Are You Doing SMAC?

Are you doing SMAC (social, mobile, analytics, cloud) hero

Small business accountants are becoming more tech savvy. So are the clients they serve. It’s not a perfect transition, but it’s happening. What’s next?

As technology solutions have become a must-have instead of a nice-to-have, more small to medium-sized accounting firms and businesses are utilizing the cleverly named SMAC system to drive business innovation and solve real-world problems.

At PayPie, we’re all about solving real-world problems, like cash flow. Here’s what we found out about the buzz everyone is feeling from SMAC.

What is SMAC?

SMAC stands for Social, Mobile, Analytics and Cloud technologies that help a business make the leap into the digital age. They are the building blocks of the internet of things (IoT) where technology has shifted from machines to the humans that use them.

Social

Social is just what you expected, all the main social media channels, Twitter, Facebook, LinkedIn, Instagram and SnapChat, along with the constant stream of newcomers.

The social media universe is a place where you can interact with customers and ‘listen in’ on what people are saying about your business and your competitors. A skillful use of social media can engage customers, build brand awareness and drive sales. A tone-deaf approach can have the opposite effect.

Mobile

Mobile consists of smartphones, tablets and other connected devices, like restaurant and retail point-of-sale (POS) systems. While phones and tablets help you access information from almost anywhere, they can also gather information through tools, like receipt scanners using optical character recognition (OCR) technology.

Analytics

By its nature, all this technology and technological integration create more data. The challenge and value come from turning this data into usable information. Think QuickBooks Online (QBO) and the business financial data collected from standard business transaction and other integrated applications. Then there are apps like PayPie that connect to QBO and provide powerful cash flow and financial analytics.

Cloud

The cloud is the glue that connects social, mobile and analytics. The mythical cloud hosts most of these online and mobile tools. It’s also the main conduit for sharing information between these technologies. QuickBooks Online is hosted in the cloud and so are the applications (apps) in its ever-growing ecosystem.

Read More: The Problem with Small Businesses and Accounting Technology 

Data Never Sleeps — Trends in Data

Why you should be doing SMAC

Longing for the days of the abacus? Your tribe is probably a very lonely place because tech is firmly embedded in the future of accounting. In fact, 80% of the highest performing accounting firms say adding value to existing clients is the most effective way to drive growth. Now that you know what SMAC is, here are a few ways you can apply it.

Build better relationships with social

A majority, 96% of small businesses use social media as part of their marketing efforts. According to Intuit’s Firm of the Future thought leaders, social is quickly becoming a vital sales and branding tool for accountants and bookkeepers.

Don’t overlook the importance of mobile

In the United States, 95% of Americans own mobile phones, 77% of which are smartphones. Some entrepreneurs even claim to run 100% of their business from their phone.

It’s no wonder there’s a growing number of accounting apps for smartphones, such as time tracking, scheduling, expense and mileage tools, just to name a few. Knowing which apps to suggest small business clients helps accountants fulfill their roles as advocates and fintech experts.

You can’t escape the cloud

In 2016, Intuit stated that there was a 41% increase in subscribers for cloud-based accounting software. The trend is pretty hard to overlook. One of the reasons that many small businesses (41%)  are choosing cloud accounting software is for the increased functionality.

The cloud not only increases access to information — from almost anywhere and any device — it also changes the way people connect. Face-to-face meetings are no longer a prerequisite to delivering value. Especially when you can have all the information you need lined up and ready to share via e-conference or e-mail.

Another benefit, when you combine cloud computing with automation, you eliminate a lot of the time-consuming manual tasks that once kept you from offering further analysis and insights.

Add value with analytics

By 2020, 1.7 MB of data will be produced every second for every living person. For small to medium-sized enterprises (SMEs), structured data, like entries in accounting software, only represent 20% of all data. The other 80% of the information, generated by smart devices and other technology, is considered big data or unstructured data.

