Cloud-based Accounting: Next Gen SaaS++ Finance & Accounting Solution

Global market trends have presented fresh n Seamlessly integrates with other challenges for the CFO that includes optimally applications in the business’ ecosystem managing and analyzing the business critical financial information in a cost effective In the past, graduating from premise based manner. At the same time, the growth of the software solutions meant acquiring a costly internet has created an increasingly dispersed and complex on-premise software workforce that must submit key data to a application. These applications entailed a company’s financial system and ensure real- significant upfront investment, long time access to the corporate information from deployment cycles, and a cumbersome anywhere, anytime on a 24 x 7 basis. The business process. evolved market landscape has created new opportunities for niche as well as managed Today, a new breed of cloud computing or service providers to offer innovative cloud- platform based solutions have emerged to based accounting solutions to small and address business’ real-time financial medium business owners with an aim to:

  • Automate the end-to-end finance and accounting life cycle including Order-to-Cash (O2C), Procure-to-Pay (P2P) and Record-to-Report (R2R) processes
  • Support multiple business entities and on-demand financial consolidation
  • Deliver real-time financial and operational visibility
  • Provide audit trails that satisfies regulatory and compliance requirements
  • Seamlessly integrates with other applications in the business’ ecosystem

In the past, graduating from premise based software solutions meant acquiring a costly and complex on-premise software application. These applications entailed a significant upfront investment, long deployment cycles, and a cumbersome business process.

Today, a new breed of cloud computing or platform based solutions have emerged to address business’ real-time financial management needs. This whitepaper aims to highlight the key trends and benefits associated with shifting to cloud-based accounting solutions. Further, we will emphasize how service providers can deploy innovative service delivery models to streamline finance and accounting processes and enjoy benefits beyond mere cost savings.

While companies of all sizes must deploy increasingly sophisticated financial management tools and processes to manage their corporate operations, small and mid-sized companies are particularly challenged to contend with these issues. Many of these companies are either too young or small to be able to justify the cost and complexities of traditional mid-market on-premise applications. The Next Gen accounting model needs to take into account the below factors while devising a solution:

Automation of Complex Revenue Management: As products and services evolve, they need to upgrade their revenue management and billing processes. Today, companies need to comply with increasingly complex revenue recognition guidelines. Most traditional mid-market accounting systems are not equipped to handle this increased complexity and many organizations are forced to resort to a manual process utilizing Excel spreadsheets to manage their revenue recognition and billing processes. By leveraging a cloud-based accounting platform that enables you to automate these processes, companies benefit significantly in higher finance productivity, faster close processes, and simplified compliance.

Real-Time Financial and Operational Visibility: Many companies are looking to gain better real-time visibility into their business and more effectively distribute a consistent set of information to all stakeholders. Often, Excel or an expensive 3rd party reporting solution seems to be the only option. By leveraging a financial system that incorporates both a multi-dimensional General Ledger and an embedded reporting and analytics engine, companies can more easily analyze real-time consolidated and local financial and operating metrics across their business with the ability to drill-down in real time to supporting details.

Auditability: Increasing regulatory and compliance requirements, such as Sarbanes-Oxley and tightening GAAP guidelines, are forcing many businesses to demonstrate greater ‘auditability’ and ‘traceability’. These requirements become increasingly important when companies consider public offerings or mergers with publicly held companies. Companies need to be able to make prior period adjustments and easily view the change history to appease financial auditors concerned about today’s stricter regulations.

Software Integration Capabilities: Savvy companies have adopted Customer Relationship Management (CRM), Salesforce Automation (SFA) and other powerful applications to automate and closely track their customer interactions. Rather than having to input or access important customer data into or from multiple business applications, these companies are seeking to tie together the applications to give their end-users and executives a ‘holistic’ view of their customer relationships.

Anywhere / Anytime Access: Many companies seek to give their workforce remote access to their financial management systems. These companies may also want to share their financial management reports with their suppliers or other business partners. This means real-time input into their financial management system and access to centralized business data, in a controlled manner that complies with common business processes and practices, and offers robust security to protect sensitive financial data.

Cloud-based accounting is similar to traditional, on-premises, or self-install accounting systems, with only the accounting software hosted on remote servers, similar to the SaaS (Software as a Service) business model. In cloud computing, users access software applications remotely through the internet or other network via a cloud application service provider. Cloud-based accounting solution frees the business from having to install and maintain software on individual desktop computers. It also allows employees in other departments, whether in remote or branch offices, to access the same data and the same version of the software.

