Is it Time to Upgrade?

Accounting software is a great tool for your business. It helps you keep track of invoices, let’s you see where are your money is going and even allows you to access your information basically anytime, anywhere.

But if your accounting software is out of date, it actually might be doing more harm than good for your business. Here are some signs that it might be time to look into an updated system.

  • Are you still communicating with vendors and customers through email or even *gasp* snail mail? If so, it may be time to look for a system that provides an easier way to communicate.
  • If your desk is covered in papers and you have paper invoices and timecards coming out your ears, it’s time to stop endangering the tree population and look into a system that can do this electronically.
  • It might be time to look into some new software if your system doesn’t allow you to look at your information anytime, anywhere. This includes your cell phone – many systems allow you to have all of your information at the swipe of a finger.
  • Is your chart of accounts endless? Or, maybe you need to create a whole new set of accounts each time you add another profit or cost center (grants, jobs, products lines, etc.). Either way, both are major signs that it’s time to upgrade and update.
  • Your account system should do what you need it to, without you having to perform extra steps and work arounds. If your system is doing the exact opposite of its intended purpose, it’s time for something new.
  • If your vendor has completely stopped (or won’t be for much longer) supporting your software, you’ll need to upgrade. Although this sounds pretty obvious, we see this problem quite often!
  • It’s time to upgrade to a new system if you’re still using spreadsheets to track date and compute calculations. (Hint: accounting software does this for you!)
  • Here’s a big one. Do you enter manual journal entries – maybe you’ve even compiled them in your spreadsheets? Are you operating in several systems that don’t sync together? Time to get on board with a new, updated system!
  • Consider how much time you are devoting to closing the books each month. If you’re manually creating reports and manually completing the consolidation process, you’re wasting your time. An updated system can help you save your time to dedicate to other parts of your business.

If any of these common warning signs sound like something you are experiencing, now is probably a good time to start looking for new, updated accounting software. Although the transition won’t be easy, the benefits to your business will be worth it!

Setting up for Success: Part 1

You’ve decided to start a new business – how exciting! There are many important things to consider when getting everything set up, such as your human resources policies (your employees matter!) and software and solutions (you want everything organized and running smoothly). Another important component you need to consider is your accounting – after all, these numbers lay the foundation for your business and essentially tell your story.

Accounting is an important part of your business, and getting it right the first time is crucial. So where do you even begin?

First, it’s important to understand your business and industry. This understanding can help you answer some important questions for designing your accounting system. Some of the questions that may come up include:

  • “What basis of accounting should I be using?”
  • “What information should I be tracking in order to make informed decisions?”
  • “I know what I want to track, but how do I track it?”

Let’s start with the first question: selecting your basis of accounting. Your basis of accounting is essentially a framework used to record your transactions. There are a few different types to choose from, with the following being the most common.

  • U.S. GAAP (United States Generally Accepted Accounting Principles) – Try saying that one ten times fast. This is an accrual based framework in which revenues and expenses are recorded when they are earned and incurred, respectively. This is the most commonly recommended type.
  • Cash Basis – In this framework, revenues and expenses are recorded when cash is received or paid, respectively. Cash basis presents two different methods of accounting: pure and modified. The difference comes in that under modified cash bases, some transactions follow U.S. GAAP. Check out this blog to learn more about cash versus accrual methods.
  • Income Tax Basis – This is a framework in which revenue and expense recording depends on tax regulations. This helps eliminate the need for converting from one basis of accounting to another for tax return purposes.
  • Regulatory – In this framework, a regulatory agency prescribes the best method.

Now that we’ve looked at the different basis types available, it’s time to determine what information you should be tracking. The key here is to capture all of your business transactions in the simplest, and most efficient, way possible. This includes both cash and noncash transactions.

Depending on your specific business or industry, you might need to consider tracking your transactions in greater detail. Here are some areas to consider tracking:

  • Should you be tracking direct and indirect costs related to construction or manufacturing contracts so you can see the profitability?
  • What sales tax jurisdictions do you need to track for sales tax reporting?
  • Do you need to track certain items for tax return purposes?
  • If you do business in multiple states, should you be tracking transactions by state for tax purposes?
  • Do you have different departments or divisions that you need to track in order to view profitability?

Once you decide what information you should be tracking, you can select an accounting solution, and start designing your accounting system.

Stay tuned for the second part of this blog, where we go in depth about how you track your information. Although we’ve shared similar posts about these topics in the past, we think a refresh and reminder is important. If you need help in the meantime, just ask!

Successful Solution Selection

It can be overwhelming picking out a new, or even your first, business solution system. After all, this software can help you maintain your financials, customers and even your own internal resources. Picking out this solution is no easy task – and certainly not one to take lightly.