However, even the term “structured data” is somewhat misleading as it still requires a sophisticated use of artificial intelligence (AI) and machine learning (ML) to provide meaningful analysis. As evidenced by the sheer number of analytics apps on display QuickBooks Connect 2018 in San Jose. It’s also why PayPie was named a Small Business App Showdown Finalists for its cash flow analytics.

Read More: 10 Reasons Accountants Should Offer Cash Flow Consulting 

Put an end to cash flow problems

For such an essential business concept, cash flow monitoring and forecasting can actually be a significant challenge for small businesses.

PayPie thinks it shouldn’t be this way, which is why we developed our cutting-edge cash flow projection and analysis tools. Our performance insights also provide a 360° view of financial health.

Getting started is as simple as creating a PayPie account and connecting a business’ QuickBooks Online account. Once that happens, our application takes this financial data and begins is assessments using hundreds of data points. Then all you have to do is click on the dashboard button to view a wealth of insightful charts and graphs that help make sense of cash flow and financial health.

Get started today! 

cash flow forecasting daily projections cash flow forecasting monthly projections

PayPie currently integrates with QuickBooks Online and was a 2018 Small Business App Showdown Finalist. 

The information in this article is not financial advice. This content is general while every financial situation is unique. It does not replace the expertise that comes from working with an accountant, bookkeeper or financial professional. 

Stock image via Pexels. Infographic via Domo — Data Never Sleeps 6.0 (Email required for report download.) 

What Small Business Owners Want From Accountants

what small businesses want from accountants main image

This month Accounting Today released the results of its inaugural Small Business Accounting Insights Survey. This survey of more than 1,000 small business owners includes some positive news and some positively startling observations on what small business owners want from accountants.

If, like most of us here at PayPie, suspense just isn’t your thing, let’s start with the most shocking observation:

Nearly half of the small businesses surveyed don’t work with an accountant

We’ll give you a second to pick yourself up off the floor. It’s true, 468 of the 1,000 respondents said they hadn’t worked with an accountant in the previous year and were not likely to do so in the coming year. A direct quote from Accounting Today Editor in Chief Daniel Hood, “They literally can’t imagine how an accountant can help them.”

While you ponder this, here’s a bit of good news:

The small businesses that used accountants, loved their accountants

The 549 businesses that worked with accountants were quite happy with their accounting partners. Plus, the more services they were using, the higher the approval rating. The businesses that collaborated with accountants were also more profitable and experienced higher growth. In total 72% of the businesses who worked with accountants were very satisfied.

The opportunity — in terms of what small business owners want from accountants:

Accountants need to give small businesses more reasons “why”

I want my accountant to “take care of the financial side so I can focus on running the business.”
—Actual small business respondent

The biggest obstacle is that small business owners don’t know what they don’t know. It’s not their fault. Turns out that when you get the keys to a business, neither an MBA or CPA is automatically included. This means it’s up to accountants to give them the reasons why.

Small business owners need to be awakened to what a skilled small business accountant can really do for them. The narrow, limited understanding of what an accountant can actually do is the knowledge gap that needs to be leapt. Eyes need to be opened to the fact that accountants can do more than help you file your taxes.


The opening quote is true. Working with an accountant should make a business owner feel more confident. It should also make the business owner understand how fundamental this financial knowledge is to running their small business.

Read more: 10 reasons why accountants should offer cash flow consulting.

What do small businesses want from their accountants?

Most small businesses, 78%, want a trusted advisor. Someone who responds quickly, understands their industry, offers clear, reasonable pricing and uses plain language instead of accounting lingo. Trust me, the first time anyone sees the acronym “EBDIT” — they’re going to think you misspelled Fitbit. (Or maybe that’s just me.)

Trusted Advisor

What financial problems do most small businesses face?

Not surprisingly, the top challenge was cash flow problems. Other problems faced by small businesses included low profitability, the loss of a major client, the need for capital and too much debt. We know we’re “preaching to the choir” when we say that a majority of these things all tie back to cash flow.

