Several businesses are moving their accounting to the cloud, and for a good reason. Accounting statistics for small businesses show that 87% of companies report remarkable improvement since switching to the cloud.
As a bookkeeper or savvy accountant looking to serve your clients better and improve efficiency, the chances are you know the many benefits of cloud accounting.
Nevertheless, when you want to bring your customers on board with cloud-based accounting software, that’s where the problem comes in.
You’re bombarded with questions such as, are their data secure? Isn’t the cost of cloud accounting software high? These and many more questions need answering to convince them that changing to cloud accounting is a worthwhile endeavor.
Read to learn about cloud accounting benefits, uses, security, and more!
What Is Cloud Accounting?
Cloud accounting, also called online accounting, works a lot like desktop accounting, only it hosts the entire process remotely on the cloud.
Cloud accounting requires no desktop application; all you have to do is log in to an online platform. All the data is stored in the cloud.
Most cloud platforms feature an open API (application programming interface). That means that you can connect your system with third-party software, a feature that is helpful to business owners.
Benefits of Cloud Accounting
Below are some benefits of cloud accounting:
Access Your Accounts Anywhere
It doesn’t matter where you are or what time it is. With cloud-based accounting, you can access critical business figures anytime as long as you have access to the internet.
You can use your laptop to log in through a web browser. You can also use a mobile phone or tablet to access your account via a mobile phone app.
Access to Real-Time Information
Cloud accounting allows you a real-time overview of your business’s financial position. Past reports that are maybe weeks or months old should be a thing of the past.
With a real-time overview, you can assess your current cash status and plan for future expenditures. Additionally, such information is vital for making strategic and financial decisions with your team of management.
Access to the App Ecosystem
Open APIs allow you to add several third-party apps to your system, expanding the entire business system.
Some of the vital apps you can connect to your cloud accounting system include online invoicing apps, cash-flow predicting apps, project management tools, etc.
With these tools, you can save on time and costs and identify problems before they can hit your business. In addition, you make a saving because you don’t need admin staff with these apps.
Live Bank Feeds
You can make it easy to follow your bank data by linking your banking directly with the cloud accounting system. That way, you can now receive live feeds to the accounts, speeding up bank reconciliation.
In addition, it keeps you updated all through about your bank account status.
Always Working with the Latest Software Version
The cloud always auto-updates its software versions to the latest. That means you no longer have to waste any time or money installing updates. Instead, any time you log in to your account, you’ll find an up-to-date version, and all you need to do is get down to work.
Another thing is if any security fixes are required, your software provider will handle them for you at no cost.
Secure Sharing of Data
Working with your advisers, accountants, or bank is straightforward with cloud accounting.
You can grant them access to your accounts through cloud accounting software. That way, they can access real-time financial information and safely and quickly advise you accordingly.
Connected Online Payment
You can connect payment apps such as PayPal to your cloud accounting system. That means your clients can now make automatic payments, which promotes timely payments.
What’s the Difference Between Cloud and Traditional Accounting Software?
There are a few clear distinctions between traditional accounting software and cloud accounting. These include:
- Cloud accounting is more flexible than traditional onsite accounting. As long as you have an internet connection, you can access your account from any device. On the other hand, traditional accounting requires that you’re at your premises because you have to use your office computer.
- While cloud accounting software automatically updates your financial information, ensuring real-time reporting, traditional accounting doesn’t. Real-time data helps minimize banking errors.
- Cloud accounting automatically updates its software, and even if your business expands, you’ll suffer no high spikes in costs. On the other hand, onsite accounting gets quite costly when your business grows. You’ll need to pay higher maintenance costs, higher license fees, and purchase new expensive hardware like servers.
- Cloud accounting requires less maintenance than its on-premises counterpart. Your software provider will back up and update your system automatically without requiring you to download and install anything.
When Should You Use Cloud Accounting?
Some of the key business areas where you can use cloud accounting include:
To Reduce Workloads
With cloud accounting, you require a smaller or no team of admins. The system automatically does bookkeeping, collects cash, and offers automatic bank reconciliation. This automation means a reduction in your workloads.
Get More Insight From Your Financial Data
Real-time financial intelligence and reporting make it easy for you and your team of advisors and management to make decisions.
You have instant access to all the numbers, critical data, and insights you need to make the right and informed decisions.
Paying VAT or GST Online
You can pay your taxes online using cloud accounting software. Once the transaction is complete, you can send the details digitally to the revenue authorities.
Getting MTD Compliant
A cloud accounting platform ensures you’re Making Tax Digital (MTD) compliant, meaning you’re digitally prepared. In fact, you can send your returns in iXBRL format as per the government requirements.
Working Remotely
Cloud accounting is vital where a company operates remotely because your accounting and management team can access all the key financial information from their homes as long as they have access to the internet.
How Is Cloud Accounting Safe?
Are you worried about the security of your financial information with cloud accounting? Well, you need not to because your data is safe.
Like online banking, cloud accounting software uses encryption to rewrite your information into a secure, unbreakable code. This is what it uses to store and send data.
The security measure that cloud accounting puts in place include:
- Top-level digital security software (has inbound and outbound encryption).
- Automatic updates
- Secure premises
- 24/7 customer service
- Security staff
- Anti-malware and technical support staff
- Off-site automatic backup server
- Multiple in-built user authentication and segregated networks
- Frequent security audits
What’s the Future of Cloud Accounting?
The future of cloud accounting looks bright. Some of the technologies likely to impact the future of cloud accounting positively include:
Machine Learning and AI
Machine learning systems and artificial intelligence are already impacting how businesses handle their accounts via cloud accounting software.
With the help of machine learning systems, upcoming firms can track the income and expenses of the whole industry. With recorded data from your company and others in the industry, you can make future projections. This is especially helpful for small businesses trying to expand or firms planning to compete overseas.
If you have the proper accounting AI, you can be sure it will scan through hundreds or even thousands of documents using its human-like intelligence in language processing. Ultimately, it will produce terms, such as “unsustainable” and “debt” to help it predict the financial status of your firm.
AI can also help predict clients, markets, or customers that are risky or problematic. In addition, it can foresee any potential problems your business is likely to face in specific geographical locations.
Continued Integration
Cloud accounting allows you to connect valuable software and apps to your system. There’s more work in progress to make this virtual integration of the cloud accounting software with apps of different capabilities even better and much more seamless.
Another progress being made in terms of virtual integration is app layering. This works a lot like package deals that vertical markets are currently providing. However, it comes with a better approach to customize cloud accounting solutions to precisely fit their businesses.
The layered approach, where one can combine various apps performing different tasks or layer them together into a single app, is an excellent development that will be a crucial component of cloud-based platforms in the future.
Take Away
We get that change is sometimes tricky. However, if you can find an accountant that adopts a cloud accounting approach, it will bring enough benefits to your financial management that it’ll outweigh the costs. However you look at it, it’s worth the jump.