Small-business owners see blue sky in cloud accounting

Online systems automate bookkeeping, freeing up time for companies to help clients

Modelo Tech Studio owner Rodrigo Freig started using KPMG’s Finance Plus cloud-accounting service when it launched in May | Chung Chow

Rodrigo Freig recently simplified his business’ bookkeeping.

When Freig founded Modelo Tech Studio two years ago, he started using QuickBooks Online software, but he calculated his accounts receivable, accounts payable, payroll and other bookkeeping tasks himself.

He worked with KPMG annually to look into his online records, and to help him with his corporate taxes.

This evolved in May, when KPMG introduced Finance Plus – a system that helps small-business owners who lack the time or accounting experience to manage bookkeeping and financial reporting.

“Before they started doing their system, with Finance Plus, it was me doing all of the paperwork, all the bank-account reconciling, all the stuff that’s day to day,” Freig told BIV. “Now, they do everything or, pretty much, 80% of what I was doing before.”

Freig still sends out invoices, and he accepts digital payments from clients, but he said KPMG’s system keeps track of his payment records.

The net result is that Freig has more time to create digital 3D modelling of buildings for his engineering, architecture and construction industry clients.

Freig’s six-employee company’s growing client list includes ventures such as BC Hydro, SNC Lavalin (TSX:SNC) and Acton Ostry Architects.

With annual revenue tripling to more than a $1 million run rate today, compared with about $350,000 initially, Freig said he can devote time saved on his accounting to his growing volume of work.

“Rodrigo every month used to reach out to me because either he couldn’t get his banking to balance, or even just to download his bank [information] feeds,” Vancouver-based KPMG partner Raimey Resendes told BIV.

“He was also having an issue with the payroll software that QuickBooks Online was using. We were able to take advantage of Finance Plus, and go in there and remove those headaches.”

A Forrester Consulting study, conducted for cloud accounting giant Xero, found that 49% of business owners used cloud technology during the COVID-19 pandemic, up from 32% in 2019.

That means that most small business owners have yet to adopt the benefits of using cloud accounting.

“Traditionally, a small-business owner would make a payment for parking, picking up coffee or going to a restaurant with a client, and they would keep a receipt,” said Baker Tilly WM senior manager Johanna Leh.

“At the  end of the year, they would go to their accountant and bring this shoebox of receipts. Accountants would sift through all of these receipts – looking through a year’s worth of transactions in a shoebox.”

Baker Tilly’s cloud-accounting service enables clients to take photos of receipts and have them automatically populate folders in a digital cloud.

Leh said artificial intelligence technology recognizes vendor names on receipts and can organize them according to coded rules devised specifically for clients.

Instead of having proprietary apps that connect to digital clouds, Baker Tilly accountants use apps from global giants, such as QuickBooks Online, Xero or the Sage Group.

Its client volume enables it to access those platforms at a cheaper subscription rate than what a single client would have to pay, Leh said. She added that her firm’s cloud-accounting practice has grown “substantially” during the past year, to hundreds of clients.

Vancouver’s Smythe LLP has also seen a surge in cloud-accounting clientele.

Partner Camellia Ho told BIV that her firm’s cloud-accounting business is up about 60% from a year ago.  Smythe’s affiliation with Allinial Global means that it is also connected to more than 250 offices in 13 countries. That gives it expertise, resources and international connections across a range of industries, Ho said.

Grant Thornton is another of the many firms vying for cloud-accounting business as well as advisory and strategic consulting work. Partner John Parker told BIV that he has been working in the cloud-accounting sector since 2013, when he had a small firm with two partners. 

He then helped launch Grant Thornton’s cloud accounting practice when he joined the company in 2017, he said.

“It’s been a very high-growth area for the firm,” said Parker. “Small businesses have responded favourably to the offering because it really does eliminate so much of the administration and the mundane tasks around bookkeeping.” •