Technology and accounting have become the terms that can be used in the same sentence. There was a time when accounting had little connection with technology.
But, today, accounting and technology go hand in hand, especially with the number of accounting and tax applications available and their integration with cloud technology. Even a survey by Accountancy Age suggested that about 78% of SMBs will solely rely on cloud technology by 2020.
Many accountants and CPAs are unknowingly using cloud technology in the form of automated bookkeeping apps, and more. It is helping them to improve their productivity and efficiency. Leveraging the cloud for accounting processes is termed as “Cloud Accounting.” But what it actually is, how is it transforming the accounting industry, and is it even secure?
To answer all such questions, let’s look at some critical aspects of cloud accounting-
What Is Cloud Accounting?
First things first, cloud accounting is the term used when businesses and accounting professionals use cloud-based accounting software to manage accounting processes, such as bookkeeping, financial statements, bills, and invoices.
What Is Cloud-Based Accounting Software?
A cloud-based accounting software is the regular desktop version software installed on cloud servers instead of a local desktop. All the accounting data and applications are stored on the cloud of a third-party hosting provider. The users are given access to their cloud account to access their accounting software and data in real-time without any geographical barriers.
Difference Between Cloud-hosted And Locally Installed Accounting Software
|Cloud-Hosted Accounting Software
|Locally-Installed Accounting Software
Multiple users access from remote locations
Internet access required
Advanced security for data protection
Automatic data backup
Limited users and restricted geographical access
No internet access required
Minimum security options
Manual backups required
Is Cloud Accounting Useful For Small Businesses?
No matter how big or small the business is, cloud accounting is beneficial for all. It makes managing and organizing accounting data smooth and efficient. All bills, invoices, and documents can be stored in one place and can be accessed whenever required.
Cloud accounting also allows efficient management of time and seamless collaboration with team members and clients based at different geographical locations. Accountants and small business owners don’t even have to worry about the performance of the software or any IT-related issues.
Cloud accounting not only helps in a smoother accounting workflow but also helps in improving the efficiency of daily operations.
Here are some of the benefits of cloud accounting-
1. Multi-user Collaboration
More than one user can work on the same file from different locations, making processes faster and hassle-free.
2. Real-time Access
The accounting software can be accessed from any location, even if the user is stuck in traffic, ensuring zero compromises on the number of billable hours.
The accounting process on the cloud can be easily up-scaled or down-scaled depending on the user, RAM, or storage requirements.
4. Automatic Data Backup
All the accounting data is stored on cloud, and automatically backed-up daily or weekly, depending on the cloud service provider opted for.
5. Advanced Security
Cloud hosting providers deploy advanced levels of security to protect the tax and accounting data from all possible cyber threats or natural disasters.
6. Seamless Integration
The accounting software is not always sufficient to manage accounting processes; many third-party add-ons for processes such as CRM, office suite, and time tracking are also required. All these add-on apps can be easily integrated for faster processes.
Are There Different Pricing Plans For Hosting the Accounting Software?
Yes, costs differ depending on the hosting provider selected. Different cloud accounting solution providers have different plans depending on the requirement of the small business. Some providers even offer a free trial option to check how cloud accounting works before investing in it. The price also depends on the accounting application you want to host on cloud.
Before selecting a cloud solutions provider, business owners should check for any additional charges apart from hosting services. Moreover, it is also important to check whether the CSP has annual plans or monthly plans. Monthly plans are beneficial as the demands of the accounting industry keep on changing in accordance with the busy season.
How Secure Is Cloud Accounting?
Accounting professionals deal with the personal and confidential data of their clients. This data is always at risk of getting lost or compromised. Thus, data safety is one of the biggest and most important priorities for accounting professionals.
The cloud service providers ensure that the data is safe and protected using advanced technologies, such as two-factor authentication, multiple firewalls, end-to-end encryption, antivirus, anti-malware, DDoS protection, among others. Moreover, their data centers are equipped with redundant infrastructure on the server, network, and equipment level.
What Is The Future of Cloud Accounting?
Technology is ever-evolving. New features and updates roll out almost every day. The same is the case with cloud accounting. These changes in cloud accounting will result in new transformations in the accounting industry. Some of the technologies that are going to change the accounting industry are-
- Artificial Intelligence– Almost every accounting task is now automated with the help of AI. There is no more need to perform bookkeeping tasks manually. AI does that for the accounting professionals, providing them more time to focus on more rigorous processes.
- Big Data– It is the large sets of unstructured data accumulated from different sources. Big data enables accounting professionals to evaluate tax codes and detect fraud in order to provide a better experience to their clients.
- Machine Learning and Robotics– ML algorithms can be applied to the invoices and bills to extract the information required. It can also be used to fill various tax forms automatically from the stored data.
Cloud accounting has become the necessity of every accounting business for a better workflow, improved productivity, smooth customer services, and much more. Although cloud accounting is taking over, it is equally essential to look out for the challenges it brings.
Want to know more about cloud accounting? Ask our Solutions Consultant at 855-223-4887.