloud accounting software, look for a solution with a dynamic general ledger that allows you to use dimensional values rather than complicated account codes to categorize transactions. Dimensions are like tags or labels that can be added to transactions for enhanced reporting. Think organizational details (department, location, division), details related to revenue (product, channel, customer) or other characteristics that may be useful for performance tracking.
Automated core processes. Manual process are a drag on productivity, yet many accounting packages still have limited automation capability. As a result, accounting personnel often spend several hours a day performing mundane, repetitive tasks like data entry instead of using their skills and intellect to solve problems. This is a poor use of resources that results in errors, stress and employee turnover.
Look for a cloud accounting solution that automates major steps in the record-to-report process, including tasks like invoicing customers and processing payments; entering, approving, and paying vendor bills; recording depreciation, accruals, and other recurring transactions; allocating and recognizing revenue; and reconciling bank accounts. It should also incorporate technologies like artificial intelligence and machine learning to help accounting personnel identify and address anomalies.
Data Visibility and Reporting.
The accounting system should be the central repository of your organization’s financial data. If important accounting processes are being managed with spreadsheets, then at least some of that data is sitting outside of the accounting system. And because spreadsheets are static, the information they contain quickly becomes out of date, which makes it hard to get a complete, real-time view of what’s happening in the business. Cloud-accounting software avoids this by providing a single source of real-time financial data. So instead of struggling to pull information from multiple sources, you always have an up-to-date view of your current financial position.
Having that single source of real-time data is valuable, but you also need the ability to share information with key stakeholders, including department heads, the board of directors and shareholders.
Basic packages typically provide preformatted templates that can be used to produce financial statements and other standard reports. This saves time by eliminating the need to create reports from scratch. A format that works for one company, however, doesn’t necessarily meet the needs of others. Unfortunately, these templates are often hard-coded, making it difficult to modify the layout or decide which data elements to include on a report. This can prevent you from communicating information in a way the makes sense for different stakeholders.
To take full advantage of business data, your cloud accounting solution should include robust analytics. In addition to providing configurable standard reports, it should also include tools for producing custom reports, tracking key performance indicators (KPIs), and creating dashboards. While many software providers offer these tools, not all systems are created equal.
Look for a system with robust reporting capabilities that are also user friendly.
Effective controls. Internal controls are the policies and rules organizations use to protect themselves from financial fraud, serious errors, and intentional abuse of benefits, resources, or authority. Effective controls ensure compliance with government regulations and accounting standards. They also help ensure effective decision-making regarding investment of capital or allocation of company resources.
A cloud accounting solution must have embedded governance, risk, and compliance (GRC) features that enable you to comply with tax laws, accounting rules, and federal, state and local regulations everywhere your business operates. It must also meet privacy and data protection requirements as well. Finally, it should include review and approval workflows to ensure proper management oversight of expenditures and reduce the risk of fraud.
Achieve Better Business Results with NetSuite & Circular Edge
Grow and scale your business while gaining a competitive advantage with NetSuite’s best-in-class integrated cloud business software and Circular Edge’s expertise in NetSuite implementation, advisory, managed services and direct staffing. Let us show you how to leverage our direct staff pool of resources to realize better insights, organizational efficiency, increased profitability and improved relationships with your suppliers and customers – and ultimately take your business to the next level.
Contact Circular Edge today to learn more about our NetSuite consulting services.
NetSuite Cloud Accounting Software
NetSuite cloud accounting software transforms the general ledger, giving you the ability to record transactions with multiple dimensions while helping reduce errors by simplifying your chart of accounts.
NetSuite also increases the efficiency and productivity of accounting staff by automating accounts payable, invoicing, bank reconciliation, revenue management, and other core processes. Powerful analytics capabilities give you the tools to produce more meaningful reports, track KPIs in real time, and glean new insights that lead to better decisions and improved performance.
Finally, NetSuite’s built-in governance, risk, and compliance (GRC) features provide essential controls to reduce fraud and adapt to increasingly complex regulations and accounting standards.
Want to learn more about NetSuite cloud accounting solution? Watch our on-demand webinar: A Checklist of Must Have Cloud Accounting Capabilities.