Cloud has truly helped a lot of entrepreneurs run their businesses with more convenience. Many businesses, small or large, are now shifting to Cloud because it allows them to store, access, and retrieve their data anytime and anywhere. But what exactly is this thing called Cloud?
Cloud is basically the internet and all the things you can access remotely from it. Data stored in the Cloud means it is stored on internet servers instead of your own computer hard drive.
What is Cloud Accounting?
Cloud accounting is the practice of using an accounting system through the internet. This means your records of income, expenses, assets, liabilities and all other things in your books are stored online. Now, you don’t have to worry about random people accessing data from your business because this information is encrypted. This means that only you and people whom you give access to can view the data.
In cloud accounting, you use an online software solution that comes with tools that can help you in the accounting process. You can access this through your web browser or through an app from your mobile phone. When you process data thru the software, it is immediately stored.
Many businesses have been using cloud accounting since the early 2000s.
What are the Advantages of Cloud Accounting?
Keeping your books online has several advantages.
1. Real-time data access
With your data processed and stored online, you can access it anytime and anywhere. You can check it from the office or at home. Even when you are in another city or country, you can monitor your financial transactions.
Cloud accounting also gives you the flexibility of running your business and looking at the larger financial picture in real time data wherever you are.
2. Automated Data Entry
There are tools in the accounting software that links the data from your sales and purchases straight from your bank to your books. This will save you time from transcribing transactions one by one.
You can also set up a dashboard that shows important financial information like who needs to pay you and the due dates of your payables.
With cloud accounting’s multi-user access, your team and advisors get real time visibility and reporting, allowing you and your team to easily collaborate. You don’t need to repeatedly email files to multiple people and resend the same files whenever it is updated. All you have to do is send your collaborators the link, and they’ll consistently be updated. You can also control the level of access your collaborators have to your data.
4. Secured Data and Back-up
When you use a hard drive to store your financial files, there is a risk of data loss because of machine damage and corruption from bugs and viruses. If your data is stored in Cloud, you won’t need to worry about the state of your hard drive.
Cloud is one of the most secure ways of storing information. The servers are secured and no one can access your data without your permission. All your data are also automatically backed up.
With cloud software, you don’t have to think about updating to the latest versions. Software updates are developed and delivered fast, so you instantly get them.
What is the difference between Cloud accounting and the traditional accounting software?
Although they have the same primary function, there are several distinctions between cloud accounting and traditional accounting.
1. Accessibility and Flexibility
As mentioned, in Cloud accounting, you can access real time data anytime and anywhere. This is a convenience that you would not have if you are using traditional accounting software, you would need to go to your office and access your computer to view the files; or keep your files in an external hard drive or a USB that you bring with you anywhere. Having online access is more convenient either way.
2. Software Maintenance
Cloud accounting software requires less maintenance compared to traditional software. Updates usually occur naturally, and you won’t need to download and install anything into your computer for this. Your cloud provider is also the one who does data backups.
In the traditional accounting software, you may need to purchase additional computers, licences, and databases as your business grows. This may cost a lot. With cloud solutions, you don’t need to spend much to expand your storage and processing capacity.
3. Risk of Errors
Although equipped with tools to automatically process data, you would still need to manually type in data if you’re using the traditional accounting software. Manual data entry is time consuming and comes with a higher risk of errors. Cloud accounting software offers an automated data entry process. Not only does automation reduce risks of errors, it also increases productivity and reduces costs.
Frequently Asked Questions
Is my financial data secure in Cloud?
Cloud servers are secured. Your account is also encrypted, so your information can’t be stolen or damaged. Losing accounting information because of natural disasters like earthquakes and typhoons are also very unlikely when you store information in Cloud.
Will Cloud accounting help my business save money?
Shifting to Cloud can give you cost saving potential through eliminating manual tasks thru automation, lesser electricity use, less staff and saving on the upfront cost and fees of hardware and software licenses and maintenance. Outsourcing your accounting services is also relatively cheaper than hiring an in-house bookkeeper and accountant, especially for small businesses.
How much does Cloud accounting cost?
Outsourced cloud accounting can range from 120+ to 340+ Australian dollars. However, you and your business have unique needs and there is no one size fits all solution when it comes to accounting. The cost of the service will most likely vary depending on the services you want.
If you want to learn more about how Cloud accounting can help you grow your business, contact ACT Bookkeeping Group and book a free consultation. Our team of experts can help you with XERO and customize services according to the needs of your business.