What Is Cloud Accounting – All You Need to Know
Cloud computing is a great euphemism for centralization of computer services under one server.
- Evgeny Morozov
Accounting, also popularly known as bookkeeping, is a time-consuming task in every industry, but it is also very useful for financial control and proper budget management. The emergence of technological innovations has highly transformed the everyday activities of accounting.
The evolution of cloud computing technology has revolutionized the way organizations function and handle their businesses. Adapting cloud computing in accounting for reaping the overall benefits of accounting is something many are currently choosing.
What is cloud computing in accounting?
Recording the income and expenditure to track the performance of the finances is very essential for any business. Cloud computing in accounting possesses the same functionality as desktop accounting, but the overall accounting activities of a business take place via the internet and get safely stored on the cloud server. It consists of all the procedures such as gathering, storing, accessing, and processing all documents such as - invoices, purchase orders, and account statements in the form of electronic documents. Cloud accounting is applied through several cloud accounting software and is a paradigm transaction in the area of accounting. The cloud platforms will also have an open API, which is the third-party software that can connect with the system to give a better value to the business owner.
Difference between cloud accounting and traditional accounting
There are a few essential differences that distinguish cloud accounting and traditional accounting, though they are intended to serve the same purpose they function in a variety manner such as the types of security protections they possess in changing the role accounting, the costs they incur, and the level of collaboration between coworkers and stakeholders they provide. A few of the vital differences between cloud accounting and traditional accounting are:
Benefits of cloud computing in accounting
Shifting the process of accounting from the desktop to cloud computing has been a great leap in financial management, with several limitations and cost effects of traditional accounting. Let’s have a look at the benefits of cloud computing in accounting and the essential areas it adds tangible and real value.
- Access the accounts anywhere, anytime
The main and most important benefit of cloud computing in accounting is - one can access their financial records from anywhere on the globe and at any time. Cloud accounting offers the best access to the essential business numbers 24/7, from any location where a person can have internet access, eliminating the requirement to work from one central office-based computer. A person can able to work remotely. Permission-related sharing supported with remote access gives access to share documents with anyone. Log in via a web browser from the laptop, or use the provider’s mobile application to access the accounts even from the phone or tablet.
- Accessibility to the real-time information
The use of cloud accounting is real-time data processing and analysis. By keeping the bookkeeping and bank reconciliation updated from time to time, one can get real-time reporting. Looking for historical reports, which are days, weeks, or even months out of date, is a time-consuming process. Cloud allows real-time overview and easy accessibility. This gives quick and detailed information about an organization’s current financial position. These real-time insights are essential when seeking a cash position, planning future expenses and when taking critical financial and strategic decisions as a management team.
- Data sharing with high-level security and safety
There are too many threats and risks involved in storing and processing the information while taking help from traditional accounting software. But with cloud accounting, one can get the security of the cloud, no downtime, multi-level access, and the latest software versions. As the data is stored in cloud servers they don’t demand the protection of hardware. With cloud accounting software, one can easily give access permissions to the accounts while working with the accountant, bank, or other advisers. The requirement for USB memory sticks or sending emails back and forth is not needed. The financial advisers have real-time, secure, and safe access to all of the financial information. This is quicker, safer, and offers the advisers the data they require to help and advise in the future.
- Working with the latest version of the software
The cloud accounting platform will always have the most recent and updated version of the program. There is no requirement for time-consuming and costly upgrades. An individual just needs to sign in to the accounting platform and start working. There is no need for applying security updates because the software provider will take care of it automatically.
- Very-efficient and highly-scalable
As the business grows, the transactions and the financial statements also get piled up. One is required to step up their game in accounting. With cloud accounting, they do not have to worry about memory constraints as they can scale or customize their accounting software based on the business demands. They can use third-party apps for forecasting, invoicing, and industry-based apps with cloud accounting software.
If one still has the question “what is cloud computing in accounting?” then it is understandable that it saves a lot of time and also money. It fastens up the processes and offers convenient data collection options. One can also take help from automation to reduce the workload. Cloud accounting also enhances productivity and ensures cost efficiency.
Industries that are reaping the benefits of cloud computing in accounting
The industries which reap several benefits of cloud computing in accounting are often those that have too many complex financial situations and those on the cutting edge of technology as well as an ongoing business. Cloud accounting gives firms better operating in these fields to handle their finances with huge ease, accuracy, and efficiency. A few of the industries that are getting highly benefitted are:
- Financial services and FinTech
- Renewable energy and new technologies
- Media and publishing
Cloud computing software in accounting
With many industries choosing cloud computing in accounting, it will surely revolutionize the way accounting works. With cloud accounting, they can gain instant insights into the accounts instead of the bulk of records. This will be useful to gain information and make the right decisions. By applying cloud accounting, businesses don’t require to spend more time on administrative work, which includes data entry, seeking documents, etc. One can spend more time and work on strategizing, decision making, revenue generation works, and growing the business. Cloud accounting is the next-gen for all businesses and the quicker they adopt it, the better for their business growth. Let’s have a look at the most popular cloud accounting software options that are used:
Cloud accounting software options
The cloud accounting market is growing tremendously with a vast scope of various cloud service providers to choose from. The cloud accounting software that’s the right one must perfectly fit all the business goals as well as the accounting demands and the app ecosystem. A few of the cloud providers to choose from are:
Xero – A perfect choice for small businesses that needs simple accounting alongside detailed reporting as the business expands. Xero also has a huge worldwide app ecosystem.
QuickBooks Online – A platform that’s the main goal is to offer better cloud accounting for small businesses, with all the accounting programs and functionality of QuickBooks classic desktop version, plus an appealing app store.
Zoho Books – It gives many other business software of its own to connect Zoho Books with. It consists of a few connections to third-party software too.
Sage Business Cloud Accounting – Large-scale businesses will mostly use the scalable accounting of Sage’s cloud platform, with all the business functionality of their desktop version. Third-party apps are available, but extra Sage modules will add to the costs and budget.
If one is thinking, what is cloud computing in accounting? Then it is the hot cake for the growing industries globally, whose main goal is to handle the business finances in a convenient, efficient, safe, and secure environment. Cloud accounting is going to contribute majorly to both small and large-scale businesses as the world continues to go digital.