Until recently, accounting and payroll have relied on paperwork and outdated systems that are difficult to maintain and even more difficult to connect. The amount of time and money that can be lost by continuing to work in siloed, outdated systems truly does affect all of us.
Traditional accounting vs cloud accounting
With traditional accounting systems, companies collect their accounting information – such as income, expenses, assets, liabilities, and equity – and deliver it to the accounting office each month. This is often done with mountains of paperwork and emails. An accountant then manually enters the information into an accounting system and archives the original paperwork in binders.
In this system, it’s not uncommon for documents to go missing or for data to be entered inaccurately – which means even more time spent ensuring that end-of-month statements and balance sheets are correct. The potential for human error is significant.
The process is dramatically different with cloud accounting. Both the accounting office and company employees work in one system that is seamlessly connected and shares data in real-time. When the company creates sales invoices in the accounting system, for example, all relevant documents are updated and archived automatically.
Cloud accounting systems also link directly to banks, credit cards, tax authorities, etc. So, if the system notices that an invoice has not been paid, it automatically sends a reminder or initiates a debt-collecting process. These built-in automations and integrations significantly reduce human error and make the entire accounting cycle much more efficient from beginning to end.
Speed and accuracy are the name of the game in accounting — that’s what makes moving to the cloud so beneficial. In Benelux, for example, our accounting software company Yuki has seen huge advantages to adopting cloud software early. When we asked their Managing Director, Ellen Sano, to share one of the biggest advantages she’s seen, here’s what she said:
“Our view on bookkeeping is that it should run in real-time, not as a way to write history. That’s in the core of our product, and can only be done in the cloud. For us, it’s in our DNA and logic. For our clients, it’s an eye-opening experience compared to their normal way of working. Accountants can review errors more quickly, and clients can tackle business questions on a day-to-day basis rather than quarterly.”
Expectations vs reality
At the beginning of the cloud accounting revolution, some market researchers predicted a decline in this field. But, we’ve actually seen the exact opposite.
In the Nordics, the accounting industry as a whole is experiencing all-time high revenue growth in markets that have widely adopted cloud accounting. We also see that more people are becoming interested in working for accounting offices now that it requires less manual work and offers more opportunities to directly influence a business’s success.
Greenstep is a great example of this. The company was founded in Finland in 2010 and offers financial management services to organisations of all sizes. They’ve experienced non-stop organic growth with high-profit margins. They’ve even expanded to two new countries, which is not typical because of country-specific accounting laws.
Yes, cloud accounting changes nearly every step of the accounting cycle, and it makes the days of endless paperwork and storage rooms stacked with binders a thing of the past. The one thing cloud accounting and automation can’t remove is the need for accounting experts. Businesses will always need accountants to give business-direction advice, weigh in on financial decisions, and make sure all systems run smoothly.
The case for accounting offices
The biggest winners are companies who recognise this opportunity and go all-in early. Eventually, all accounting offices will need to make the move to cloud accounting, so the ones who put it off for too long will eventually lose competitiveness in the market. In Benelux, for example, early adopters have seen a huge benefit in moving to the cloud.
“Because the early adopters don’t have any legacy on clients or on coworkers, their business is much more streamlined. They have the opportunity to let only digital clients in, which makes them more profitable.”Ellen Sano, Managing Director at Yuki
There’s no turning back. If we look at the frontrunner markets – the Nordics, Benelux, and New Zealand – no one has started building new non-cloud accounting systems in the last 10 years. And, one by one, the support for all the existing non-cloud accounting systems is being discontinued. The rest of Europe might be a decade behind the Nordics and Benelux in cloud accounting adoption, but that just means accounting offices in those markets have the opportunity of a lifetime to push for change. We are certain that it won’t take 10 years for these countries to get to the level that frontrunners are at today.
Want to see how European markets match up in cloud accounting adoption?