For instance, if a business can’t fund its own operations well enough to meet the needs of a major client. Not to mention what the blow losing a client can deal to a small business’ bottom line. Or if cash flow isn’t managed properly, then debt will most certainly become a problem.

ness accounting problems

Notice how little these common financial issues have to do with filing taxes and looking for deductions?

The real opportunities lie in the kinds of advice only an accountant can give

The responses of trusted service and advice were a given. What was less than a given was an awareness of what kind of an advisor an accountant can really be.

Most respondents were unaware of value-added services like cash flow consulting that help a business understand the money it earns moves in and out of the business. Only 21%, a little less than 1/5 of respondents, turned to accountants for value-added services like business planning, which can include cash flow forecasting.


With small business survival rates being what they are, consider that those small businesses who forecast cash flow on a monthly basis have an 80% survival rate.

Read more: How cash flow consulting helps small businesses

services like cash flow consulting

Everyone understands the concept of making money. What they often fail to comprehend is the timing of it all. That your accounts receivables need be in synch with your accounts payable. Or, even that accounts receivable and accounts payable are two different things.

Cash flow consulting that includes analysis and forecasting helps businesses make better short- and long-term decisions. It helps them know if they can afford to hire new employees or invest in other growth opportunities. Routine analysis can also help pinpoint opportunities to cut costs or improve income.

Automation helps, but only accountants can advise

With cloud-based accounting software, like QuickBooks Online and its diverse ecosystem of apps, you can automate many of the manual, data-entry functions that no one — not you or nor business owners — even like to do.

With simpler solutions for expense management, invoicing and other previously time-consuming tasks, now there’s more time to focus on advocacy and building deeper relationships with business owners through services like cash flow consulting.

Get easy, insightful cash flow analytics

Another plus for accountants and the small businesses they serve is that more and more advanced analytics solutions are being developed to take the data within the business’ accounting software and make it more usable and meaningful.

This is exactly what PayPie’s analytics do. Once you connect a business’ QuickBooks Online account, our proprietary algorithms comb through the data to create a cash flow analysis that includes monthly and daily cash flow projections and detailed breakdowns of receivables, payables, income and expenses.

cash flow forecasting daily projections

Make your small business clients’ cash flow data easy to present, understand and discuss. Try PayPie today.

PayPie currently integrates with QuickBooks Online and was a 2018 Small Business App Showdown Finalist. 

The information in this article is not financial advice. This content is general while every financial situation is unique. It does not replace the expertise that comes from working with an accountant, bookkeeper or financial professional. 

Stock image via Pexels. Survey results via Accounting Today.

The Problem with Small Businesses and Accounting Technology

accounting technology hero image confusion

Accounting technology has come a long way since the dawn of time. While it took thousands of years to go from clay tablets to iPads, modern accounting software has evolved at the speed of light. In less than 30 years we’ve moved from early enterprise resource planning (ERP) systems to the versatility of the cloud.

What does this mean for the average small business? Unless you own an accounting or bookkeeping business, it’s not likely that a spreadsheet is your spirit animal. However, cloud-based software-as-a-service (SaaS) applications, like PayPie, have made it easier for small businesses to harness the benefits of automation.

The problem is many small businesses are not only time-starved —  they’re somehow missing out on the time and money they could save by adopting accounting technology.

Industry surveys indicate small businesses aren’t keeping up with the pace

According to the good folks at the GetApp Lab, we’re currently in the “Age of Intelligent Accounting.” We’re living in a time when technology lets you easily forecast cash flow, automate data entry, improve processes and securely share data.

age of intelligent accounting

Yet, a FitSmallBusiness study of 293 small business owners found that no single form accounting software, in any category, had a usage rate of 50% or more. The only category that came close was general accounting software with 49.8%. In fact, most categories came in at 40% or less.

