Client Accounting Online: Taking Back Control of Your Clients’ Data

Column: My Perspective

From the December 2009 Issue

I remember the days as a kid when I would go to my dad’s accounting practice and spend the day helping him. The process was fairly complex ... and completely manual. Clients would handwrite checks and, at month’s end, deliver their check stubs, bank statements, sales receipts, and other manual documents. Data would then be manually posted in a journal or ledger, and eventually a financial statement would be typed out. I clearly remember learning to perform client accounting services the old fashioned way.

Fast-forward a few years. QuickBooks came on the scene and things started changing … fast. Many small business clients are now using QuickBooks, Peachtree or other leading client accounting applications to do much of the work that used to be done by hand. These products were certainly a great invention for clients, but they did not come without issues. Most firm leaders will agree that the advent of the client accounting movement has also brought its own set of issues. The primary issue: bad data. These new applications allowed control of data entry to change hands. Clients were empowered to enter their own information. And soon enough, the phrase “garbage in, garbage out” was coined.

Now we have clients using accounting packages, and for the most part many do not have the level of accounting knowledge required to operate them effectively. The end result is an expectation for the accountant to clean up the mess each month. It’s a vicious cycle. I get tired just thinking about it.

So, what’s the solution? To identify the solution, we must first look at the end goal and the core problem.

The goal: The client, the bank, and the IRS all want and expect good, accurate data.

The problem: This is nearly impossible when each client is operating their own accounting system, living in isolated silos, and eliminating a firm’s ability to implement a standard, uniform workflow process.

The solution: Share!

Firms need to collaborate with clients to accomplish uniform goals. That means sharing data. Firms must have real-time access to all clients’ data in order to monitor issues throughout the month instead of cleaning up one big mess at month’s end. To accomplish this, firms are encouraged (strongly!) to take advantage of the Internet. It’s time for the cloud.

WHAT IS CLOUD COMPUTING?
Cloud computing simply means having access to a client’s data via the Web. This enables simultaneous access — sharing! There are a few different ways this can be accomplished using one or more technologies, including hosted and SaaS-based software.

Hosted software is really just a desktop solution that is hosted on an off-site server. Servers are housed in world-class, highly secure data centers. Hosted software provides the firm and their clients with immediate access to their applications and data.

SaaS (Software as a Service) is a solution that actually lives on the Internet (a desktop version does not exist), making it extremely convenient and accessible by all authorized parties. An example of the SaaS model is online banking. You perform banking tasks via the Web. Data is synchronized through the system’s advanced technology. You do not access a software application of any kind.

MORE DETAIL ON HOSTED SOLUTIONS
Many of you probably have clients that use or have used QuickBooks. One of the challenges of using the desktop version is having real-time access to the same set of data as the client. Another challenge is how the QuickBooks file is exchanged. Another problem, which I’m confident most firms experience, is changes to data made by the client AFTER data files are handed over to the firm. And the list could go on and on.