So where do you even begin?

It all begins when you realize your current system isn’t working (if you already have one), or when you realize some form of business software might help you better run your business (think better data, more efficiencies, etc) if you don’t already have one in place.

You then need to be a psychic and look to the future to see where your business will go and what software will get you there. Okay, not really, but you do need to think about your business needs looking forward. You will want to think about what growth you hope to see for your company, and what you will need from your software to get you there.

Once you understand what exactly you want from your solution, you can start evaluating different options. Of course, there are many options available, but have no fear – a consultant can help you find the right fit for your business (let us know if you need help).

To help you get started (because we’re nice like that), here are five tips for successful solution selection.

  1. Be sure to involve leaders from each division of your company in the process. These people are often the most impacted by the outcomes of your decision, so you want to make sure they have a say. By involving them, you can likely discover specific needs and desires that may have otherwise gone unnoticed. By including a broad range of leaders from your business, you can help ensure you’re choosing a solution that everyone can benefit from.
  2. Identify all the wants and needs for your new business tool, and then take the time to determine which are the most important to the success of your business. In a perfect world, there would be one solution that would cover absolutely everything on your list. However, reality disagrees. By creating a list, you know where you can compromise on some aspects and still get the best solution for your business.
  3. Ask around to find out what other business colleagues are using in their businesses. This can help you get valuable reviews on which products seem to be doing better than others, and can help you determine which ones will be a better fit in your industry. Learning from others can help you implement a trustworthy solution.
  4. After you’ve shopped around based on your wants and needs, consider contacting companies to set up product demonstrations. Seeing the tool in action gives you a real-time view of how this product would work within your business. When requesting demos, don’t be afraid to let the company know some specifics of what you want to see. After all, this is the success of your business we’re talking about, and you want the best solution possible.
  5. During these demos, make note of how the system performs on components that are important to your business’s success. After experiencing all the demos, you can go over your notes and see which systems performed well on these parameters, and which systems flopped.

Choosing a solution for your business can be a daunting task, especially with all the options available on the market. By following these five tips and reaching out to a consultant, you can comfortably make a decision on the best solution to fit your business.

A version of this blog first appeared on Eide Bailly’s technology consulting blog.

Red Flags of Fraud

In today’s day and age, fraud is occurring all around us. The impact fraud has on your business can be devastating. In fact, The Association of Certified Fraud Examiners’ Global Fraud Study found the typical organization loses a median of 5% of revenue each year due to fraud. Small businesses have it even worse. The same study found companies with fewer than 100 employees lose a median of $155,000 each year due to fraud, compared to a median loss of $120,000 for businesses with 100 or more workers.

These statistics are scary, and fraud can undoubtedly wreak havoc on your business if you don’t catch it.

So how do you prevent fraud from happening in your small business? There are five common areas where red flags of fraud may pop up.

  • Common Sense Flags – These flags are usually obvious, but sometimes overlooked. Some of the most common include:
    • Complaints from other employees regarding an employee
    • Unexplained amounts of overtime
    • Employees who have a history of lying
  • Behavioral Flags – These flags may be easy to recognize by the way an employee is behaving. Examples include:
    • Spending too much time at work – the employee rarely takes vacations and/or never misses work
    • The employee won’t let other employees help them with their workload, even if they’re overwhelmed
    • An employee who manages financial records is extremely protective over the records
  • Accounting Flags – The accounting department has many areas where fraud can be committed. After all, this is where the money is. Be on the lookout for some of these red flags:
    • The business is unexplainably unprofitable
    • You’re noticing cash flow issues
    • There are issues with missing and adjusted inventory balances
    • Account balances aren’t reconciling
    • Unexplained adjustment entries on the books
    • Financial statement trends and ratios don’t make much sense
  • Documentation Flags – Keeping up with documents that go in and out of the business can help you catch fraud in your business. Common issues may include:
    • Excessive credit memos
    • Original documents have been messed with (invoices, vendor statements, bank statements), whether it’s electronically or whited out on a hard copy
    • Deposit slips and receipts that are MIA
    • An excessive amount of accounts receivable being written off
  • Internal Control FlagsYour internal controls are where your business operates on the daily. This leaves a large area where fraud can be occurring. Watch out for these issues:
    • Expense reimbursements do not match up with receipts
    • Background checks on key employees are not being performed
    • A single employee has control of the company check book
    • Internal controls are non-existent or inconsistently enforced
    • Company credit cards are easily accessible to everyone (and support for those expenses is not submitted)

 

Fraud can have a devastating impact on your business, and can be extremely hard to recover from. By keeping an eye out for these red flags, as well as other issues that don’t seem quite right, you can help prevent your business from falling victim to fraud.

