As a business owner, you know that keeping track of all the finances can be challenging and time-consuming. So it's no wonder why more and more companies across the world are turning to cloud accounting to make their life just a little bit easier. Cloud accounting is an innovative way of managing your business finances remotely and securely on cloud-based servers with software designed specifically for this purpose.
Not only does it reduce the need for manual recordkeeping activities, but it also helps streamline processes such as invoices, payments, taxes, payrolls - basically any financial aspect of your company that needs to be tracked! In this blog post, we will take an in-depth look at what makes cloud accounting so popular amongst businesses today and explore how this type of system can help you reach new heights in profitability.
Let's get started!
What Is Cloud Accounting?
Historically, accounting tasks were completed with the help of software that was stored digitally on the hard disc of a desktop computer. On the other side, cloud accounting refers to the practice of performing bookkeeping tasks by utilising software that is run from a remote location and stored in the cloud (also known as online).
Cloud computing, in its most basic form, refers to the practice of storing applications and information on remote servers that are accessible over the internet rather than on the hard disc of a local computer.
The internet is being used here as a metaphor for the cloud. It harkens back to the days when flowcharts and slideshows would depict the enormous server farm infrastructure of the internet as nothing more than a puffy, white cumulus cloud that would take links and spread data as it floated through the air.
Over the course of the past few years, the cloud has caused disruption and transformation in a variety of industries, making it possible for companies to function more effectively, reduce expenses, and magnify their outcomes.
Choosing The Best Services In Cloud-Based Accounting
Accounting in the cloud is very useful for companies because it enables real-time recording and documenting in a structured style, as well as fast access to data that has been recently updated for the purposes of analysis and evaluation.
It eliminates the need for user intervention by providing automation in the process of information entry and bookkeeping, which ultimately results in faster and more accurate record keeping. We are a professional accounting company that offers our clients with professional services via cloud accounting. In addition, we provide our clients with the following advantages:
- Backup of records: All of the records are uploaded and stored on the cloud, where they are readily available for use at any time.
- The fact that only authorised individuals are able to access the information contributes significantly to an increased level of security and secrecy.
- Accounting in the cloud doesn't really necessitate a significant amount of IT infrastructure creation and maintenance, which results in cost savings for information technology.
- Cloud accounting makes it easy to collaborate by providing data to a large number of stakeholders and providing them with easy accessibility to that data.
Cloud Accounting Benefits
The use of a cloud-based accounting system comes with a number of advantages; the following are some of the most important ones:
1. Security
A cloud accounting system offers users a safe and reliable method of storing and managing their financial data. Cloud-based software, as opposed to desktop software, which would be installed on a single gadget, is housed on a separate server at another location. As a result, it is less probable that information may be discarded or damaged as a result of an error in the hardware.
In addition, cloud accounting software is often equipped with heightened levels of protection, including functions such as strong passwords and encryption keys, which assist in the safeguarding of crucial data.
Many cloud accounting companies offer consumers the option to limit who can access or update their information via the use of access control capabilities. As a direct consequence of this, cloud-based accounting software offers a high level of protection for companies and the financial information they save.
2. Get Access to Your Accounts Anytime, Anywhere
Accessibility from any location and at any time, thanks to the internet, is one of the most valuable aspects of cloud-based accounting software. It is advantageous currently, especially considering the growing number of workers and company owners conducting their operations in remote areas.
The finest accounting software for smaller companies should come with a smartphone application that can be downloaded for free on iOS and Android devices. The following are examples of functions that could be incorporated into apps:
- Financial dealings and establishing connections to bank feeds
- Disclosing of monetary and fiscal facts
- Tracking of mileage travelled
- Monitoring of expenditures
- A snapshot of the money coming in and going out.
- Create invoices on the fly and send them off to the client through email.
Certain phone applications offer the same functionality as cloud-based accounting software, which means they are able to do all of the necessary functions.
3. Data Available In Real Time
A key benefit is that multiple workers can work on the accounts at the same time and upgrade them in real-time. This is a significant benefit. It is useful for companies that have various sites or have personnel that frequently travel.
Additionally, maintaining financial data up to date offers financial management with current financial data that can be utilised in the production of reports. The ability to save both time and cash as a result of this is a significant advantage. When using cloud accounting software, it is possible to generate reports considerably more quickly and with much less effort.
4. Financial Data Stream
Cloud-based accounting software has the advantage of being able to link to your online banking account and instantly import operations. This is one of the many advantages of utilising such software. However, if you have more than one bank account, you will need to establish a feed for each of those accounts.
