Did you know that around 50% of Australian businesses depend upon cloud accounting?
Cloud is an extremely important resource for businesses today. In the area of accounting, the cloud can be really helpful to small or medium businesses around the globe. But what exactly is the cloud?
The cloud, in simpler terms, refers to the delivery of computing services through the Internet.
Cloud accounting is a great approach to making accounting tasks more convenient as well as streamlined. In order to improve efficiency and optimise resource utilisation, cloud accounting can contribute to a great extent.
The way accountants used to perform their jobs has changed immensely with the introduction of cloud accounting. Not only is the online process produce more efficient and faster results, but it also replaces paperwork and other manual accounting tools.
What is Cloud Accounting?
When basic accounting tasks, such as managing and balancing the books, are performed using software that resides in the cloud, it is referred to as cloud accounting. It is often delivered in an as-a-service model.
It allows multi-user access and safe remote or online storage. The accounting software used is hosted on safe remote servers.
Small business owners and their finance teams can store and access accounting systems, financial documents and reports from the company computer or anywhere where an internet connection is available.
How Does Cloud Accounting Work?
It works by using secure web-based software that helps streamline business processes.
The users can access the software applications through the Internet through a cloud application service provider. A company does not need to set up individual desktops with cloud-based software, as everyone in the company can easily access the cloud on their own devices.
Cloud accounting also provides data security. Along with this, disaster recovery and data backup are usually a part of your account.
What Is The Difference Between Cloud Accounting Software And Traditional Accounting Software?
There are numerous differences between traditional, on-site accounting and cloud accounting software.
Cloud accounting software, unlike traditional accounting software, updates financial information automatically and also provides financial reporting in real-time. As a result, account balances are mostly accurate as fewer errors are made as compared to manual data entry.
Handling multi-currency and multi-company transactions becomes more efficient with cloud accounting software. Along with this, such software is more flexible since you can access the accounting data from anywhere and on any device as long as you have an internet connection.
As a company expands, it has to encounter extra costs when it comes to software license and their maintenance, as well as the additional costs for systems management, database and other software licenses.
Besides this, with traditional accounting software, the business may need to make expensive capital purchases of new hardware, like servers.
On the other hand, with cloud accounting software, there aren’t such extra costs associated with growth. This accounting also needs far less maintenance than the traditional one. The cloud provider completes the backups, and updates happen automatically. Thus, nothing else needs to be installed or downloaded on a company computer.
Is Cloud-Based Accounting Software Safe?
One of the major concerns people have before using cloud-based accounting software is the security of their financial data.
Cloud accounting providers make use of encryption, rewriting the information into secured and unbreakable code to send and store data. Along with this, cloud solutions make use of the same type of security that is used to make financial data and online banking safe.
The following security measures are offered by good accounting software:
- an off-site automatic backup server
- multiple segregated networks
- regular security audits
- dedicated anti-malware staff
- multiple built-in user authentication methods
- high-level digital security software with both inbound and outbound encryption
- automatic updates
- customer service and technical support
Benefits of Cloud Accounting
Cloud accounting removes a lot of drawbacks and cost of implications of traditional accounting. But how can cloud accounting benefit your business?
Here are some of the key areas where cloud accounting can benefit a business.
Access Your Finances From Anywhere
You can access your financial data anywhere, anytime, with cloud-based accounting software. You do not have to worry about wasting time with updates and downloads that come with regular software, as the cloud is hosted remotely.
Along with this, a software provider can offer a mobile app, which makes it easier to access the numbers while you are on the go. Overall, this system gives you the flexibility not to sit in your office to check on your cash flow or access your accounts.
Get An Up-To-Date View Of The Business
If you wish to get a complete, up-to-date view of your current financial situation, cloud accounting software is what you need.
Since your data lives on the cloud, you can easily make informed decisions about the financial future of your business. On the other hand, with the traditional method of accounting, you would need to scroll through various pages of information only to get accounting data reports.
With cloud software accounting software, meeting the demands of a fast-growing business becomes easier as you can access real-time financial data whenever needed.
Makes Collaboration Easier
Another advantage of cloud-based accounting software is that it makes collaboration with your accountant much easier.
With a cloud accounting system, you can easily generate reports that your accountant may ask from you. Besides this, you can easily provide the accountant with access to the software.
Having an online accounting program comes with the benefits of having control over how much access to financial information you wish to give to an employee.
For instance, if an employee processes payroll, they can be provided with access just to payroll instead of providing them access to bank accounts or other financial information.
