Again drawing on experience, let me tell you why in 2010 running a finance function in a small business is less complex, costly and gives you a competitive edge.
In the days before the cloud
No two ways about it, but, in 2004, once we’d delivered on quality: my Digital Agency’s competitive edge was sadly reduced to price. Design and Development skills were slowly becoming commoditised by the technology platforms and freelance and outsource markets. We had to cut cost wherever we could as our clients demanded price reduction. We had a highly skilled team in Sofia, Bulgaria and not only did the developers cost far less than in the UK but their skill and qualification was deeper. (they’d all qualified at Sofia University mostly with degrees in mathematics and computer science)
Setting up the finance function
As the business grew, personally, I needed to move away from the finance stuff (my time was more valuable in the sales function as by that stage we had 10 hungry mouths to feed in London and 30 in Bulgaria) Since we already had an existing business in Sofia, it was as a no brainer to have our finance function relocated there. Again, there was no shortage of skilled accountants in Sofia, and like-for-like I hired a Bulgarian controller for a fifth of what I’d ended up paying in London and kept a desk free in London for a badly needed account manager.
Sounded practical and achievable, but..
This all sounded like a credible plan but this decision cost me a fortune because, at the time, the technology was a barrier not an enabler. Like any UK business we were forced to settle for Sage, a server-based accounting package. To cut a long story short, I ended up throwing £25k at the software and hardware and another £10k at a consultant who had to come and set it all up so that we could have more than one use in more than one geography. Sadly, I gave up because it took more than a year to get going and I couldn’t afford to be without a growing finance function. Regrettably, it ended in me having to make our BG controller redundant.
Would it be different in 2010?
Oh yes! The Cloud would have enabled me to make my plan work quickly and cost-effectively. A flexible web-based accounting package didn’t exist in those dark ages. Today I could turn to one of the three leading Cloud Based Accounting package providers in the UK: Kashflow, Xero or Freeagent. I wouldn’t have had to invest in consultants, expensive accounting packages and servers that needed continual maintenance and upgrade. Even before wanting to move the finance function to Sofia I remember having to go into the office to work on Sage because I couldn’t access the data with any reliability even though I had stumped up an additional license for my laptop or home computer.
AoB runs its finances in the cloud and while I’m writing this article I’ve just had an email in from a client asking for a copy of an invoice. I logged into the system from my Peet’s Coffee shop in San Francisco and it was in his inbox instantaneously I could just have easily done it on my iPhone if I’d been out an about. If you’re a client of mine, you’ll be used to me raising fee notes on my iPhone that we both agree on when I’m sitting in front of you.
The Cloud is more flexible, scalable and less monolithic and costly
I also wanted to point out that a Sage server license for line 50 which most small businesses still get flogged (most probably recommended by their Accountants)- with all its inflexibility and sluggishness costs a small business annually circa eight times as much compared to a Cloud computing solution. And that’s not where it ends – Sage’s bolt on support, payroll and other solutions are far more expensive than the equivalent offering from the Cloud providers.
AoB has just put a plan together…
for a client to help them move their finance function to the Cloud. We’ve shaved substantial budget and shortened their billing and collection cycle which has, in the first 3 months, paid for our fees. This saving excludes all the administrator’s time we’ve freed-up from paper pushing allowing her to do things that add value to the business making her job far more fulfilling.