Because of this, you won't have to manually enter the details of your operations into the relevant software, which might help you save time. Instead, the transactions will be sorted into various categories by the programme so that you can keep track of where your cash is going.
5. The Processing of Payments
There are a variety of cloud accounting systems that have the capability to establish payment processing on sales invoices that have been sent to clients. Because of this, it's possible that invoices may get paid more quickly, providing a straightforward payment solution. PayPal, Stripe, and GoCardless are examples of a few of the potential solutions.
6. The Exchange of Data
The majority of service providers permit multiple users. The package that you commit to will be determined by the maximum number of users that you are allowed to connect.
The majority of cloud-based accounting services provide you with the option to contact a bookkeeper, accountant, or both. It is helpful at the end of the fiscal year and during the process of creating corporate accounts. You could still keep on with the task as they are implementing any revisions for the prior year.
7. Low Initial Investment Required
Although the majority of service providers offer a paid online membership on a monthly basis, some of these memberships are free of charge, while others begin with a little fee per month. In addition, the membership will be instantly renewed on a monthly or annual basis, whichever you choose.
The majority of them provide a free trial so that you may determine whether or not it is appropriate for your needs.
The charges will be determined according to the characteristics of the company, which may include bank feeds, stock management, reporting, payroll, and monitoring sales invoices.
8. You May Cancel At Any Moment
Cancelling your subscription is always an option with the vast majority of cloud-based business applications.
There could be a variety of causes for the termination, such as the need to update the software or the fact that the company has discontinued operations.
You may continue to have access to the information even after the membership has been terminated, although the data may then be deleted from the system. When you discontinue a membership, check to see that all of the necessary reports have been downloaded first.
9. Updates for Accounting Software Hosted in the Cloud
You may rest assured that the programme will always be running the most recent version, which is one of the primary benefits.
The vast majority of suppliers of commercial cloud services regularly modify their software, either to bring improvement or to conform to new regulations, such as those pertaining to the digitisation of taxes. Therefore, when users log in, you will be able to verify that they are using the most recent version of the software.
10. Online Assistance
Different cloud-based services offer a variety of modes of online help. For example, many will provide communication by email or the telephone, whereas others will provide online chat as an option.
Some of the most recent service providers also offer online accounting assistance. It is ideally suited for use by a small company that is looking for assistance with both its accounting and its technology.
11. Spend Less On Accounting Or Bookkeeping Services
You might be able to save money on the services of a bookkeeper or an accountant if you maintain the financial information current and accurate.
When you finish your account, you'll have a better understanding of the numbers, and you'll be able to stay on top of the cash flow and financial reports.
12. Maintain a Record of Your Customers
The majority of services give you the ability to send invoices to clients from whatever gadget, making it possible for clients to receive bills more quickly and, presumably, pay them more quickly.
They will also keep a record of the amounts owed by consumers and, if so configured, will automatically send out notifications.
13. Examine the Bills
Do you intend to cut down on paperwork? The majority of accounting software programmes include the capability to email jpegs, pdfs, and other types of receipts straight to the account.
There are also add-ons that allow you to scan or photograph the receipt; the programme will then take the data from the receipt and offer it as accounting information.
14. Keep the Software Up to Date as the Business Expands
One benefit of using accounting software that is hosted in the cloud is the ability to update to a more advanced version of the product as the needs of the company evolve.
When searching for accounting software, it is important to review the pricing structure and investigate any functions that may be necessary. For example, it could include inventory management, payroll for newly hired employees, tracking of projects, or support for many users.
15. The Software Manuals
The majority of cloud accounting solutions for small businesses feature online tutorials, support forums, and tutorial videos.
If you're searching for something specific, they will typically contain a question mark that you might tap to obtain additional details about the subject. On some of the pages, you'll also find links to various guides.
16. Simple Integration With A Variety Of Other Solutions
Forty distinct options are available for small companies that can be integrated into Zoho Books' accounting software.
Numerous partners have contributed to the development of Xero by producing extra services and applications.
17. Classify Users
Suppose you do not want other staff members to be able to view the accounts. In that case, you can make the principal user an administrator and assign the other users to various functions.
One possible example is configuring only the sales ledger so that they can create sales invoices.
18. Accidental Burning or a Natural Catastrophe
As long as you have access to the internet, you will be able to continue using the accounting software and accessing the data even if a fire or other natural catastrophe destroys the company.
Cloud Accounting Drawbacks
1. It's Possible That the Monthly Fee Will Become Pricey
If you have to add extra services or invite new members, the cost of the subscription fee can quickly escalate, despite the fact that it may start off rather inexpensively.
