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When Education Pioneers dropped desktop QuickBooks and began using Intacct cloud accounting for small business software, corporate controller Todd Forsyth said the organization saw several improvements, including faster financial reporting, real-time collaboration and much more detailed expense tracking.
Forsyth said "the big advantage" of a cloud accounting system like Intacct is that users in the organization can access live financial reports to see the status of their operations. "That was probably the biggest driver for the change," he said.
With Intacct's cloud-based ERP system, when Forsyth pays a consulting fee for a program in California, for example, a member of his team in the West Coast office will see it immediately. That was not possible with on-premises QuickBooks, he said.
With Intacct, Forsyth said, Education Pioneers can close its monthly financial books by day number 15 of the following month. On Jan. 15, for example, he provided the profit and loss statement, the balance sheet, and cash flow for the month of December in a report to his executive team.
Some small businesses moving to cloud financials
In the realm of cloud accounting for small business, Education Pioneers has plenty of company. The nonprofit, based in Oakland, Calif., which develops, recruits and places data analytics, finance, HR and other support staff in more than 200 public schools and other educational organizations in 20 cities in the U.S., is among a growing number of small to midsize businesses that are ending use of on-premises accounting or financial management software and moving to the cloud. The organization replaced desktop QuickBooks with Intacct in late 2013, Forsyth said.
Gene Marks, president of the Marks Group PC, said Intuit's Quickbooks dominated on-premises accounting software, but may not hold such a commanding position in the world of cloud accounting for small business. Although a good basic tool for invoicing, payables, inventory management, and profit and loss, Marks said the cloud version, QuickBooks Online, started with less-than-adequate features for cloud accounting for small business. But Intuit is catching up, he added.
"As people move to the cloud, a lot will make decisions to consider other alternatives and move to other alternatives for various reasons," said Marks, whose company resells cloud accounting software -- such as Xero and QuickBooks Online -- and provides services such as implementation, training and customizing. He noted that ERP systems from Intacct or NetSuite often are chosen by companies with more complex needs such as purchase order management, sales order management or warehouse management.
As an example of low-cost cloud financials, Russ Fujioka, U.S. president of Xero in San Francisco, said Xero offers cloud accounting software for small business, with more than 600,000 subscribers worldwide including 47,000 in the U.S. and Canada.
Both Xero and Intuit also offer online marketplaces with hundreds of applications, such as Shopify for e-commerce and Unleashed for inventory management, which can be integrated with their accounting software. Many of the applications can bring ERP functions to small businesses at a price and speed that was cost prohibitive just three or four years ago, Fujioka said.
Intacct integrates with Nexonia for expense tracking
At Education Pioneers, Intacct integrates well with Nexonia, cloud software for business and travel expenses, which is a big piece of the organization's operating costs, he said. The information from Nexonia flows directly into Intacct.
Forsyth said he is reviewing a possible purchase of planning, budgeting and forecasting cloud software, but right now a lot of detailed budget work is completed in Microsoft Excel. Operating costs and other summary information from 15 departments is loaded from Excel into Intacct at the start of a fiscal year and then used for reporting and planning for the rest of the year inside Intacct, he said.
The budget is consolidated in Intacct and individual budgets are also available for departments in finance, executive and business operations, he said. "Each individual budget director can then see their department's budget versus actuals throughout the year."
Intacct allows greater expense details
Forsyth said Intacct also allows him to add different levels of detail to an expense. QuickBooks on premises, on the other hand, was limited by the amount of data it could provide for defining an expense. The reporting functions in Intacct are much more nuanced and granular than he could obtain with on-premises QuickBooks, he said.
For example, with a $20,000 catering fee, he can use Intacct to add details such as the location for the expense and that it was tied to a specific grant from a certain foundation. It allows him to report that it was a cost for a program, not fundraising or management, he said.
"If I want to know what my management overhead costs are, I can quickly do that," he said. "I can see which costs were classified as management overhead. If I want to know my programming costs, I can do that. If I want to know my programming costs in Chicago versus my programming costs in Dallas, I can do that. These are all dimensions that I have been able to add to these entries. You cannot do that within QuickBooks."
Although an ERP system works for Education Pioneers, small to midsize businesses often do not need to move to an ERP if they use something like QuickBooks or Xero, said Jaime Campbell, chief financial officer for Tier One Services in Rock Hill, S.C. Instead of purchasing an ERP, users can save money by integrating with an application for customer relationship management, project management, invoice and billing, or time tracking, she said.
"God willing, the business will grow and then the business will need a full-sized ERP," said Campbell, whose company provides technology consulting and outsourcing of CFO services. "A lot of businesses don't need to go there now."
Shift to cloud financials may come slowly
Vendors are in fierce competition for cloud accounting for small business, but the shift from on premises won't happen overnight.
Gene Marks, president of the Marks Group PC, said many small businesses are sticking with on-premises QuickBooks, even though Intuit is phasing out support and maintenance to move users to the cloud.
However, Chris Davey, a director of product management with Intuit, said rather than reducing support and maintenance for on-premises QuickBooks, the company is focusing on feedback from desktop users and making changes to improve the product's support and features.
Cost is a big reason for staying on premises. "A lot of people have sunk costs into their accounting system and now they have to move to the cloud and pay a monthly fee," Marks said. "A lot of my clients say, 'Why would I do that?'"
Sales numbers show that Intuit's desktop business is still strong amid the change to the cloud. In a recent fiscal year, Intuit reported $527 million in revenue from QuickBooks Online, while the desktop business was at $1.5 billion. In the coming years, the revenue mix will rapidly change since year-over-year growth of QuickBooks Online subscribers is at 47%, said Stephen Sharpe, a spokesman for Intuit.
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