A version of this blog was first produced by our Forensics team on eidebailly.com.

 

Final_infogaphic_web_Fraud Red Flags

How to Manage Change in Your Organization

Change is inevitable, and that’s a fact. Making changes in your business allows you to stay up-to-date on trends, keep up with the competition and remain a force to be reckoned with in your industry. In order for change to be successful, you need to make sure your people are on board. Often, this can be quite a challenge. What if your employees react negatively or don’t adopt a new form of technology the way you had hoped?

A concept called change management can help get your employees on board and be accepting of new changes in your business. Change management can provide a framework to help leaders engage the entire organization and give them a sense of why the changes are being made, as well as how and who it will impact.

Here are five change management concepts to follow when implementing a big change in your business – whether it be new technology, reorganizing your teams or something else.

  1. Communication is key – Change can create some uneasy feelings, uncertainty and even resistance. The last thing you want to do is ignore these issues. The best idea is to acknowledge and address them as soon as they come up. This can lead to higher levels of support, more employee acceptance and more buy-in. People who feel uninformed or neglected throughout change are going to be less open to adopting what’s new, so communicating with everyone throughout the process ensures no one will feel left out.
  2. Support from the top – Getting executives and senior level management to support change can almost ensure a successful change initiative. When leadership is on board, it shows all others that if the executives support the change, it is likely worthwhile. In order to get this effect, leadership needs to embrace the change to unify and motivate the rest of the organization. If you have a leadership team who doesn’t support the initiative, it is likely destined to crash and burn.
  3. Dedicate a go-to person – To make matters a little simpler, consider dedicating one person to drive progress and lead the communication across the entire organization. This one person will act as a touchpoint for feedback, questions and concerns, and will be able to communicate them with key stakeholders. They could also deliver updates and progress reports to the organizations to keep everyone up-to-date. How do you choose this person? Consider the type of change you are initiating. If it involves technology, look to your IT people and see who would be the best fit. If it involves management of daily work life, consider and HR professional to be this person.
  4. Offer loads of training – If you’re initiating any kind of change that involves a disruption of how things are usually done, people will need to learn the new way of doing things. Offering technical and process training can help employees understand the aspects and impacts of the new technology, system, etc. This can help them understand how their everyday work will change and what to do to adapt. This can help keep your team engaged in the change adoption and can continue to foster communication and involvement throughout the process.
  5. Measure success – For any type of change to be successful, it needs to be adopted and accepted by those impacted by it. To know if a change initiative is successful, you need to measure the impacts of it. Have a plan to measure key data before, during and after the change to see how well it was received by the organization. This will help you identify what is working well, what might need to be improved and whether the change is still a good idea for your organization.

Change is hard – there’s no doubt about it. However, by practicing some of these ideas, you can implement a smooth change initiative that will have a successful and positive impact on your business.

A version of this blog first appeared on Eide Bailly’s Technology Consulting Blog.

 

Cloud Based Accounting: Is it Right for Your Business?

You may have heard a buzzword that’s been floating around a lot lately: the cloud. We’re not talking about the big white things in the sky. No, the cloud refers to a big network of servers that work together virtually to store and compute data, run processes and house information that is easily accessible no matter where you are.

The cloud is becoming a buzzword because it’s changing up the tech world. For example, remember how you could buy the Adobe Suite in a box, than you would have to install it onto your computer using the disc provided? Well, if you’ve updated Adobe in recent years, you know you now have to purchase and download it online. This switching away from a physical product and moving to an online based system is all thanks to the cloud.

Adobe isn’t the only program adopting a new way of operating. In fact, your bookkeeping and accounting software is starting to become some of the most popular cloud based systems available. Don’t believe it? Intuit found that in 2016, 64% of small businesses in the US are adapted to the cloud. In fact, the cloud is becoming so popular that by 2020, it is anticipated that 78% of businesses will be fully operating on the cloud. This 64% has nearly doubled the 37% that were cloud adapted in 2015. Our point? Cloud based systems are becoming wildly popular for business use.

With cloud based accounting becoming so popular, have you thought about moving your business away from the OnPrem systems you’re currently using and moving to the cloud? Here are some considerations to keep in mind when making this decision.

Updates | With OnPrem systems, you have to wait until the new, updated version comes out, drive to the store and buy it and then install it on your computer (which is where it would stay). When it comes to cloud based systems, updates are ready to be downloaded as soon as they become available (and in many cases, you don’t need to download anything). While some cloud based updates you have to pay for, many software subscriptions include all updates (and support)! Not to mention the updates are typically pushed out to you without lifting a finger. The cloud makes it easier to stay up to date so you can ensure your business doesn’t fall behind on the latest technology has to offer.

