Why All Accountants Must Move To The Cloud
While accounting software has been around for ages, the move to the cloud is a relatively recent phenomenon that has been developing for a decade or so. The transition is still in progress and many companies still use desktop-based accounting software.
The following will help you understand the state of the market as of 2018.
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67% of accountants prefer cloud accounting
The vast majority of accountants believe that cloud technology makes their role easier. It simplifies and speeds up collaboration with clients and improves the quality of services. This is what we learned from Sage’s report, “The Practice of Now”, based on responses from 3,000 accountants.
53% of respondents said that they adopted a cloud-based practice management solution on many levels, such as project management and communicating with clients.
Source: https://www.sage.com/en-us/cp/practice-of-now/
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58% of large companies use cloud accounting
The overall adoption of cloud accounting is between 45% and 58%, depending on the size of the company, according to Accounting Today 2018 “Year Ahead” Survey
The study said that 45% of small companies, 57% of midsize companies and 58% of large companies select cloud accounting over desktop alternatives.
Source: https://www.sage.com/en-us/cp/practice-of-now/
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18% of small to midsize businesses in the US don’t use any accounting software
Viewpost, a company that helps US businesses integrate payments and invoicing, surveyed 5,000 U.S. small-to mid-sized business decision makers, revealing some interesting stats on cloud accounting.
While it may be hard to believe, nearly 1/5 of US small and midsize businesses surveyed by Viewpost doesn’t use any accounting software. The companies surveyed were rather small though, as over 50% had revenue lower than 500,000 USD.
Source: https://www.sage.com/en-us/cp/practice-of-now/
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52.9% of US SMBs believe it’s essential to integrate accounting, invoicing and payments
The survey by Viewpost also reported that it made sense to integrate accounting, invoicing, and payments for both CEO and CFO in more than half of companies. At the same time, 33.7% said this wasn’t key to any of the C-level executives.
Security was the most significant concern for 38.3% companies, preventing them from integrating accounting, invoicing and payments in an all-in-one solution. Ease of use and the number of features were among the crucial factors before choosing an integration solution for 48.8%.
Source: https://www.sage.com/en-us/cp/practice-of-now/
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37% of accounting software buyers are first-time users
Another fascinating report sheds some light on the market for accounting. According to Software Connect, a company offering software consulting services, as much as 37% of companies they dealt with in 2017 were first-time buyers, which means they didn’t have any accounting solution in place. Among those who did have a solution, 35% were seeking a change from QuickBooks, and 11% from Sage 50.
Source: https://www.sage.com/en-us/cp/practice-of-now/
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QuickBooks online has 2.55 million subscribers worldwide
At the end of 2017 Intuit reported that it had reached 2.55 million subscribers overall, of which 425,000 were Self-Employed users. However, the company’s share outside the US was a lot lower, at 550 thousand worldwide.
Other competing cloud accounting providers include Xero, which reported 250,000 users in the UK alone as of October, 2017. For comparison, in the UK, QBO reached 100,000 as of March 2017.
Another UK-focused cloud accounting company, FreeAgent, reached 52,000 subscribers in March of 2018.
Sources:
https://www.sage.com/en-us/cp/practice-of-now/
https://www.insider.co.uk/news/freeagent-software-accounting-edinburgh-story-12264764
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Deloitte is the largest US accounting firm based on revenue
Deloitte had the most substantial revenue among all big accounting companies in the US with 18.55 billion dollars as of March, 2018. The UK-based company came ahead of PwC US (15.62b), Ernst and Young LLP (13b), and KPMG LLP (8.96b).
Source: https://www.sage.com/en-us/cp/practice-of-now/
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58% of small businesses do not expect to talk to accountant’s f2f in the future
According to a recent report by cloud accounting provider Xero, a lot of small businesses believe that remote collaboration with accountants is the future. Fifty-eight percent said they do not expect to meet with their accountants face to face anymore.
Despite this, small businesses consider accountants a significant asset. Fifty-six percent believe they’ll use an accountant’s help in other fields than accountancy, and 30% place accountants at the top of their list of trusted advisors.
