Accounting mistakes can result in costly penalties, as exemplified by the story of Hanger Inc.
Recently, the Austin-based medical device manufacturer joined the ever-growing list of companies to fall victim to poor accounting. According to BizJournals.com, Hangar's accounting mistakes are expected to cost more than $28 million after years of inaccurate financial statements are corrected. Biz Journals reports that Hangar's stock has dropped more than 25 percent from its high-point to $19.69 per share.
While rebounding from accounting mistakes of this magnitude is never an easy ordeal, it's certainly easier for Hanger than it would be for a startup company with limited funding. But what can a business do to escape the fate of such costly accounting mistakes?
Solution: Cloud Accounting
As technology continues to evolve, there are abundant opportunities for businesses to find creative ways to save time and money while staying in compliance. One of the products of improved technology is cloud accounting. Cloud accounting is a necessity for many small businesses because it helps eliminate the detrimental effects of accounting mistakes in an economical fashion.
Many small businesses either don't have the resources to hire a full-time financial advisor or tax preparer, or don't have the experience to do the accounting work personally. Cloud accounting helps businesses in a variety of ways.
1. Creates a Conducive Ecosystem for Reliable Accounting
A business can use a cloud accounting system from a company like Paychex in order to share access to online accounting for bookkeeping collaboration. With easy access to the financial books (by the people that need visibility), it makes it easier to address questions or issues and eliminate accounting errors. Cloud accounting also allows for small businesses to integrate other third party software for an even more insightful look into a business's finances.
2. Cloud Software Helps Keep Your Accounting Practices Secure
Traditional accounting practices or software leave room for privacy breaches. If only one computer has access to a business's finances, information must be transported (usually by USB), in order to share details. Saving sensitive data on outside computers instantly creates security issues. Cloud software eliminates the need to transport data by allowing an organization to access their information in multiple locations.
3. Complicated Reports Become Unnecessary
Cloud accounting software typically offer dashboards to help small businesses easily organize and input invoices and expenses. Reports are no longer necessary because it is possible to glean real-time insights into a company's financial well-being. With certain systems, a company can accomplish the following from any device:
- Take pictures of receipts and upload directly to the cloud which helps a company avoid missed expense reporting.
- Import important bank information for paid invoices or other deposits to keep accurate accounting records.
- Track inventory through a device to make decisions on the fly.
- Generate financial reports instantly to ensure the business is looking healthy.
4. No Need for Client-Side Upgrades
Traditional software or accounting systems require regular system and data updates. With cloud-based accounting programs, IT tasks are typically managed by the application vendor so any sort of upgrade or data backup is expediently managed. Small businesses can avoid the risk of outdated data or software, establish better backups, and establish quicker access to software bug fixes.
At the end of the day, proper accounting means saving an organization time and money and maintaining the viability of a company in the face of costly penalties for regulatory non-compliance. Technology has provided a way for companies to keep track of their finances more economically, and help ensure the health of their business.