In an era of DIY (do-it-yourself) the rise of cloud accounting is no surprise. The days of investing in expensive infrastructure and hiring of external consultants to support your accounting systems are over.
Cloud accounting software gives SMEs the opportunity to instead invest in a low-cost technology platform that offers more robust solutions and the ability to stay on top of your financial affairs from anywhere and at any time.
If you’re just starting your search for a new accounting solution, you’ve come to the right place. In this article we’ll cover everything you need to know and discuss why cloud accounting should be embraced sooner rather than later if you’re a small business.
What is cloud accounting exactly?
Cloud accounting falls into the internet category of Software as a Service (SaaS). Instead of purchasing physical copies of the software from a store, you gain access to an online site that serves as your accounting portal.
The accounting software exists online and is accessible by anyone in your company with the proper credentials. Your employees enter accounting information such as sales, bills and company expenses either manually or through automated processes.
All bookkeeping functions and accounting reports are performed in the cloud, then made available for download or print to your staff.
For those unfamiliar with cloud technology, it is not literally a nebulous place where data is stored, but rather scores upon scores of remote servers dedicated to storage and processing.
The “cloud” connotation refers to the fact that the information follows you like a cloud above your head, and is accessible from anywhere on any device given the correct credentials.
Cloud Accounting Benefits
There are three major difference between cloud accounting vs. traditional accounting.
Cost is greatly reduced when using cloud accounting services because your firm is no longer responsible for maintaining hardware or server space. Nor paying for upgrades to the software as is the case in traditional accounting.
In cloud accounting, you pay a monthly or yearly fee that entitles you to a certain set of features and number of users. Software upgrades are made automatically in the back end so you don’t worry about them anymore. New functionality is also automatically rolled out as it becomes available.
Traditionally, in a small business accounting department an accountant or one of the directors is in charge of the accounting system. Sometimes the entire function is outsourced altogether.
That means if any member of staff needs a single piece of accounting information they can only get it by going through that person. The result is a loss of productivity and wasted idle time.
With cloud accounting, every employee who possibly could have need of access to the accounting department can be given a user ID and password to log on from a computer of their choosing.
Information is available from anywhere and at any time. There is also no risk of losing records because the service provider has internal backup processes of their own to make sure your data is always available.
In traditional accounting, your organization buys a number of licenses for the number of users or computers that will need the accounting software.
When your company grows, merges, or buys another firm, it has to go back and acquire more licenses, more bandwidth, and/or more servers to hold the load.
None of these factors are stress points in the cloud. If you need more functionality or want to give additional staff it’s not a problem.
Most cloud accounting systems include a number of users and their roles, and can also be expanded with the click of a button. What would take days or weeks in the world of traditional accounting is now possible in seconds within the cloud.
Cloud Accounting Advantages
One of the best things about any cloud environment is that it gives SMEs a chance to compete with much larger organizations when it comes to technology and professionalism.
Cloud accounting gives SMEs the opportunity to stop pouring money into hardware and software that needs constant, costly expansion. It also liberates access to a company’s accounting system to allow other qualified employees access on their own time.
Cloud accounting can free up valuable man-hours and repurpose staff to other assignments that augment your SME’s efficiency.
Cloud Accounting Security
The cloud’s ability to keep data safe is a big concern for firms who are just starting to explore small business cloud accounting options.
Major data hacks at giant companies like Target, Equifax, and British Airways have exposed the personal and financial records of millions. However if we look closer into each case the cause is often human error.
Companies or staff who are not careful with their credentials are seeing them stolen or used for ill intent. The risk your data becomes compromised as a result of actually sending it to the cloud is minimal.
Every cloud accounting app has powerful data encryption and multiple layers of protection that often matches bank-level data security.
If you’re in the process of exploring cloud solutions for your small business BrooksCity can help. Our team of cloud accountants in London is ready to help you decide if a cloud accounting package is the right thing for your business.
We’ll help you explore your options and answer any questions you may have about cloud accounting. For more information feel free to contact us or request a quote directly here.