Source: https://www.sage.com/en-us/cp/practice-of-now/
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83% of clients are demanding more from their accountants today than 5 years ago
After surveying 3,000 accountants for the “Practice of Now” study, Sage reported that 42% of clients would like accountants to offer business advice. This means that accountants need to review how they can loosen their administrative burden by automating the most time-consuming tasks, e.g. by using data entry apps.
Sage’s report also revealed that accountants strongly believe AI can provide smart automation and solve productivity issues. Forty-nine percent of respondents would like to automate number crunching, data entry, and task management. Investment in AI to speed up repetitive tasks is a likely option for 66% of accountants surveyed.
Source: https://www.sage.com/en-us/cp/practice-of-now/
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The average UK accountant earns £62,042, CPAs in the US make $119,000 yearly
A recent salary survey by Accountancy Age reported that UK accountants make £62,042 on average. This figure relates to all people working in the accountancy profession. Interestingly, 11.6% of respondents overall did not have any formal qualifications.
Accounting is a much more lucrative profession for those who are qualified, which is indicated by another study based on salary figures from the USA. The average salary of a CPA based in the United States is $119,000 per year, excluding bonuses. Newly qualified CPAs that have less than one year of experience earn $66,000 yearly on average, while CPAs with over 20 years of experience make $152,000 per year in salary.
Sources:
https://www.sage.com/en-us/cp/practice-of-now/
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18% of UK accounting firms have nearly all clients online
The move to the cloud is still happening for most accountancy firms. The latest report by Xero revealed that only 31% of accountancy firms have at least 80% of their clients in the cloud. However, the report said that this number was expected to rise within two years from 31% to 56%.
The UK currently has the highest number of desktop clients at 28%, compared with 9% in Australia and 5% in the US. Only 18% of UK firms who participated in the survey have nearly all clients using online accounting (98%-100%). The MTD initiative is expected to encourage more companies to move to the cloud.
Source: https://www.sage.com/en-us/cp/practice-of-now/
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69% of CFOs rely on spreadsheets to build reports
Workday’s “The Future of Financial Reporting Survey” showed that the vast majority of CFOs rely on good old spreadsheets to analyse and present data. The study also showed that 50% of CFOs worried that all documents and disclosures were not up-to-date, 40% thought their data might not be trustworthy and accurate, while 36% didn’t have access to the status of the reporting process at any given time.
Source: https://www.sage.com/en-us/cp/practice-of-now/
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1.24 million accountants and auditors were employed in the US in 2017
According to Statista there were 1.24 million accountants and auditors in the USA as of 2017. The analysis predicts that this number will grow to 1.44 million by 2022.
For comparison, according to “The Accountancy Profession In The UK” Report from Oxford Economics, there were 599,000 people in the accountancy profession in the UK in 2016, which was more than the real estate sector. Accountants contributed to the UK’s GDP at an estimated amount of £52 billion.
Sources:
https://www.sage.com/en-us/cp/practice-of-now/
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20-40% of bills in Western European countries are electronic
The latest e-invoicing report by Billentis for 2018 estimated that only 20-40% of all bills and invoices are in the electronic format in most Western European countries, including the UK, France, Germany, and Italy. Scandinavian countries and Estonia have a higher adoption of e-invoicing at over 40%.
Interestingly, the report also noted that in 2018 the number of e-invoices delivered by service providers is expected to reach ca. 3.2 billion exceeding e-invoices issued directly by the sellers (ca. 2.9 billion).
Source: https://www.sage.com/en-us/cp/practice-of-now/
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66% of UK businesses are at risk due to mismanaging paperwork
A new survey by Cleardata revealed that as much as 66% of UK businesses might not be handling paperwork properly.
The study said that 72% of companies surveyed used filing cabinets, cupboards and drawers as their primary storage options. Forty-four percent of businesses used storage lock-ups and self-storage facilities, while for 22% the preferred storage options including basements and lofts which are at risk of flooding and damp. Seventeen percent store their documents in sheds and 16% in garages.
Interestingly, the report also said that it takes 5-6 days for companies to retrieve documents on average, while for 44% companies it took more than a week. There was also a small number of companies that said they needed more than a month to retrieve documents.