Save Time
The major benefit of cloud-based accounting software is Automation. You can automate your workflow to save time.
For instance, by entering your vendor information, you can set up a workflow that will automatically pay that vendor every month on the same due date. Also, it lets you automate sending out invoices to recurring customers.
Eliminate The Need For Installation
Cloud-based accounting software operates online, eliminating the need for purchasing and installing a program on your computer.
Unlike traditional software that requires individual licenses for installation on each computer, cloud access is facilitated through a mobile app or web browser, allowing you to log into your account seamlessly.
This not only provides convenience but also leads to cost savings, as there’s no necessity for an in-house IT team to handle tasks like software upgrades or address technical issues.
Improve The Accuracy
Since all the financial information is entered in the same place, the chances of accounting errors happening with cloud-based accounting systems are pretty low.
When you are entering expenses income regularly and categorising transactions, you can easily pull up an accurate report at any time.
If you use an Excel sheet, you will need to know various formulas, accounting practices, or shortcuts. However, with a cloud accounting system, all you have to do is enter your income and expenses on a regular basis, and you will get an accurate report.
Access To Tech Support
Using cloud-based accounting software comes with the advantage of access to tech support.
Tech support can be accessed via chat or telephone. You will have technical professionals available almost instantly to help you with the issues you may be facing with the cloud-based software.
Thus, you will not need to employ an in-house IT representative who can deal with the software, and as a result, you will end up saving not only time but money as well.
FAQs
What are the risks associated with cloud accounting?
Although there are limited risks with cloud software, they do exist. Some of those risks include security threats, privacy breaches and technical issues that may force system downtime.
Still, many people believe that the benefits of cloud accounting outweigh the risks. This is the reason why a lot of businesses have shifted towards cloud accounting software.
What type of data can be stored in cloud accounting?
A cloud accounting application has the capacity to store any data that you would typically save on a computer. This encompasses a wide range of business-related information, including but not limited to proposals, quotes, accounts payable and receivable files.
The versatility extends to storing various file formats such as documents, spreadsheets, audio, and video. Utilising cloud storage ensures that this wealth of data is securely preserved and easily accessible whenever the need arises, offering businesses a convenient and comprehensive solution for managing and retrieving their critical information.
Is cloud accounting the future?
Certainly! cloud accounting is widely regarded as the future of financial management. Embracing a cloud accounting solution not only modernises your financial records but also equips your business with essential tools for growth and competitiveness.
By seamlessly integrating traditional accounting systems into the digital landscape, these solutions pave the way for businesses to thrive in the evolving business environment.
With the power to streamline processes and enhance efficiency, cloud accounting emerges as a pivotal asset for businesses looking to stay ahead and prosper in the dynamic landscape of modern commerce.
What are the costs associated with cloud accounting?
Determining the costs linked to cloud accounting hinges on the specific cloud accounting system you select for your business needs. The expenses can vary based on the level of storage and usage included in your plan. For instance, with some platforms, you have the opportunity to explore their features through a free trial.
This allows you to firsthand experience the functionality of the online accounting software, enabling you to make informed decisions about the subscription tier that best aligns with your business requirements.
By taking advantage of trial periods, businesses can assess the effectiveness of the software in streamlining their accounting processes before committing to a particular plan.
Is my financial data secure?
Cloud Accounting Solutions can provide the same or even better secure way for accounting data storage. For example, if a company computer possesses important financial information, a loss of this information can cause serious data loss.
Cloud accounting does not leave a trace on a business computer, and data stored on the cloud is encrypted with a password-protected system. Sharing information is less worrying. With cloud accounting, a single customer needs access to an identical computer using a single password.
Do You Need To Use Cloud Accounting?
With its significant advantages and cost-effectiveness, many emerging businesses are opting for cloud accounting solutions right from the outset. The trend is reinforced by the fact that even entry-level accounting systems now come with cloud versions, often steering customers in that direction.
At the core of every business operation lies finance and accounting, essential for monitoring transactions and assessing financial health in real time. Sound financial practices are paramount for the longevity of a business and for compliance with crucial financial and tax regulations.
While some companies, in their initial stages, might resort to spreadsheets or manual systems for managing their general ledger and accounts, this approach is prone to errors, cumbersome, and often unsustainable.
All you have to do is find a cloud accounting software that effectively addresses these common challenges. Tailored software is available to accommodate businesses of all sizes, from sole proprietorships to multinational enterprises, making it a logical and versatile choice for businesses across diverse industries.
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