Everything is done online now; shopping, banking, meeting, classes, sports and accounting and list goes on. With the advancement of businesses online, cloud accounting becomes highly efficient and convenient as a means to manage finances across all business platforms anywhere and anytime.
What is this thing called the cloud?
Think about when you use internet banking. Every time you access your bank data, you’re using the cloud. The cloud makes data and software accessible online anytime, anywhere, from any device. The hard drive on your computer or laptop is no longer the central hub.
What is cloud accounting?
In the case of cloud accounting, you keep your business books online. That includes records of income and expenses, and assets and liabilities. The information is encrypted, much like a bank’s, therefore only people with the login can view the data. Businesses started using cloud accounting software – also known as online accounting software – in the early 2000s. Most systems come with tools for quoting, invoicing, managing bills and more.
This is perfect especially as most of our business transactions are done anywhere in the world. The flexibility of cloud accounting is greatly appreciated during international travels, remote work, outsourcing, and the use of e-commerce.
What is cloud accounting software?
Cloud accounting software is similar to traditional, on-premises, or self-install accounting software, only the accounting software is hosted on remote servers, similar to the SaaS (Software as a Service) business model. Data is sent into “the cloud,” where it is processed and returned to the user. All application functions are performed off-site, not on the user’s desktop. In cloud computing, users access software applications remotely through the Internet or other network via a cloud application service provider. Using cloud accounting software frees the business from having to install and maintain software on individual desktop computers. Cloud accounting solutions also allow employees in other departments, remote or branch offices to access the same data and the same version of the software.
Examples of Cloud-based Accounting Software
What’s the difference between cloud accounting and traditional accounting software? There are several key distinctions between cloud accounting and traditional, on-site 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 a few select on-premises computers. Secondly, 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. Additionally, they are better able to handle multi-currency and multi-company transactions more efficiently.
In the on-premises world, every time a firm grows, they encounter greater software license and maintenance costs as well as new licenses and fees for database, systems management and other software. The firm might also have to make expensive capital purchases of new hardware, such as servers. With cloud solutions, businesses don’t 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. Moreover, cloud accounting requires far less maintenance than its traditional counterpart. The cloud provider completes the backups, updates occur automatically and nothing needs to be downloaded or installed on a company computer.
Benefits of cloud accounting software
Running your business accounts online has many advantages. Data about your sales or income and purchases can flow straight from your bank to your books so you don’t spend hours transcribing them. You can see your current financial position at any time. Multi-user access makes it easy to collaborate online with your team and advisors. It’s online software so there’s nothing to install or update, and all your data is backed up automatically. You can set up a dashboard showing important financial information like who owes you money, what bills are due, and how your cash flow is looking.
Is Cloud-Based Accounting Safe?
You might be wondering how secure your financial data is on a cloud-based system. Cloud-based accounting software uses encryption, rewriting your information into a secured unbreakable code, to send and store your data. This is the same type of security used to make online banking safe.
Cloud-based accounting software offers the following security measures:
HTH & Accounting Associates help organizations and business owners with accounting and/or financial consulting services. For Help with the accounting cycle or Bookkeeping contact us at firstname.lastname@example.org or call us at 909-599-2111
Thank you for Reading,
The author, Katrina Marie Echeverria is an Accounting Intern at Thaddeus Resource Center. She aspires to be a virtual bookkeeper and provide services to clients around the world.