Source: https://www.sage.com/en-us/cp/practice-of-now/
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Half of UK companies admit to not paying their customers on time
The latest report by Tungsten Network indicates that receiving payments after the agreed terms is a big problem for UK companies. As much as 47% of businesses admitted that late payments were a problem.
Respondents said that 1/5 of their payments are never on time, and 1 out of 12 respondents said they don’t even know how late they are due to the lack of payment monitoring process.
The biggest issues causing late payments were too many paper invoices received (49%), as well as the lack of automated exceptions (43%) and approval (43%).
Source: https://www.sage.com/en-us/cp/practice-of-now/
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72% of UK self-employed manage taxes on their own
Given the growth of the self-employment sector, it’s not a big surprise that most of these entrepreneurs handle taxes without any professional help from an accountant.
According to a survey by SJD Accountancy, as much as 72% of the UK self-employed deal with taxes single-handedly, 18% employ a general accountancy firm, 7% hire a specialist accountant, and 3% seek non-professional help among friends and family.
Sources:
https://www.sage.com/en-us/cp/practice-of-now/
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64% of SMBs in the USA spend at least $1,000 on tax preparation
A new survey conducted by the National Small Business Association (NSBA) of 1,000 small businesses analysed what it takes for small companies to handle taxes.
Sixty-four percent of respondents said that they spend at least $1,000 per year, of which as much as 15% spend more than $10,000 yearly. For 26% of companies it takes 1-10 hours to handle all tax-related duties, while for 40% it takes 11-40 hours per year.
Similar stats from the World Bank’s “Doing Business” report shed some light on the tax burden for all companies. In 2017 in the USA, it was 175 hours on average, in the UK it was 110 hours, while in the whole EU — 171 hours.
Sources:
https://www.sage.com/en-us/cp/practice-of-now/
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Credit: Pawel Piejko, Arbitrue
Summary
67% of accountants prefer cloud accounting
58% of large companies use cloud accounting
18% of small to midsize businesses in the US don’t use any accounting software
52.9% of US SMBs believe it’s essential to integrate accounting, invoicing and payments
37% of accounting software buyers are first-time users
QuickBooks online has 2.55 million subscribers worldwide
Deloitte is the largest US accounting firm based on revenue
58% of small businesses do not expect to talk to accountant’s f2f in the future
83% of clients are demanding more from their accountants today than 5 years ago
The average UK accountant earns £62,042, CPAs in the US make $119,000 yearly
18% of UK accounting firms have nearly all clients online
69% of CFOs rely on spreadsheets to build reports
1.24 million accountants and auditors were employed in the US in 2017
20-40% of bills in Western European countries are electronic
66% of UK businesses are at risk due to mismanaging paperwork
Half of UK companies admit to not paying their customers on time
72% of UK self-employed manage taxes on their own
64% of SMBs in the USA spend at least $1,000 on tax preparation
Case Study
Service Type: Cloud based business
Name: Mr Bennett
Business of Customer: Accountant
Summary: Mr Bennett enquired to have his business operations be transferred to the cloud in order to increase productivity and decrease risk to his business.
Description: Running a highly successful business is not easy and making the decision to change how the operations of the business are conducted is risky and requires good project management and experience. That is why Mr Bennett instructed Cosstec IT Solution to help transfer his highly successful accountancy business onto the cloud.
Transferring business operations onto the cloud is not an operation which can always be completed during office hours. It requires highly skilled and knowledgeable IT professionals to be able to conduct the smooth transfer within a small window of time.
Cosstec IT Solutions staff successfully transferred Mr Bennett s business onto the cloud within a weekend (48 hours) and ensured the system was ready for his team of accountants and administrators to come to work on Monday morning and continue their duties. Here are some of the tasks our expert team completed during the weekend while working tirelessly into the late hours to ensure the successful completion of the project;
- Retire local server
- Replace local server with cloud based server
- Wipe clean PC’s and set-up remote access
- Copy all files and data to cloud
- Clean up all machines and speed up
- Liaise with cloud Server Company
- Install Security systems
- Configure all related network devices
- Upgrade relevant software and/or devices
- Install VOIP
As an extra duty of care, Cosstec IT Solutions has continued checking up on the IT Security of Mr Bennett’s cloud based system to help prevent any security issues. Another Happy Customer!
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