Sign InBook a demo

Accounting Statistics: New Data For 2023

Jul 19, 2022

We recently completed a study of 91 CFOs of multi-entity companies and asked them about their accounting processes. Our goal here was to acquire well-grounded accounting statistics. In addition to uncovering some interesting insights and statistics into the current state of accounting, we also discovered several key opportunities that forward-thinking multi-entities can leverage.

Here Are the Accounting Statistics We Found and Our Commentary on These Findings.

94.5% of companies are using cloud accounting software and at least 58% of multi-entity companies are still using SMB accounting solutions

Most companies (at least those with multiple entities) have realized that cloud accounting software is significantly more efficient than traditional accounting solutions. In addition, cloud accounting software is much easier to set up and doesn’t require any maintenance.   

On the other hand, SMB accounting solutions require multi-entity companies to create separate accounts for each entity. Unfortunately, this means the parent company never has an up-to-date, consolidated general ledger as the entities are only consolidated at the end of the month. 

This makes it nearly impossible to accurately gauge the company’s overall performance until the month is closed. 

In addition, multi-entities that are using SMB accounting software have to either:

  • Perform the consolidation process manually in Excel  
  • Purchase a consolidation add-on, export the data, and execute the consolidation process in the add-on, reimport the data

As you can see, both processes are time-consuming (which slows down the close financial process) and expose the data to manual error. 

So a major opportunity for these companies is to move to a solution (like SoftLedger) that offers real-time data and automatically updates the consolidated general ledger the instant an accountant makes an entry for an individual entity. 

This way, they will be able to close the month faster and always offer executives accurate data in minutes.

The Majority of Multi-Entity Companies (85%) Spend at Least $2,000 per Month on Accounting Software.

Approximately 30.77% of companies spend over $2,000 and up to $5,000 per month on accounting software, and an additional 38.46% of companies spend over $5,000 per month.

This image breaks down the current spend on accounting software per month. 15.38% spend between $0-$1,000, 15.38% spend between $1,001-$2,000, 30.77% spend between $2,001-$5,000, 25.27% spend between $5,001-$15,000, 7.69% spend $15,001-$30,000, 4.40% spend $30,001-$70,000, and 1.10% spend $70,001 or more

Companies Using SMB Accounting Software Tend to Spend More on Software per Month Than Those Using ERP Systems.

About 47.17% of companies using SMB accounting software spend over $5,000 per month on accounting software based on our statistics. However, only 29.62% of companies using ERP systems spend over $5,000 per month on accounting software.

Accounting Statistics

This suggests that because multi-entity companies using SMB accounting software have to pay for a new account for each entity, it quickly becomes very expensive and inefficient.

How Long Does It Take Companies to Set Up Their Accounting Software?

About 34% of companies take 1-2 weeks to set up their accounting software, and about 50% of companies require more than two weeks to set up their accounting system

Companies using SMB accounting software take longer to set up their accounting systems than companies using ERP systems. About 49% of companies using SMB accounting software completed the setup process in two weeks or less, whereas about 56% of companies using ERP systems completed the setup process in two weeks or less.

What Is the Most Important Thing CFOs Look For in Accounting Software?

The most important thing CFOs look for in accounting software is multi-entity consolidation automation. When looking for a new accounting software solution here is a percentage breakdown what is most important to CFOs when looking at new accounting software solutions. 31.87% say access to real time data, 45.05 say easy multi entity consolidation automation, 9.89% say crypto capabilities, 12.09% say ease of integrations, and 1.10% say other

45% of CFOs said that the most important thing they look for in accounting software is automatic multi-entity consolidation.

An additional 32% of CFOs say that real-time data is the most important thing they look for in accounting software. 

What Percent of Companies Can Consolidate Their Entities in 1-2 Days?

Only 16% of multi entity companies can consolidate their entities in 1-2 days

As multi-entities must finish the consolidation process before they close out the month, their financial close process is also delayed. This means that most companies don’t have access to a real-time, consolidated general ledger throughout the month.

About 44% Of Companies Require a Week or More to Consolidate Their Entities.

The 44% of companies that require at least a week to consolidate entities are at a disadvantage as executives won’t be able to make decisions based on accurate data.

On average it takes 16.48% of companies to consolidate their entities in 1-2 days, 39.56% in 3-6 days, 24.18% in 7-10 days, 10.99% in 11-15 days, 3.30% in 16-25 days, and 5.49% in 26 days plus

Here’s the full breakdown of the average time required to consolidate multiple entities:

  • 16.48% say it takes 1-2 days to consolidate their entities
  • 39.56% say it takes 3-6 days to consolidate their entities
  • 24.18% say it takes 7-10 days to consolidate their entities
  • 10.00% say it takes 11-15 days to consolidate their entities
  • 3.30% say it takes 16-25 days to consolidate their entities
  • 5.49% say it takes 26 plus days to consolidate their entities

Here's a Full Breakdown of How Each Company Overspends.

90% of companies overspend during at least one month in the year and nearly half (48%) of companies overspend at least three months in the year

As you can see, it’s most likely that a company will overspend in one or two months during the year.

In addition, about 23% of companies overspend at least five months out of the year.

Of Companies That Overspend at Least One Month Throughout the Year, 38% Said It Was Because They Didn't Have Access to Real-Time Data.

Without real-time data, it’s difficult to make informed decisions throughout the month. Fortunately, companies can solve this by using a solution (like SoftLedger) that provides real-time data.

What Is the Most Common Issue CFOs Face With Their Current Accounting Software?

When asked, open-endedly, what their biggest pain point with their current accounting software is, about 33% said it is either difficult to use or they frequently experience technical difficulties.

Usability is the most common issue CFOs face with their current accounting software. 15% say expense, 33% says too difficult/technical issues, 15% say miscellaneous/poor performance, 13% say slow, 9% say security, and 7% say nothing

Final Thought

Accountants have fully embraced automated accounting solutions, though many of these solutions are still cumbersome and inefficient.

In the coming years, we’ll likely see more and more software evolve to meet the needs of modern accounting teams.

At SoftLedger, we’re proud to be at the forefront of this revolution by offering a flexible accounting platform with real-time data and automatic consolidation in an easy-to-use package. If you’d like to learn more about SoftLedger, schedule a demo today.

Consolidated Financial Statements: Process and Tools

Why You Need Financial Reporting Automation

Financial Trends in Healthcare You Must Be Aware of for 2023

Author
Recent Blogs
Chrissy O'Hara
Head of Finance at SoftLedger
A CPA with extensive experience in financial analysis, forecasting, and strategy, Chrissy has a unique blend of accounting and finance knowledge. Chrissy has served as senior advisor on many large, complex financial transactions. She began her career at Ernst & Young, followed by in-house management roles at Fannie Mae, Citadel, and Wedgewood. Chrissy holds both a B.S. and Masters in Accounting from George Washington University and an MBA from Northwestern University.

Frequently Asked Questions

Yes, users have the option to use their own chart of accounts or SoftLedger’s standard chart of accounts when getting started with SoftLedger.  SoftLedger’s flexibility allows users to make changes to their charts by easily adding new accounts.

Ready to Get Started?

Book a demo for a free test-drive of the SoftLedger software and APIs
Book a demo

Subscribe to our
newsletter

Read SoftLedger reviews on G2

© Copyright 2024 SoftLedger, Inc.

Features
Industries
Company
Blog
magnifiercross-circle