2. The Danger of Sharing Data With the Incorrect Individuals
If you need to set up the user controls, and you run a small business and invite a large number of people to log in, you run the risk of sharing incorrect data with other individuals.
It is always to your advantage to place restrictions on access wherever possible.
3. Intent on Keeping Records Within the Home
A more major firm may contain a team of developers and their respective servers. This enables them to maintain complete confidentiality of their data within the organisation.
Desktop accounting software is a viable alternative for some companies, including those that are quite small, which choose not to keep their financial information in the cloud.
4. Access to a Reliable Form of the Internet is Needed
The slow internet access experienced by certain users is a common issue. If you have a slow Internet connection, filling out the accounts could take you a very long time.
In this scenario, it would be beneficial to investigate some of the more conventional choices available for the desktop versions.
Why Going For Paperless Accounting Makes Sense
1. Faster inquiry response time
Cloud accounting systems can retrieve data from databases in a matter of seconds. As a consequence of this, they have the potential to substantially cut down the amount of time this could take for your account department to reply to enquiries made by third parties such as contractors, distributors, or other external entities.
Previously, you were required to search for material relevant to an enquiry manually. However, this process may now be completely automated.
2. Real-time collaboration
Going paperless and utilising technology that is hosted in the cloud makes it much simpler to collaborate with coworkers from other departments as well as those within your own organisation.
It is best if your firm's certified public accountants and accountants work together to satisfy the financial needs of both your business and your customers. Accounting software for businesses that are hosted in the cloud makes real-time collaboration easier, which means that your teams will have fewer barriers to overcome when analysing figures, discussing strategy, and making adjustments together.
3. Reduced time spent handling documentation
When using a traditional method of accounting, often known as accounting based on paper, each and every record has to be handled in a specific way. In the event that a staff member submits an application to make a purchase, for instance, the document containing the request will need to be received and manually evaluated. Then, finally, the data will need to be stashed.
Subsequently, your financial department will need to submit a purchase order, receive goods, send invoices, gain entry into books, and so on. Cloud accounting makes it possible to eliminate the need for paper during this process completely. Every one of these laborious steps may be accomplished with just a few clicks on the mouse.
4. Instant document access
Your accounting personnel will be able to quickly locate any data they require with the help of paperless accounting, which will save time and reduce errors. However, the requirement to stand up, find the relevant files, and then look through the contents of those folders can be extremely laborious and ineffective.
By transitioning to a paperless system, you may make it simple for all of your workers to acquire papers in a more timely manner and proceed with activities that require the documentation with a minimum of obstructions.
5. Faster invoice processing
The processing of invoices is a time-consuming operation that is almost certainly something that your finance team is required to carry out on a reasonably consistent basis. Additionally, it has traditionally been a task that relied substantially on the use of paper and/or manual labour. Thankfully, one of the key components of a paperless accounting system is the capability to process invoices.
E-invoices or processing and scanning have taken the place of manual data entry thanks to these systems. As a result, before you even begin, all of the data is already entered into your accounting system, which cuts down on the amount of time you need to spend and dramatically reduces the number of mistakes.
6. Reduced supply and storage costs
The use of paper in any system necessitates the existence of supply and storage facilities. Any such business, like filing cabinets, manila folders, warehouses, etc., requires you to dedicate at least some portion of your funds for upkeep. The costs associated with setting up and maintaining such a service might be significant.
The transition to a paperless accounting system necessitates the adoption of an entirely new storage method. A paperless accounting system eliminates the requirement for the physical resources and space required to maintain records, and it replaces those needs with more cost-effective and digital methods of keeping.
Conclusion
Modern accounting software that is hosted on the cloud can help enhance productivity by reducing the number of human errors, labour-intensive and repetitive processes, unneeded expenditures, and scraps of paper used. In addition, by using cloud accounting, you can reach previously unattainable heights in terms of financial management.
As your company expands, it will become an exceedingly effective strategy. It helps to handle financial records more effectively, provides a clear perspective of reports to aid in improved decision-making, and enhances resource usage and efficiency to guarantee prosperity.
Many companies are moving their accounting operations to the cloud to gain strategic benefits through increased productivity and accuracy.
Cloud accounting is a similar concept where you manage all of your accounting tasks but that software is run through remote servers. Xero and Quickbooks Online (QBO) are the most notable examples in the world of cloud accounting.
Cloud accounting is a good option for businesses because this equates to real-time access to information, which is crucial for making informed decisions. Getting your books into the cloud also means that you can integrate your software into your other business tools.