Founders are faced with plenty of administrative issues. This includes the decision if the accounting should be internal or external. Some time ago, it was recommendable for young entrepreneurs to go for an external solution as accounting software licenses were expensive and the regular updates of the program were not easily done if it was not your day to day business. But the accounting world has changed.

The cloud is changing everything

Cloud software is changing the way we work at startups and SMEs: Independent, not bound to a location, automated and mobile. What was still common until just recently is now already ancient: buying software licenses and installing them on a certain number of workstations in the company.

Benefits of cloud software include: Scalable use and elimination of software maintenance. In addition, the monthly subscriptions save a lot of money in the budget of a startup.

Dynamic in- and outsourcing

Thanks to cloud software, the decision as whether the accounting should be internal or external can (and should) be made dynamically. We call that: Dynamic In- and Outsourcing. What does that mean?

Assuming you start your business with limited financial resources and want to keep the external costs in the start-up phase as low as possible, so use your own resources. Then you need a partner who will show you the important business transactions and their booking as well as typical pitfalls related to your business model. All done in a workshop including a quick accounting crash course. This partner should be available for support and special questions, perform quarterly reviews, and be responsible for the professional preparation of the year end closing (payroll, VAT reconciliation, annual accounts, tax return).

In the next phase, your startup gets traction and you want to spend your valuable time with your customers, rather than messing around with internal administrational activities. This is mostly the time when you have reached the so-called “Product/Market Fit” and your business generates a positive cash flow. You want to outsource your accounting effortlessly and without any changes in your accounting processes.

In the third phase – it gets better and better – you hire new team members. Let’s assume your new employee for internal sales and back office expresses the desire to use his/her existing capacity to do the bookkeeping, as he/she has basic knowledge and wants to stay on top in this area. You want to promote them and you call your fiduciary partner to redefine the responsibility of your accounting processes.

With the right accounting and admin processes, the dynamic in and outsourcing adapts easily to your company and needs.

The right choice of accounting software

An important condition for dynamic in- and outsourcing is the right choice of the accounting software. The following questions can help you evaluating your accounting programs:

  1. Which processes are automated? Does the software enable automatic bank reconciliation and to what extent is data automatically read and used?
  2. Does the software transmit my payments directly to e-banking or do I have to import the payments into e-banking via XML / pain or do I even need to enter them manually in e-banking?
  3. Does the software enable the entire process from quotation, order, invoice to financial accounting and dunning? Or does the software only cover part of your processes?
  4. Does the software work on your web-browser or is it accessible via a remote service like Citrix or Desktop Remote?
  5. Can I attach underlying documents (PDFs of invoices, expense receipts, etc.) to the bookings?
  6. Is the software applicable to scale your business, e.g. by allowing foreign currencies and cost centers to be processed?
  7. Does the software have a daily updated dashboard reflecting the key figures such as liquidity, outstanding invoices, sales etc.?
  8. Can your accountant access the same data and does this access cost you anything extra?
  9. Price / Performance: What are the costs for the software rent and how much of notice periods do you need to give? Is the program user-friendly? How do I like the design? Is there a support fee?
  10. Can I change my accountant and still use the software with my new trustee? Or am I limited in changing my partners?
  11. Lastly how often are backups made? Where is the data center located and who is liable in case of loss (loss of data)?

Leanrun is happy to inform you more about those topics.

© 2020 leanrun ag (ltd)