QuickBooks found similar results when it surveyed 400 small business owners with 20 employees or less. Most spent more time than they’d like on back-office operations, such as accounting, administrative tasks, bookkeeping, inventory and accounts receivable. Furthermore, only 30% of these small businesses considered themselves “highly automated.”

Why aren’t small businesses adopting accounting technology at historic rates?

Most small businesses said cost was the main reason they weren’t using small business accounting software and other accounting technology. The irony is that these tools are often quite affordable. For instance, the “Simple Start” version of QuickBooks Online is $20 USD a month and there are often sign-up promotions.

Then there’s the simple fact of valuing the time and the savings gained by preventing costly mistakes. Every hour that a business spends on a process that could easily be automated is an hour that’s lost toward growing the business. An hour spent each day on updating a spreadsheet adds up to 5 to 7 hours a week or 20 to 28 hours a month.

Mistakes also cost time and money. Any business that files its taxes late without filing an extension, will be fined. The longer the problem goes unsolved, the more interest and penalties accrue. Without proper processes, solving the problem is also harder. Any mistake that goes unresolved can easily snowball into a spiral of despair.

Pro Tip
In most cases, the costs of accounting software and related accounting technology are tax deductible in both the United States and Canada.

The times are changing and so should small businesses  

Within the next few years, 80% of accounting and finance tasks will be automated. If you take the literal translation of few as three years, this is soon, very soon.

It doesn’t mean the robots will take over. What it means is those small businesses who embrace process automation by using cloud-based small business accounting software and the ever-growing ecosystem of apps will:

  • Reduce errors by up to 95%.
  • Make some processes up 4 times faster.
  • Gain cost savings of up to 80%.

“Cloud accounting automation capabilities will significantly streamline internal operations. This lowers the risk of data loss and miscommunication. And given the technology’s low cost of entry and maintenance, its return on investment cannot be ignored.”
—Tammatha Denyes, TD Accounting Services, 2018 QuickBooks Firm of the Future Runner-up

Where small businesses can leverage accounting technology

According to small business owners themselves, they spend too much time on accounting, bookkeeping, administration, inventory and chasing payments. However, they’d rather be spending more time on things like building their teams and marketing their products and services.

tasks with too much time

Going back to the costs of failing to automate:

  • 70% of small businesses aren’t using apps to help them automate scheduling — which not only wastes time, it puts these businesses at risk of violating labor laws and increasing turnover.
  • 60% of small businesses aren’t automating their payroll — let’s just say that in the history of bad ideas, this is one of them. Hello, tax laws anyone?
  • Only 21% of small businesses have integrated their accounting software with invoicing apps — considering late payments are a top business concern and cash flow headache, this should be a “no-brainer.”

Any small business accountant or bookkeeper reading this piece is probably saying, “Yes, yes, yes!” to all the points above. But how do we turn the tide and get small businesses to take advantage of the simplicity and effectiveness that accounting tech offers?

The role accountants and bookkeepers play

“We can consult with our clients to help them solve their pain points as they occur and make real-time changes to their business. This makes us more valuable than ever before.”
—Tanya Hilts, Cloud Bookkeeping Services, 2018 QuickBooks Global Firm of the Future Winner

Once a business works with an accountant and/or bookkeeper, they quickly see the benefits of this relationship. From complying with tax and labor laws to setting and achieving financial goals, there are no better advocates than small business accountants and bookkeepers.

As the people establishing financial processes, accountants and bookkeepers have a unique opportunity to get small businesses using accounting technology. Many financial professionals have their core go-to apps that they often recommend to businesses. Slowly but surely, this is how the bridge will be gapped.

When you consider that 40% of small businesses claim that doing their own bookkeeping and taxes was the worst part of being a small business owner and another 64% do their bookkeeping by hand, it’s easy to see where the opportunity lies.