Cloud-based accounting solutions offer several advantages over traditional on-site, on-premise software systems. As opposed to the more traditional systems, such as Quickbooks, Quicken and Peachtree, cloud-based accounting solutions reduce total cost of ownership (TCO), improve return-on-investment (ROI), and shorten payback time, all while delivering other advantages in system performance, reporting, and employee efficiency.

When comparing the TCO of the cloud versus on-premise systems, it may initially appear that on-premise solutions provide a more cost-effective solution. For example, the start-up costs, on average, for software licensing is about 9% of the total IT expense as opposed to the initial subscription fee of cloud computing which can be 68% of the total IT expense. However, the cost comparison evens out after a period of time.

With on-premise software solutions, the majority of the ongoing costs become visible after the system has been implemented. With the cloud, the only ongoing costs include customization and training which requires a less substantial ongoing investment. Because of this, businesses can actually save money with the cloud. With lower total costs, Return on Investment (ROI) can often exceed triple-digit percentages, while payback timing is typically a fraction of on-premise, averaging 3-6 months.

In addition to reduced on-going expenses, the cloud offers multiple benefits over on-premise systems including enhanced data security, reduced maintenance costs and easier workforce management.

Enhanced data security: Keeping sensitive financial data safe is paramount to any operation. Because a cloud-based system resides in a managed data center, the data is significantly more secure and stable then comparable on-site solutions. Offering 24-hour security, multi-tiered redundancy and other forms of continuity, cloud-based systems significantly reduce the risk of theft, damage or other issues when compared to on-site, on-premise PCs within a central office.

Reduced maintenance costs: Cloud-based systems provide software upgrades that are automatically installed, which reduces the need to expend IT resources to install, reinstall or upgrade software programs. Additionally, because cloud-based software is monitored at a data center, any incompatibility issues have already been addressed and resolved before a new program is implemented.

Better Data Access Control: Cloud-based solutions enable users to access data remotely. This makes it easier for business partners, such as auditing firms and outsourcing companies, to access relevant data more quickly. Companies also enjoy a greater degree of immediate control over data access when employees leave the company. Cloud-based Solutions enable companies to provide limited access to the auditors so that they can access the needed information

Flexibility and Scalability: Cloud-based systems offer anytime data access from any computer, which optimizes the systems’ flexibility. As a result of availability real-time data, reporting is more flexible and user can access the data remotely to gain visibility for consolidated or multiple entities. Cloud-based systems are extremely scalable to suit the needs of an operation. Instead of having to procure user licenses and suitable hardware that is needed in traditional on-site installations, the cloud easily accommodates new users and multiple entities, as well as multiple currencies through its central data center.

Over the last 10 years, the outsourcing of business processes in general and non-core functions like IT, HR, F&A, Procurement and others have evolved rapidly and come to be routinely serviced from delivery centers located in different continents. The activity that began as “lift and drop” of the processes from high cost to low cost locations is evolving to transforming the business processes through “Platform-based Processing”. This involves building processing capabilities, leveraging the software platform and making it available to customers on a “transaction pricing” model. In essence, it is a SaaS++ model wherein the Business Processes are delivered as a Service, “BPaaS”, leading to a lower Total Cost of Ownership for the end customers.

For service providers, it leads to higher revenues and customer stickiness as illustrated below

Total Cost of Ownership and Business Value are the key drivers for Small and Medium businesses while evaluating accounting service providers. The challenge lies in providing state-of-the-art technology platforms like SAP or Microsoft Dynamics at affordable price points to the Small and Medium business market.

Quatrro has developed an innovative platform based accounting model, built on the strengths of innovative cloud concepts like multitenancy and skill based routing that has enabled hundreds and thousands of small businesses, franchisors and franchisees across the United States and the rest of the world gain access to affordable accounting solutions. Highlighted below is a brief outline of our solution:

Applicability: The accounting functions that we have streamlined through our model include:

  • Accounts Payables (AP)
  • Accounts Receivables (AR)
  • Reconciliations (Rec)
  • General Ledger (GL)

Background: The traditional model of service delivery necessitates that teams be structured and dedicated by client. In the mid-market in which Quatrro operates, this would necessitate the need for multi skilled resources and process inefficiencies. The gains due to economy of scale would be lost. The model which Quatrro has developed is laid out as follows:

Key Features of the Model:

  • Teams based on functions – Accounts Payable, General Ledger, Accounts Receivables, Reconciliations
  • The Quatrro analyst works on the employee portal wrapped around the accounting platform
  • Client Portal is platform and client agnostic
  • On shore presence to manage client sensitivities to off shoring

Implementation Methodology:

The work is allocated by skill sets (functions) that translates into increase in efficiency. Allocation via process flow would have required the resources to be really efficient as they would need to know the entire value chain of the process. Usually, the resources are adequately trained in a particular skill set and as the process becomes repetitive, it results in enhanced efficiency. Moreover, these allocated functions shorten the turnaround time.

