Software that enables cloud accounting is now widely used by businesses and accounting firms. But just in case you’re still uncertain about the benefits of switching to cloud-based accounting, we wanted to share the top advantages. The quick breakdown is that cloud-based accounting provides:
- Real time information and timely reporting
- Increased security
- Automatic data back-up
- Cost savings
- Improved efficiency
- Lessening your environmental impact
What Exactly is Cloud Accounting?
We’ve all heard of data being stored “in the cloud” but it may not be immediately clear to you what that really means. In general terms, anything stored in the cloud is stored on multiple servers at different remote locations. A software application is then used to access and edit your data through the Internet or some other network using software. In the case of accounting software, a subscription fee is typically paid by the user to grant access to software and server storage capabilities.
Real Time Information and Timely Reporting
Perhaps the most obvious benefit of cloud accounting is the ability to have up-to-date financial information at your fingertips, anywhere and anytime. Team members can collaborate real-time from multiple locations on the exact same financial information. This is especially useful for small businesses that may not have a dedicated office space or that outsource their accounting and bookkeeping functions. With current financial information always available, the decision-making process is made easier – quick access to a cash flow report will allow you to see right away if the funds are available for that big purchase.
The cloud method of spreading your data across several different geographical locations is more secure than storing it all at one location – the threat of a natural disaster, power outage, or attack on the server is less impactful because if one server happens to be damaged or destroyed, your data is still stored at another location. Major accounting software providers employ 24/7 monitoring of server sites, strict access control, and bank-level encryption in order to keep data secure. Online accounting software is continually updated automatically with the latest security measures which, not only saves the time it takes to keep traditional desktop accounting software updated, it also ensures your data is always protected from the latest threats. Improved security is a benefit that’s especially important for small businesses that often lack the resources for strong security of financial data.
In conjunction with the added security cloud accounting affords, it also provides data recovery options not available with traditional accounting software. Data backup and disaster recovery is often included as part of a cloud accounting software account, as well as redundant servers to back-up main servers in case the main server becomes unavailable. No longer will time need to be spent creating manual back-ups nor will you run the risk of forgetting to create a backup before misfortune strikes.
There are notable cost savings when compared to managing internal servers with similar accessibility. An on-site server is an expensive purchase that must be maintained and kept in a temperature-controlled room, and this upkeep is often quite costly. The server hardware and software will also require upgrades according to the latest technology, but this is done for you when using cloud accounting software. When the need for storage increases at any point, then more hardware must be purchased for an internal server. Whereas, storage on the cloud is scalable to meet your needs and the cost is built into the software subscription fee.
Another great benefit of cloud accounting is all the compatible apps available that integrate with the software to improve functionality and increase efficiency. There are many apps that allow for everyday repetitive tasks to be automated which increases productivity and reduces chances of human error. For example, document collection and management apps such as Hubdoc and Receipt Bank will automatically extract relevant information from any documents uploaded into their system and allow you to post an invoice from a supplier in a matter of seconds.
These types of apps speed up the bookkeeping process which allows business owners or employees to spend more time on innovation, analysis, customer interactions, and creative thinking. There are thousands of different apps that can be connected to cloud accounting software in order to customize it to perfectly suit your needs.
Lessening Your Environmental Impact
Cloud accounting software is a great tool for moving a business towards being fully paperless. Not only is cutting down on paper usage good for the environment, it also provides cost savings. Less money will be spent on buying office supplies such as toner, paper, and file folders. There will no longer be the need to sort, file and store documents in a physical capacity which takes up valuable space. Data is more easily accessed when it is stored using a hosting service such as Dropbox or OneDrive, or even more so when the relevant document is attached to a transaction within your cloud accounting software.
There are many document storage solutions available for digital documents which provide better search ability to find documents, which is much faster than having to rifle through a filing cabinet full of paperwork.
Recommended Cloud Accounting Software
As for the different options when it comes to choosing cloud accounting software, QuickBooks Online, Xero, and Sage Online are among the most popular and would be a good place to start when shopping for a program. These Cloud accounting options are easy to scale and offer different subscription levels to best suit a variety of business’ needs.
So why not board this quickly moving train of cloud accounting and take advantage of all the benefits!!!
About the Author
This blog was a collaborative effort, written by our bookkeeping team! If you have any questions they are happy to help.