What Is Cloud Accounting? Everything You Need to Know

The Cloud is an informal term for remote computing and its primary function is to store data. Many of us already use the cloud for social media such as Facebook, or for other services including online banking. The Cloud essentially enables data to be accessible from any device, anywhere at any time. It is becoming increasingly more incorporated into our everyday lives and is rapidly replacing the traditional hard drive, this is especially true when it comes to accounting, and there are a number of cloud accounting solutions on the market.

What Is Cloud Accounting?

Cloud accounting essentially runs your office’s accounting and book keeping department. It is delivered as a service rather than a product and includes many of the features and benefits you would expect to get with a service. As the accounting software is hosted on a cloud server managed by the service provider it means that all improvements, updates and patches are all taken care of.

Unlike traditional desktop accounting software, cloud accounting solutions update any financial information automatically, providing your reports in real-time, thus always keeping you up to date. This reduces the amount of errors that can be made by entering this information manually. It is essentially much more efficient than traditional accounting software.

How Cloud Accounting Works

Cloud accounting is like traditional desktop accounting software; however, the main difference is that the software itself is hosted on remote servers. When you enter data into the software, it is sent off into the Cloud, where the data is processed, and is then sent back to you seamlessly.

As cloud accounting software is accessed remotely through the internet, you and your team can access it wherever there is a connection available. Most providers offer multi-device solutions to make your life easier, and allows you to see your accounts in real-time.

What Are the Benefits of Cloud Accounting?

  • It allows employees from other branches or remote locations to access the same data and version of your accounts. Adding multiple users with different access levels is much easier.
  • It provides real time reporting with up to date accurate information.
  • Transparency and visibility are provided throughout your organisation.
  • Data is synced to all devices allowing your team to work anywhere, anytime.
  • The chance of clerical error is significantly reduced.
  • Software updates are included in the subscription.
  • Multi-currency transactions are easily managed.
  • Increases work productivity.
  • Data backups are often managed by the provider – no more taking removable media off-site.

How Safe Is Cloud Accounting?

Security measures vary, depending on which provider you choose. Security is priority to a majority of providers, using both firewalls & data encryption, however we suggest that you consider the risks and research whether the potential provider has adequate protection measures. When choosing a cloud accounting provider, the main concerns are the physical hardware security, multi-tenancy and user access. It is worth asking the following questions when choosing a cloud accounting provider:

  • What are the security measures?
  • Is sensitive data stored on a separate server?
  • How often do they backup their services?
  • What are the encryption measures?
  • Which security certificates does the provider have?
  • Is customer service and technical support included?

When it comes to storing your data, there are always some risks involved, even when using traditional accounting software. Paperless accounting is now considered more secure than traditional accounting methods and is used by major companies such as Barclays Bank. However, cloud accounting does remove the risk of data being lost or stolen through physical means, such as a team member losing a laptop or storage device. Cloud accounting leaves no trace of financial data on a computer, and data access is encrypted and password protected.

Could Cloud Accounting Save Me Money?

Cloud accounting removes the need for excessive IT infrastructure investment that some desktop solutions require. As everything is accessible online, and your data is stored in the Cloud, all you need is an internet connected device. IT staff that are trained in accounting software maintenance are no longer needed, as software updates and security patches are taken care of by the provider.

Most providers charge based on a monthly subscription model. The number of users, features and how much data you store are often factors in the pricing, but different providers offer different pricing models. When you take all of this into consideration, cloud accounting solutions tend to work out much cheaper than traditional desktop accounting.

Which Cloud Accounting Software Do I Choose?

There are a number of cloud accounting software providers on the market to choose from with multiple packages available at different price points, your choice will depend on the individual needs of your business.

Reputable software providers include Xero, QuickBooks and Sage, all of which offer comprehensive and compatible cloud accounting software.

Why Is Cloud Accounting Good for Business?

In short, cloud accounting is the ideal solution for businesses, enabling owners to stay connected with their data and accounts wherever and whenever they choose. It offers you an individually tailored, cost-effective solution to your accountancy and book keeping department. Cloud accounting presents itself in a way that's easy to use and allows you to see your accounts in real-time.

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