Armanino Blog
Article

Cloud-Based Accounting System Benefits Franchisees

June 11, 2014

When franchisees stray from franchisor-established accounting practices, serious problems arise. Franchisees who find their business performing below expectations often turn to the franchisor for answers.

Franchisors find it difficult to offer support, however, when financial data is either inaccurate or difficult to access. In the absence of quality information, it’s impossible for the franchisor to evaluate and provide recommendations to the franchisee as to how they can improve their business. To resolve this issue, franchise organizations turn to efficient and effective cloud-based accounting systems.

What are the benefits of cloud accounting?
Moving to a cloud-based system means financial information can be accessed anywhere, from any device, at any time. Transactions are automated via linked bank accounts or point-of-sale systems, which means that financial information is updated in real-time. This helps franchisees easily monitor the performance of their business. Bookkeeping, then, can more readily become standardized so franchisors can be assured information reporting at the franchisee level is always accurate and up-to-date.
One of the biggest pain points in the franchisor/franchisee relationship is the lack of accurate financial reporting that is key to the success of running a business. A cloud-based accounting system eliminates this pain point by providing immediate access to financial information so that inaccuracies are addressed quickly.

Franchisees also rely on the franchisor to help them evaluate and provide advice about how to improve the performance of their business. Under-performing units can affect the entire franchise system and damage the brand. It is very important that accurate financial information is available to the franchisor in order for it to provide this level of support.
Cloud accounting is more efficient and accurate than traditional desktop software or paper-based processes. The system can also provide alerts, such as when bills are due, and offer a portal through which users can log in and authorize payment.

What do businesses need to know when migrating to the cloud?
Security and risk should always be considered when migrating to a cloud-based accounting system, so careful due diligence is critical. Make sure software vendors have the resources and capitalization to support your business properly, and have a track record of success.

It’s important to choose software that is easy to use so user adoption is not an issue. Accounting systems are only as good as the processes behind them, so planning is key. Making sure that documentation about how processes will change and what they should look like when new software is installed will also place the franchisor in a better position to train their franchisees to use the new system.

How can cloud accounting create efficiencies in a franchising business?
Another pain point for franchisors is getting franchisees to adopt and maintain best practices with regard to accounting procedures. This not only affects the franchisor’s ability to help the franchisee grow and develop their business, but it also affects royalty compliance. Royalty fees — generally paid on gross sales — hinge on the franchisee’s ability to report accurate financial data. If the accounting data is not maintained properly at the franchisee level, it cannot be reported back to the franchisor in an accurate and consistent manner. This potentially affects the royalty stream of the franchisor, which can then affect the entire franchise system. Accounting issues typically cause unnecessary friction between franchisors and their franchisees. Cloud-based accounting eases the problem, offering a standardized platform through which data can be tracked, and can ultimately improve performance for the entire organization.

June 11, 2014

Stay In Touch

Sign up to stay up-to-date with the latest accounting regulations, best practices, industry news and technology insights to run your business.

Resources
Related News & Insights
The Bridge BOOtique
Live Event
Join us for an evening of shopping while supporting nearly 50 local, women-owned businesses.

October 27, 2021 | 02:00 PM - 06:00 PM PT
Armanino’s VIP Event at Community Summit
Live Event
See you in-person alongside your Dynamics peers in Houston!

October 13, 2021 | 04:00 PM - 06:00 PM PT
Optimize High Tech Manufacturing Supply Chain Improved Operations Visibility
Webinar
Learn how companies can use D365 to improve forecasting, operational visibility and increase revenue.

October 7, 2021 | 10:00 AM - 11:00 AM PT