GUEST
ARTICLE - Michael A. Smith
The Three R's of Web-Based Accounting
With
the economy still lagging, associations continue to
search for ways to raise alternative sources of revenue
and cut costs. Many organizations have put a moratorium
on technology upgrades and system enhancements, viewing
such capital investments as unnecessary to the primary
function and mission of the group. However, these cuts
come at a cost to the overall productivity and
efficiency of staff. Antiquated systems that were
designed for the association five years ago may be
holding you back from acquiring the information you need
to expand the depth and breadth of your organization
today.
So
where can an association turn to upgrade its accounting
system without making a large investment in new
hardware, software, service agreements, and consulting
costs? The Internet.
The
Internet is becoming an increasingly useful business
tool--not just for acquiring information but also for
providing real business solutions. During the dot-com
boom of the 1990s, thousands of vendors flooded the
market with exciting new products, hailing themselves as
ASPs (application service providers). Among these new
products were dozens of accounting and finance
applications. However, many were either untested or
lacked the funding necessary to sustain a downturn in
the economy, and most faded as quickly as they appeared.
But
from that initial surge, a handful of accounting
products have emerged from companies demonstrating
the financial savvy and ingenuity to sustain business
through the ebbs and flows of this uncertain economy.
These now-proven Web-based systems are every bit as
powerful as many of the more expensive server-based
systems, and at a fraction of the cost.
Cost
savings not enough? If you need more reasons to switch
to a Web-based accounting system, here are three.
1.
Real-time information. Web-based systems
offer real-time information that is simply not available
through server-based systems. Most mature Web-based
accounting solutions are hosted as HTML-based
applications, meaning the application runs within a
standard Internet browser. Therefore, no software needs
to be loaded onto the local computer, and there are no
hardware requirements.
The accounting
system can be accessed from any Internet connection on
any computer. Management can be at an annual meeting on
the other side of the world and still have access to a
current statement of financial position. The treasurer
in one part of the country and the chief financial
officer at the other end of the country can both be
looking at the same general ledger detail or aging
report. The barriers of geography are eliminated and
everyone has real-time access to the decision-making
information.
2.
Reliable access and security. Because
Web-based systems do not rely on your in-house
technology, they are not subject to periodic network
failures. Although Internet access can never be
guaranteed, by implementing redundant Internet service
providers, an organization can hedge its bet against
Internet disruption. Furthermore, as the accounting
information is accessible from any Internet connection,
employees are able to work off-site in the unlikely
event of redundant ISP failure, with absolutely no
disruption to the financial processes.
Not only is
system access reliable, most of these Web-based systems
grant you the ability to customize user profiles and
permissions, allowing management to dictate who has
access to each part of the system. As a result, your
treasurer can be granted read-only access to financial
information, while your accounts payable clerk can have
permission to enter invoices but not to approve checks
for payment.
One concern
many associations have when considering conversion to a
Web-based system is that of sacrificing a level of
security they have come to expect from their
server-based systems. Actually, the opposite is true.
Most Web-based system providers use data centers with
physical (including trained guards, video surveillance,
and alarms) and network (including firewalls,
user-specific IDs, and 128-bit data encryption) security
that far exceed the security of in-house systems. In
addition, most Web systems offer dual-drive transaction
redundancy and nightly backups to off-site storage
facilities to ensure information security.
3.
Robust functionality. These are not your
father’s accounting systems. Today’s associations
demand accounting systems that can do way more than just
debits and credits. They must be able to automatically
process payroll, be fully integrated with the membership
database, and be able to perform automatic overhead
allocations and produce functional financial statements.
Web-based systems offer these options and more.
Through
the use of XML (extensible markup language), Web-based
accounting systems are able to easily integrate with
virtually any other Web- or software-based application.
Many of the well-established Web-based system providers
have partnered with other software developers to offer
certain integrations--payroll, time and billing, and
retirement--directly as part of the accounting package.
Gone are the days of dual data entry and parallel
systems. Web-based systems provide associations with the
platform to easily develop and customize a fully
integrated package. And with more and more Web-based
database applications coming to market, we are quickly
approaching the day when associations will not need to
host any of their own systems.
The
three R’s: real-time, reliable, and robust. These are
important points to keep in mind when evaluating the
advantages of a Web-based accounting system. They can
have a profound effect on the productivity of your staff
and the usefulness of your decision-making financial
information. But ultimately, the greatest advantage is
in the cost savings. Imagine never having to buy
software or new servers. Imagine never having to pay for
upgrades or service packs. Imagine never signing another
maintenance agreement or paying for hourly technical
support. These advantages are driving more and more
associations to the Internet for total business
solutions.
The
future of business is on the Web--and the future for
tax-exempt accounting is there as well.
 Michael A.
Smith,CPA is a Manager within the Management &
Technology Consulting Services department at Langan Associates, P.C.,
Arlington, Virginia. He is in charge of the firm’s
Web-based accounting initiative. Copyright 2002 Michael
A. Smith. Originally published in ASAE's Dollars
& Cents newsletter, January 2003.
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