  • The portal platform is an integral part of our platform based accounting sulution
  • The portal provides a key interface between client users and Quatrro back-end accounting services team :
    • 4 Allows client end-users to access key financial reports and participate in transactional workflows
    • 4 Eliminates the need for users to learn complex technulogy
    • 4 Provides flexibility to turn-around client specific enhancement/workflows in minimum time period
  • Other benefits of the portal include: Operational:
    • 4 Helps in standardizing operational processes for data & document processing across clients
    • 4 Helps in monitoring health of the processes and take corrective actions when needed
    • 4 Reduces client on-boarding and go-live timelines

    • Technology:

    • 4 Provides for multi-tenancy architecture eliminating the need for a fresh install & configuration for every new client
    • 4 Provides for easy customization of reports
    • 4 Architecture allows scalability of hardware, software and storage requirements as clients evulve in the future
  • The client facing portal allows client users to access key financial reports and participate in the transactional workflows, via the internet.
  • Inputs:
    • 4 Ability to submit transactional data via the portal
    • 4 Alternate modes of communication like email, efax, ftp also available
    • 4 Can submit documents in various formats – pdf, jpeg, tiff, excel, word, txt, zip
  • Outputs – Financial Reports*:
    • Real time reports
    • Scheduled monthly or period end reports
    • Analytical information
  • Other features:
    • Vendor payment selection & authorization for processing
    • Search for documents / images online from the Documents repository
    • Operational metrics via reports and dashboards

The process via which the data records are entered from the “Client Portal” to the “Master Platform” which sits at the background is called “On-boarding”. Our “On-boarding” approach involves multiple business processes and scenarios pre-configured on the Quatrro platform to meet client requirements. Thereafter, templates for every function and process are built to ensure knowledge transfer. The greatest benefit achieved by the “On boarding approach” which rests on the automated communication between the “Client Portal” and the “Master Platform” is the shortening of the time required to go-live from the earlier 4-6 months to 4-6 weeks. As a result, the client benefits and their profitability can increase at a quicker pace.

  • Complete automation on receipt of documents from clients for data processing
  •  Transparent exchange of information between Quatrro and the client
  • Auto-tracking of various stages of the document
  • Configurable workflows for operations team
  • Auto allocation of jobs to a pool of skill based resources
  • Real time Operational metrics of work activities performed by teams available for enhanced monitoring of work activities by supervisors.
  • End-to-end data processing of client inputs in an SLA of 4-12 hours, with auto confirmation emails to clients on receipt as well as processing of inputs
  • Time saving of 25% per store while performing data entry activities
  • Time saving of 20% per store by streaming the entire operational process and reducing repetitive activities & manual interventions

Executives are moving beyond their original focus on pure cost-reduction objectives to finding ways to achieve company-wide benefits. There is a trend towards increasing number of small and medium businesses migrating to cloud-based accounting solutions from on-premise solutions that were the norm up until a decade ago. The key for service providers lies in utilizing the cloud and related technology to offer solutions that result in enhancing business value for SMB clients without necessitating upfront investment. Though this paper, we have endeavored to emphasize the key value drivers that will shape the Next Gen SaaS++ solution and how leading service providers can leverage technology to ensure widespread adoption of cloud-based finance and accounting solutions among small businesses

Quatrro Business Support Services, one of the leading businesses under the Quatrro brand, consists of a range of affordable business support services that are offered through the industry’s first ‘Click and Buy’ interface on the cloud. Built on the innovative “Internet of Things” concept, the digital portal enables SMB clients to review, evaluate and buy a bundle of services off-the-shelf on a 24x7 basis.

Quatrro FPO Solutions is the Finance & Accounting business unit under the ‘Quatrro Business Support Services’ brand. It offers a broad range of platforms and cloud-based accounting services by leveraging the industry’s leading accounting platforms designed to create economies of scale resulting in enhanced financial visibility, lower costs and improved business processes. Its client base includes over 6500+ Small & Medium Businesses across auto parts, restaurant, retail, healthcare and hospitality industries, that include franchises of some of the legendary and iconic brands in the nation, as well as not-for-profit organizations.