Last updated on January 16th, 2023
One of the most imperative business operations, accounts management plays a crucial role in determining business performance and its overall efficiency. An effective accounting operation in place can help you better manage cash flow, make impactful financial decisions, as well as lead to increased compliance.
Unlike today, accounting management was usually manual, and all tasks were executed on paper. Although the traditional accounting systems did manage to solve the basic accounting needs, they did not last long.
With the advent of innovative technologies like Cloud Accounting, businesses can now see a whole-new transformation of how their accounting operations are managed. For instance, many Cloud Accounting software programs simplify the accounting management of small businesses. Additionally, they enable these businesses to optimize their bookkeeping and financial administration processes efficiently. While the advantages of adopting a cloud-based accounting are many, not everyone is aware of it. Read on to explore the various other ways by which cloud accounting can help improve the efficiency of small businesses.
What is Cloud Accounting?
Before we dive into the discussion on the importance of Cloud Accounting for small businesses, let’s understand what Cloud Accounting software is. To start with, let’s have a brief on general accounting software, which will help you get some idea about cloud accounting as well. The term, ‘Accounting Software’ refers to a computer program that enables you to perform accounting transactions and maintain records. Some of the key modules in general accounting software are accounts payable, accounts receivable, ledger, trial balance, etc. Earlier, most of the accounting software required on-premises installation which comes with a one-time payment of the license fee.
On the contrary, Cloud Accounting software need not be installed on your local computer as it is on the internet servers. All you need to do for accessing the software is use a compatible device with internet access. This gives you an excellent opportunity to skip your physical presence near a local computer and perform financial tasks remotely. Thanks to cloud computing!
Why Cloud Accounting for Small Businesses?
A study by Fortune Business Insights, a leading publisher of market research, reveals that the market size of global cloud accounting software is estimated to reach $4.3 billion by 2024. The study also reveals that the market size of cloud accounting software is growing at a CAGR of 8.6% during 2017-2024.
Over the years, SMBs are acquiring cloud-based accounting solutions to ensure the attainment of high-end productivity and efficiency. Here are some more reasons why you should embrace the cloud computing technology for your accounting operations:
One of the most important aspects of Cloud Accounting is that it allows you to execute your accounting operations remotely. Specifically, if we talk about conducting accounting operations during the Corona Virus outbreak, organizations had to encounter critical problems while reaching out to customer support. The support centers were forced to work remotely which resulted in instances where organizations had to struggle because of the rise in support requests. In such cases, Cloud Computing acts as a boon.
If you are a small business, instances might happen when you worry about a Cloud Service provider who stores your data. But the cloud is considered one of the most reliable forms of information storage. Secondly, in an unfortunate event of a natural disaster, you don’t have to worry about business productivity. This is because cloud accounting safely stores all your data on the cloud servers. Until you have access to an internet-backed compatible device, you are safe.
Unlike an on-premises system, Cloud Accounting solutions for SMBs or large-sized businesses are less expensive. Available on monthly and yearly subscriptions, you don’t have to pay a hefty amount to avail the services of a Cloud Accounting solution. If you are a small business, you can opt for a basic plan to assess things out and can later upgrade to a higher version, if required.
Additionally, since cloud computing systems are offered as Software as a Service (SaaS), it eliminates the requirement of installing or maintaining the software. All you need to do is contact the Cloud Service provider for any assistance. This, in turn, alleviates the operational costs which otherwise, you would have invested in installing and maintaining a traditional accounting software.
Centralized business operations
With Cloud Accounting software in place, you can centralize your business operations effectively. For instance, if you want to share an important data file that needs to be shared with everyone, you can upload it to the cloud application. That said, you don’t need to send the data file individually to anyone who seeks the information. Besides, irrespective of your business size, you can avail of Cloud Computing services to restrict access and login permissions to anyone in your organization. This gives you the freedom to decide which user can or cannot access the data.
It has always been a challenge for business owners to use conventional accounting methods to fulfil all business needs. If you are a small business owner, you can avail the services of a Cloud Accounting provider. This will enable you to integrate add-ons, which will further help you customize the accounting solution seamlessly. The customized features of the accounting application can be used for executing your accounting operations according to your business objectives.
As a small business, one of your key priorities would be simplifying the on-time filing of taxes. Using cloud-based accounting software allows you to calculate and collect the sales tax amount from your customers without any error. As such, you can eliminate the risk of depositing an incorrect tax amount for which you could be penalized. Furthermore, you can use a Cloud Accounting application to calculate the income tax and ease up the on-time filing of taxes.
The Cloud accounting approach for fiscal management can bring a significant reduction in operational costs and management challenges. Opting for cloud-based accounting technology enables you to become more efficient and productive, and gain a competitive edge over others. Online functionality, nil installation requirements, and automatic backup are some of the key features which make the cloud-based accounting approach a must-have for every small business.
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