It’s all about empowerment

“With every new client we bring on, my primary missions are the same: to make their financial processes easier and to help them reach their financial goals.”
—Michael Ly, Reconciled, 2018 QuickBooks US Firm of the Future

At PayPie, we’re 100% behind empowering accountants, bookkeepers and small businesses. It why we’ve developed our risk assessment and cash flow tools and why we’ve invested in creating useful, informative and actionable content in our blog.

Just as businesses benefit from automation, so do accountants and bookkeepers. There’s no need to spend hours building custom reports. Grow into your role as an advisor and advocate by helping businesses see the big picture with PayPie.

Trying our powerfully designed and intuitive analytics is as simple as creating a PayPie account then connecting a business’ QuickBooks Online account.

Main analytics dashboard

PayPie currently integrates with QuickBooks Online and was a 2018 Small Business App Showdown Finalist. 

The information in this article is not financial advice. It does not replace the expertise that comes from working with an accountant, bookkeeper or financial professional. 

Stock image via Pexels. Age of Intelligent Accounting infographic via GetApp. Table of back-office tasks via Intuit QuickBooks. 

Forecasting Cash Flow in QuickBooks Online

cash flow forecasting in QBO main image

The average small business owner might not be as familiar with cash flow as they should. However, if you’ve got an awesome accountant and/or bookkeeper on your side, they can wax poetic on the virtues of a good cash flow projection.

Once a business starts forecasting cash flow, they’re quickly inspired and empowered by the insights it provides. This is why PayPie has included both monthly and daily cash flow forecasting within its analytics dashboard.

Accountants and bookkeepers who use QuickBooks Online (QBO) know that the Cash Flow Projector tool is only available within QuickBooks Desktop. But hope is not lost! In this article, you’ll learn how to use PayPie to project cash flow by simply connecting a business’ QBO account.

Creating a cash flow forecast in QBO

Put down the pen and paper. Forget about opening Google Sheets or Excel. Simply sign up for PayPie, then connect the business’ account. Forecasting cash flow is really that easy.

The app will then do a deep dive on the business’ financial data, looking at hundreds of variables. (And we’re just getting started…) The assessment of these variables is then presented in a unique analytics dashboard, with all of the cash flow metrics detailed in the cash flow tab.

main dashboard cash flow tab

Learn more about the PayPie QBO integration

Forecasting cash flow — monthly projections

The data for the monthly cash flow forecast pulls from the company’s income statement, balance sheet and cash flow statement. The graph shows three months of actual cash flow and another six months of forecasted cash flow. The forward-looking projections are based on the numbers from the previous three months.

Cash flow is broken into the three main categories:

  • Operating cash flow — inflows and outflows related to the sale of goods and services.
  • Investing cash flow — inflows and outflows that stem from the sale or purchase of capital investments.
  • Financing cash flow — inflows and outflows from borrowing activities or external investors.

Monthly changes in cash flow also helps identify patterns in order to leverage peaks and overcome the valleys.

cash flow forecasting monthly projections

Forecasting cash flow — daily projections

The daily cash flow projection shows the beginning and ending cash balance for each day — based on current and previous data in the business’ main financial reports.

Daily projections help you get more granular in your cash flow analysis. For example, a pattern of negative cash flow days can help pinpoint if a business is giving their vendors more time to pay than their debtors are giving them.

cash flow forecasting daily projections

5 reasons to use PayPie for cash flow forecasting.

Analyzing cash flow — accounts receivable

Receivables and payables are key components of cash flow. With PayPie you can generate an assessment of each one. Assessing accounts receivable helps identify overly generous credit terms and outstanding invoices that negatively impact cash flow and a business’ overall financial health.

