In the past few years, the cloud accounting market has exploded in popularity, with a wide variety of options now available. Online accounting software companies like Xero and its competitor Quickbooks currently have millions of subscribers. With the current business climate amidst the ongoing pandemic, many businesses are reviewing their current accounting requirements. A vast majority are making a swift transition and choosing cloud accounting to secure their business accounting processes and reap its many benefits.
Before we discuss why cloud accounting is the future and a serious consideration for businesses of all sizes, it is important to briefly discuss what the term ‘cloud’ means.
Short for cloud computing, the ‘cloud’ is basically a broad global network of servers that are all connected together as a single ecosystem. Cloud computing delivers services like databases, storage, servers, software, networking, intelligence and analytics over the internet to offer flexible resources and the latest innovation.
Cloud accounting is part of this ecosystem. Unlike traditional accounting software that is installed on a business’ server only, cloud accounting is enabled using software accessed over the internet and is hosted remotely on the cloud. This data stored on the cloud can be easily shared with others and can automatically store information from other sources. The key feature is that all functions are performed off-site. All users can access any applications remotely through the internet.
Cloud systems can bring real business benefits. The following are some of the perks that shifting to cloud accounting can bring to a business and its finance team.
Top 5 Benefits of Cloud Accounting
The following are the top benefits of shifting to cloud accounting for any sized business:
1. Easy to Use
For the first time, cloud accounting software is aimed directly at whole businesses rather than accountants or bookkeepers. This makes it easier for business owners to have access to up-to-date information and control their own processing. With a dashboard-style landing page, the whole look is designed to engage those seeking an appealing visual representation of accounts.
Furthermore, the terminology is carefully designed to be less technical. The software is quite intuitive, and this makes the whole user experience much easier than before. This approach has led many businesses to get their accounting system up and running very quickly, and without much assistance from their accountant. Users are able to access it at any time and from anywhere. They can do so using a tablet, laptop, or mobile device with an internet connection.
2. Time-Saving
The biggest advantage of cloud accounting is the huge time savings it brings. Businesses thus become more efficient by freeing up time for other important activities. This may also translate into increased cost saving in terms of lower bookkeeping costs for many businesses.
The two most common and widely used features within all cloud accounting software are:
- Bank Feeds: You can link your business bank accounts to your cloud accounting software. This takes away much of the effort of posting bank transactions. The software will automatically download transactions from your bank (usually overnight) which will then await reconciliation and confirmation required by the user. Making use of simple set-up requirements, your bank reconciliation can take place quickly within minutes rather than hours. Moreover, the software has an in-built artificial intelligence (AI) that learns from the past and makes effective suggestions for possible actions in future, to save time.
- OCR Software: Optical Character Recognition (OCR) software can read your purchase invoices, receipts, and bank statements. The software picks up important information, such as supplier, date, invoice number and amounts. The user has the choice to publish this data directly, either manually or automatically, into the cloud accounting software. This cuts down on processing time and ensures all transactions are virtually error-free.
3. Effective Reporting
Up-to-the-minute processing ensures effective reporting. This makes it easier for businesses to make decisions with live date in their hands. In-built reporting is a common feature of all accounting software, but there are also other add-on products like FUTRLI, that can further enhance the reporting.
4. Low Cost
A move towards ‘software as a service’ (SaaS) model offers huge cost savings and enables businesses to keep up with their accounting requirements as they grow. For many businesses, gone are the days of heavy investment in accounting software. With pricing models, businesses can pay as little as €20 per month for software that is hosted externally, is secure and constantly updated.
5. Quick and Easy Technical Support
With cloud software, multiple users can be added at no extra cost, including an external accountant. This means that technical support can be provided quickly. There is no longer any need for emailing of backups and waiting around for them to be returned. Moreover, this also leads to further opportunities for your accountant to provide additional services, such as assistance with technical matters such as dividend and tax planning, VAT and so on.
Rather than having to wait until the draft accounts have been prepared, now all of this can be provided using live data. This avoids the risk of any missed opportunities.
Conclusion
All the above benefits discussed above prove that cloud accounting is the future of accounting. Both small and medium-sized businesses can benefit from a wide range of cloud accounting software available. The most popular currently in the market are Xero, QuickBooks Online and Sage Business Cloud Accounting. You can research each one thoroughly and go for one that suits your budget and business needs.
