Just a few years ago, online (aka cloud) financial software started coming on the market, vying for the adoption by small businesses around the globe.
Now these applications are very common and considered “the norm” for many small businesses, especially when it comes to cloud bookkeeping software. But how is accounting in the cloud better than using normal accounting software you would use on your desktop? Forbes Magazine described it this way,
“The benefits are many: access from anywhere, integration with other popular third party cloud applications and banking software, better backup, quicker bug fixes, immediate access to upgrades. And, let’s face it: better security.”
So, is doing accounting in the cloud really better for you and your business? Let’s dig in and find out.
Time & Flexibility
Cloud bookkeeping software eliminate a lot of the tedious tasks that suck up your time.
IT tasks, such as version upgrades and data backups, are managed by the application vendor. Using a cloud solution will provide a better overview of your finances, help you make timely and accurate financial decisions, as well as peace of mind knowing that your data is secure and you are running the most up-to-date software.
And with multi-user access, collaboration with your team can be anywhere, any time, making it easier and more effective for everyone involved. This leaves you with extra time to focus on what is truly important, adding value to your business.
Having a better overview of your finances is done several ways with cloud accounting applications.
- First, real-time financial information is always a good thing. Just imagine what you could do with up-to-date financials, billing and invoicing.
- Second, one application typically can’t do it all. Payroll, purchasing, billing, etc. can be integrated with other applications. Thus, moving towards only one application isn’t required and allows a variety of platforms to meet your specific needs. Look at Xero as an example, a leading cloud accounting provider, and see their wide variety of compatible applications.
- Third: Let’s say you outsource accounting to a CPA firm. You can easily grant your CPA access to the software, and they can access it any time you wish. Say goodbye to having to back up your data, emailing it to your CPA to review and edit, and importing back into your software with their changes.
This is what real-time accounting is all about!
Businesses usually have one main concern when considering online accounting applications: security.
The good news is that many cloud services are just as, if not more secure than your offline backup. This is because many cloud platforms maintain a security level equal to that of internet banking.
The somewhat bad news is that you really need to spend some time, and do your homework before choosing a platform for your business. This involves looking for company reviews from existing users, the platforms track records, their level of encryption, service level agreements as well as other security details.
For further security precautions, refer to recovery specialist David Blackman’s article, Q&A: Cloud Computing Security.
Even with all the benefits of accounting in the cloud, there definitely some trade-offs.
- Internet Access: Depending on the quality of your internet access, connectivity may be an issue in certain locations.
- Costs: Cloud accounting applications can run as low as $20 a month while traditional software packages can have a large upfront cost.
- Software Updates: Cloud software will always be up to date, while traditional software needs to be updated manually, usually once a year.
A few adjustments to your current accounting methods may be required, but the benefits are many. Whether it is time and flexibility, convenience, security, or the some of the trade-offs, cloud bookkeeping is sure to make managing your business finances more pleasurable.
Hopefully this post sheds some light, and brings you closer to deciding whether switching to one of the many cloud accounting platforms is a good solution for you and your business.
Have any questions or concerns? Leave them in the comments below.