Accounting is the function of recording transactions that occur relating to a business. That information can be analysed, summarised and reported. Cloud-based accounting is having this information (such records of income and expenditures, bank statements and other supporting documents) stored online and having them accessed through the internet instead of having a software physically installed and administrated on your individual computer. Thus, having a cloud-based accounting software.
Below are some of the benefits related to cloud accounting:
Cloud-based accounting is becoming a better alternative compared to the normal traditional accounting software. This is due to the availability of information now being centralised for easier access to the team or employees at any given time or location.
Traditional accounting would have required physical documents being provided from one party to another. The information would only be accessible by the one individual and the work flow would be delayed if that particular person responsible for sharing the information was unreachable. Physical documentation requires printing.
Considering the current flexibility and hybrid work environments which have been adopted it is important that information is centralised and readily available for use by co-workers. When documents are stored directly on the cloud, they can be easily retrieved which is not the case if only one employee has access to supporting documents and their laptop gets stolen.
Physical document processing is a manual procedure and requires a lot of time to record information which can result in errors being prone. Cloud-based accounting packages allow you to import files or invoices directly in to the system, with little effort, which leads to faster processing speed and more reliance and efficiency being achieved.
The conventional ways of processing used can be vulnerable when it comes to security. With cloud-based accounting, there are security measures and updates in place which are continuously updated. Each person accessing the data will need to utilise their own username and password in order to gain access. Employees can have different levels of access assigned to their user rights as determined by their level of seniorityt and authorisation. The information stored in the cloud is encrypted which plays a huge role in security. There is less administration with cloud-based accounting as you do not need to spend time on monthly/weekly software installations or backups. These updates are done regularly and automatically behind the scenes with no required intervention from you as the user. This reduces the need to run servers and maintenance checks on the system and limits any other significant IT infrastructure that might be required with traditional accounting processes.
Greater functionality and automation
One has the ability to see invoices which are outstanding and those awaiting payment, in real-time. Other features include indication of how many days an invoice has been overdue and the sending out of reminders when an invoice is about to become due so you can follow up with the necessary department or customer. This tracking capability can help significantly on interest being potentially charged on invoices since you have insight on which are about to become overdue.
Additionally you are able to track the income and expenditures using graphs or charts that can make it very easy to see the bigger picture for the month or the quarter. There are a wide variety of reports that can be run on these cloud-based accounting plstforms which provides you with the ability to customise the reports and their timing to better suit your needs.
Different platforms such as payroll and other utilisable tools are easily integrated when using cloud-based accounting, allowing you to merge your payroll data into your accounting system. Bank accounts can also be linked directly to the software and bank statement imported automatically so that the whole process becomes automated.
A few considerations
A good internet connection will be needed at all times to ensure you have access to the data you need. Some cloud accounting options may require an additional cost for extra storage which is dependent on the size of the business.
Cloud service providers make use of high security standards for the storage of data and important files. Using an external service provider could also open up some additional risks when managing sensitive data.