Cloud Accounting has been a buzzword in the business world for the past decade - but what does it mean, and why is it so important?
Cloud Accounting, also known as online accounting, is the use of the internet to access, use, and store accounting software and data. Rather than installing accounting software on a computer, Cloud Accounting relies on remote servers to manage and process data. In this blog post, we’ll explore the benefits of Cloud Accounting – plus the odd potential drawback - and why without it, we jeopardise the future of our businesses.
Cloud accounting – more than simply ‘computerised accounts’
There’s more to Cloud Accounting than running your accounting processes from a computer. Known as ‘computerised on-premises accounting’, this was available only on local computers or servers owned and maintained by the company.
Anyone who needed access to the software had to be nearby the computer and have the right software installed on their computer. All information was stored locally, which made it vulnerable to loss or damage.
While on-premises accounting software offered major advantages over traditional manual methods, these systems couldn’t match the flexibility or scalability of cloud software. Often known as Software-as-a-Service (SaaS) systems, the cloud software provider takes care of all maintenance and upgrades. Customers simply pay an annual licensing fee. By using their own on-premises software, the business was responsible for upgrades, which could be an expensive and time-consuming exercise.
Let’s look at the main benefits of Cloud Accounting
- Storing and managing data in the cloud eliminates the need for businesses to store and manage data on their own or to invest in expensive computer hardware. By relying on remote servers, businesses can free up valuable office space and reduce the cost of hardware upgrades.
- Low-cost Cloud Accounting software is generally more cost effective than traditional desktop-based solutions. In some cases, all you need is a mobile device with an internet connection, making Cloud Accounting accessible to small businesses with limited resources.
- Information can be accessed and updated from any computer with an internet connection, giving businesses true flexibility in a highly-connected world. This can be particularly beneficial for businesses with remote teams or multiple locations.
- Cloud Accounting minimises errors - there is only one ledger that is kept, which improves the accuracy of the information.
- With Cloud Accounting, ledger owners can interact with their tax agents in real time instead of having to collate information and send the data file manually on a regular basis. This saves time and reduces the risk of errors.
- Cloud Accounting software is automatically kept up-to-date by the provider, meaning businesses don’t need to download updates such as new tax rates.
Drawbacks of Cloud Accounting
While Cloud Accounting offers numerous benefits, there are also a few potential drawbacks to consider. One of the main drawbacks is that Cloud Accounting is only as good as the data that you put in. This means it’s essential to keep data up-to-date to make informed financial decisions. Additionally, while Cloud Accounting can be cost-effective, there may be additional costs associated with training staff on how to use the software effectively.
A business revolution
Cloud Accounting has revolutionised the way businesses manage their finances and tax affairs. It offers a wide range of benefits, including lower costs, improved flexibility, real-time interaction with tax agents, and reduced risk of errors. While there are some drawbacks to consider, the benefits of Cloud Accounting outweigh the potential costs and can help businesses thrive in an increasingly digital world.
Talk to the Cloud Accounting experts
At Haines Watts Accountants, we understand the importance of Cloud Accounting and can help businesses implement the latest online accounting technology.
Some of the software packages we have expert knowledge of include:
- Sage 50 Accounts
- Dext Prepare
- Spotlight Reporting
Our Cloud Accounting expert, Richard Bateman, can advise on the best online accounting package for your business. Our team can help with implementation, training your key people on the software and work alongside you as you transition to a completely paperless and more automated system.
Contact us today to learn more about how we can help you streamline your accounting processes and take your business to the next level.