Accessibility | OnPrem solutions can be great, but not if you have to travel for work, or aren’t near your computer at all times. If you need to use these programs out of the office, you will need to bring your computer, use your specific server or VPN, etc. In other words, it’s inconvenient. Cloud solutions, such as Quickbooks Online, are the opposite. Because they are stored in the cloud, they are accessible virtually anywhere. Whether you’re on a mobile device or your home desktop, all it takes is logging into your account via the internet and your information is all available for you. Gone are the days of dragging your computer with you everywhere you go.

Security | In the Share the Cloud Security Spotlight Report, 21% of respondents felt there was a higher risk of security breaches in the cloud than for OnPrem programs in 2016. This was down from 28% in 2015. Although there are still thoughts of the cloud being unsafe, this trend is quickly declining. Breaches, although a scary concern, aren’t the only security issue to keep in mind. With OnPrem solutions, all of the information is housed on your computer. If your computer is stolen or damaged, you lose all of that information. In the cloud, the information is available wherever you access the program. The cloud also uses encryption to keep data safe from attacks. As with all data storing methods, security issues are real. Taking steps and putting security measures in place can help prevent your data, no matter where you store it.

Cost | Cost is always a concern, especially if you’re trying to make and maintain a profit. It’s easy to look at the cloud and say “that’s too expensive.” However, there are hidden costs that come with OnPrem solutions that you may not be considering when doing a comparison of the two. When you purchase your OnPrem solution, it’s easy to look at it as a one and done cost. However, you should keep in mind all the updates you will have to buy (and the hassle of getting them installed manually). You also should keep in mind the infrastructure involved with OnPrem solutions. You will need a computer, a server, security systems and other various IT pieces to keep the program running smoothly. The cloud has this all built in, resulting in no extra costs.

When it comes to OnPrem solutions versus cloud based accounting systems, it’s good to know your options. Having a clear vision of what’s available and how it may impact your business can help you stay on top and ready to make changes to keep your business running smoothly.

 

Beware the Data Breach

By: Eide Bailly Technology Consulting

It should come as no surprise that data breaches are becoming more and more popular in today’s day and age. Although many businesses believe this could never happen to them, the harsh reality is that it could happen to anyone. This leads us to our point: just how detrimental could a data breach be to your business’s bottom line?

Let’s first look at exactly what a data breach is. In its most simple sense, a data breach is when an individual’s name and other confidential, personal information is potentially put at risk. These breaches usually occur due to a criminal attack, a glitch in technology or even just a human error.

When looking at the expenses a business could incur due to a data breach, there are some scary numbers reported. The attacks themselves are unique and so are the expenses an organization may face. The Ponemon Institute 2016 Cost of Data Breach Study revealed that the average cost for each lost or stolen record containing confidential or sensitive information increased from $217 in 2015 to $221 by 2016 – per record! This was a 2% rise, showing an upward trend in the cost of stolen information. This is mainly due to the loss of more customers than was originally expected. Verizon, in their 2015 Data Breach Investigations Report, found that an organization may spend between $52,000 and $87,000 on 1,000 stolen records. Yikes!

It’s obvious a data breach is something no business wants to deal with. Not only will a breach cost your business money, but it could also cost you your reputation. That can lead to many financial problems down the road (think loss of customers, loss of revenue, etc.).

To make sure your business is taking the proper steps to reduce your risk of cyber-attacks and data breaches, consider some of these questions:

  • What data protection policies and procedures do you currently have in place?
  • Are there any industry regulations you need to follow?
  • When was the last time you tested your data security measures?
  • Do you have your data backed up, and if so, how secure is it?
  • Is your data protected from human errors or system malfunctions?
  • When did your management team last review your security measures in depth?
  • Have other businesses similar to yours experienced data breaches?

These questions, although just a starting point, can be extremely helpful in determining whether your business is at a high risk of a data breach. If you feel your answers to some of these questions aren’t as great as you were hoping, it’s time to start working on your business’s overall security plans.

Shameless Plug (because you knew that was coming): Eide Bailly’s Cyber Security Compass can help your business stay safe from cyber- attacks. By analyzing your business’s strengths and weaknesses, a report is given to help you determine what areas of your business need help. Trust us, this tool is pretty neat.

You don’t want your business to be another statistic impacted by a data breach. Protect your business’s bottom-line by making data security and protection a key goal in your business strategy.

A version of this post first appeared on Eide Bailly’s Technology Consulting blog.