So, what is this thing called Cloud Accounting?
Cloud accounting is accounting software that is hosted on remote servers. Data is sent into “the cloud,” where it is processed and returned to the user. It is like traditional, on-premises, or self-accounting software, only the accounting software is hosted on remote servers.
If you think about when you use internet banking. Every time you access this data, you’re using the cloud. The cloud is a platform to make data and software accessible online anytime, anywhere, from any device.
Using cloud accounting software frees the business from having to install and maintain software on individual desktop computers. It also allows employees in other departments, remote or branch offices to access the same data and the same version of the software.
What’s the difference between Cloud accounting and traditional accounting software?
The problems with traditional accounting software can be:
- The data in the system isn’t up to date and neither is the software.
- It only works on one computer.
- Only one person has user access. Key people can’t access financial and customer details.
- It’s costly and complicated to keep backups (if done at all).
- It’s expensive, difficult and time consuming to upgrade the software.
- Customer support is expensive and slow.
There are several distinctions between cloud accounting and traditional accounting; for one, cloud accounting is more flexible. Accounting data can be accessed from anywhere on any device with an Internet connection, rather than on-premise computers.
Unlike traditional accounting software, cloud accounting software updates financial information automatically and provides financial reporting in real-time. This means account balances are always accurate and fewer errors take place due to manual data entry. They are also better able to handle multi-currency and multi-company transactions more efficiently.
On-premise accounting, every time a firm grows, they encounter greater software and maintenance costs as well as new licenses and fees for systems management and other software. With cloud solutions, businesses do not get stuck with permanent, expensive equipment and licenses when your business contracts are up and, likewise, there are no big spikes in costs when it expands a little.
Also, cloud accounting requires far less maintenance. The cloud provider completes the backups, updates occur automatically, and nothing needs to be downloaded or installed on a company computer.
Is my financial data secure with cloud accounting?
Cloud accounting provides an equally secure (and sometimes even more secure) method of storing financial information than traditional accounting software. For instance, a company computer with critical financial information could be lost or stolen, which could lead to an information breach. Cloud accounting leaves no trace of financial data and access to that data in the cloud is encrypted and password protected.
Sharing data is also less worrisome. With cloud accounting, two people simply need access rights to the same system with their unique passwords. Traditional methods often require flash drives to transport data, which could be lost or stolen.
In the event of a natural disaster or fire, being in the cloud means business productivity doesn’t need to be affected because there’s no downtime. If you have access to any computer or mobile device connected to the internet, you’re back up and running.
Will cloud accounting save me money?
Companies that use cloud accounting require less initial server set-up to store data, IT staff are not required to maintain the cloud accounting system. Fewer overhead expenses and no new software purchases mean greater savings for businesses. For the on-premises world it’s the exact opposite.