The term cloud accounting has been around for a few years and yet a lot of people don’t fully understand it. It refers to software that is operated entirely via the internet, using a web browser.
Let’s think about that. Traditionally accounting software was installed onto a single computer or server limiting the work done on that software to be done by people having access to that computer. Cloud accounting software is hosted on ultra-secure, inernet-connected servers allowing you to access the software anywhere and from any device with internet access.
So above is the first big distinction and the one that most people know. But the advantages of cloud accounting are far greater than just this. Below are some of the advantages and therefore reasons SMEs should be looking to move their business onto the cloud:
Access your accounts from anywhere, on any device.
The best-known distinction between traditional accountancy software and cloud accounting software is still very relevant. All you need is your device and internet connection to access you records and reports. What a business owner does want, or at least should want, is access to their latest up to date figures. Imagine the ease of access during the Covid 19 crisis for business owners who are operating their accounts on the cloud. Cloud accounting is especially useful for businesses that don’t use Windows PCs for their day to day work, like designers, scientists, audio engineers and coders. Cloud accounts work perfectly on a Mac, Linux or Windows based system.
Access to real time information
With your data in the cloud you always get a complete view of your current situation. This allows you to make better informed decisions as the figures you are using are relevant and not older reports printed from a stand-alone software.
Bank Feeds and automated posting
The ability for your accounting software to be able to connect directly to your bank and pull in new transactions each day speeds up the whole process but also helps with the reconciliations. You can also set up rules so that repeated transactions will be automatically posted.
Cloud applications use encrypted connections when transferring data. This means that data is encrypted at source before it’s sent from your device to the remote server and then again when it returns. Therefore, there is an obvious advantage to keeping vital and sensitive information in the cloud and therefore removing the possibility of lost, stolen or damaged hardware.
Access for multiple users
Multiple users have the ability to access your accounting software at the same time from multiple locations. Therefore, you can have a conversation with your accountant on the phone with both of you looking at the same up to date information.
Always work with the latest software version
With cloud accounting you are always using the latest software and therefore getting the benefits of what the latest technology has to offer. There is no extra cost or time-consuming downloads, ensuring that you, and all relevant users, are on the same version.
Access to the app Ecosystem
This is one of the truly great advantages of cloud accounting. Third party apps which tie in with your cloud accounting software help to expand your core business systems. The number of apps available will depend on your software provider but Xero, which is my preferred system, has over 500 + apps which connect to Xero. These range from online invoicing apps, cash flow apps and apps specific to certain industries e.g Trade and Construction, Retail and Commerce, Professional Services, etc.
With the use of some invoice apps as mentioned above, e.g. Hubdoc, you can capture all your invoices, receipts, etc. on the app and then import these into the accounting system. This does away with the need of printing such invoices and filing them away. They are all held in the cloud only a click away.
Intuitive and easy to use
Cloud accounting makes the accounting process easy for people you may not have much experience of financial accounts. The software is built with non-accountants in mind with help guides available every step of the way.
Whether you are a small business just starting out, or a large firm with many employees, cloud accounting gives you the opportunity to increase or reduce its performance, resources and functionalities according to your needs.
We at O’Dwyer Power have partnered up with Xero and QuickBooks, the cloud accounting systems, when we went looking to convert our practice to the cloud. Their easy to use functionality, automation processes and app connectivity are perfect for SMEs looking to get the most out of their system.