In the accounts receivable analysis, you’ll be able to quickly access:

  • Total invoices raised — for a period of 12 months, regardless of whether the invoices are open or closed.
  • Monthly invoices, payments and open AR — laid out in a convenient bar graph. (Open AR = (previous month’s open AR + current month’s invoices) – payments.)
  • Top five exposures — showing which customers represent the highest amounts of outstanding invoices.

accounts receivable

Analyzing cash flow — accounts payable

Just as accounts receivable shows inflows, accounts payable details outflows. Crucially, if there are late payments which affect the business’ short- and long-term credit profile, as lenders base their conditions on previous payment histories.

The accounts payable analysis features:

  • Total bills received — for a period of 12 months, regardless of whether the bills are paid or unpaid.
  • Monthly bills, payments and open AP — laid out in a convenient bar graph. (Open AP = (previous month’s open AP + current month’s bills) – payments.)
  • Top 5 exposures — showing which vendors represent the highest amounts of outstanding bills.

accounts payable

Comparing income to expenses

In order to provide a historical and top-level perspective, PayPie also graphs total income and expenses for a period of 12 months. This yet another way to highlight trends, such as when expenses either exceed or come close to surpassing income.

income and expenses

Generating a breakdown of expenses

Delving further into examining cash outflows, PayPie’s cash flow analysis also breaks down expenses on a monthly basis, displaying 12 consecutive months. It’s a quick way to provide a snapshot of a business’ main expenses throughout the year.

expense breakdown

Handy reference — basic cash flow terms and concepts.

Creating a cash flow statement in QBO

If all you want to do is create a cash flow statement, simply go to the QBO reports tab and select “statement of cash flows.” However, why have just a cash flow statement when you can have a comprehensive cash flow forecast? Plus, our dashboard includes a cash flow statement as well.

cash flow statement in dashboard

Assessing credit risk

The main question that PayPie’s financial analysis answers is, “How does my business look in front of lenders?” We provide insights into cash flow as it’s closely tied to determining the business’ ability to manage its finances and credit.

However, our algorithm also examines a range of variables related to risk in order to create a proprietary risk score. Unlike traditional credit scores, it’s based on a business’ own real-time accounting data, instead of third-party sources. It doesn’t replace a traditional credit score. Instead, it serves as an internal benchmark of how the business is currently performing.

If a business is planning grown and knows that it’ll need funding in the future, it can use the risk score and the insights from the assessment to be better prepared when applying for financing.

risk score

Taking action through insights

If you’re taking the time to forecast cash flow and evaluate risk, you’re already interested in troubleshooting. But you’re also interested in solutions as well. This is why PayPie also includes a list of targeted insights, that pinpoint problem areas which need to be addressed.

These insights into financial health and borrowing capacity include:

  • Cash flow coverage ratio — the ability to pay interest and principal amounts on borrowed funds.
  • Creditor days — the average amount of time needed to settle debts with trade suppliers.
  • Current ratio — the ability to meet short-term debt obligations within the next 12 months.
  • Debt-to-equity ratio — shows how much debt is used to run the business as well as the value of the assets compared to the debt.
  • Debtor days — how long it’s taking to collect payment from debtors.
  • Interest coverage ratio — determines how easily a business can pay interest expenses on outstanding debt.
  • Leverage ratio — how much operating and financing leverage a business has in order to manage debt or acquire additional funds.
  • Net worth — the total value of the assets after all debts are paid.
  • Return on capital employed — how well a business’ capital investments are paying off.
  • Revenue growth — compared year over year.

insights (2)

Start forecasting cash flow today. Sign up for PayPie and connect your business.

PayPie’s cash flow forecasting is currently free. In the future, each user will be limited to two businesses. Volume pricing for accountants and bookkeepers will also be introduced.

In the meantime, try it out and let us know what you think. We mean it, we value your feedback.

QuickBooks and QuickBooks Online are registered trademarks of Intuit Inc. PayPie integrates with QuickBooks Online. It does not integrate with QuickBooks Desktop. 

The information in this article is not financial advice. It does not replace the expertise that comes from working with an accountant, bookkeeper or financial professional. 

Stock image via Pexels. App images via a PayPie demo account.