“The cloud” is a term that is now commonly used. However, for many people, it is not entirely clear. In computing, it refers to computing services over the Internet. These services can be storage or data analysis tools, hosted on a remote server to be accessed from any device or portal that can connect to it.
In accounting, cloud software is similar to traditional software. What differentiates it is that the system is hosted on remote servers. Revenue and expense data is recorded and sent to the cloud where it is processed and returned to the user. Finance teams can record and track money flowing in and out of a company in near real time.
All cloud accounting software functions are performed without having to install any software on a computer. Cloud accounting solutions allow a group of people from different areas to access the same data whenever they need it.
Differences Between Cloud Accounting and Traditional Accounting Software
Traditional accounting software usually relied on the installation of a program on a desktop computer. This was functional but had some drawbacks. Users could not access all the data and every so often, an update or new version of the software was required to be installed.
Numerous backups were required, which took time and effort.
Traditional accounting applications also required additional expenses as they required maintenance and licensing fees, among other fees. Because they needed to be installed on computers, companies needed to purchase additional hardware as the company and the finance team grew.
Cloud or online accounting, on the other hand, is more flexible. You have the same functions of traditional software with the difference that there is no desktop program or application. The software is accessed by logging online from anywhere and on any device with internet access and the data is stored securely on a server in the cloud.
The cloud accounting system automatically updates financial information while issuing reports and financial analysis in real time. Thanks to this, errors are minimal and you can have better control of account balances. It is also convenient because you have a greater visualization of multi-currency and multi-company transactions in an efficient and simple way.
Cloud accounting requires less maintenance than traditional software. The cloud accounting service provider automatically performs backups and updates. There is no need to install anything on the company’s computers.
What are the Benefits of Cloud Accounting?
Making the switch from traditional accounting software to cloud accounting is a huge advancement in financial management.
One of the biggest benefits is that you can forget about the hassles and costs of traditional accounting. Here is a list of the added benefits of cloud accounting.
- Access to accounts from anywhere. Using a hosted system means you can have access to your accounts 24 hours a day, 7 days a week. No matter where you are, you can access from your cell phone, laptop, or tablet with internet access.
- Updated information in real-time. Having the data and bank reconciliation updated, you will be able to obtain reports or data analysis in real-time.
- Expansion of the accounting system by adding tools, if needed, you can access extra applications to expand your business accounting system to add more features to your accounting software in the cloud.
- Automatic software updates. Every time you log in, you are working with the latest version of the accounting software as updates and upgrades are performed automatically and constantly.
- Secure data exchange. There is no need to extract data or send it by email as advisors have access to the data in real-time.
- Online payments. Payment times are much faster as clients can make payments automatically with the help of payment applications.
Accounting Security in the Cloud
Old-school accountants may be asking the question of whether financial data is secure in the cloud. Cloud accounting services provide a secure and reliable method. Arguably, it is much more secure than traditional accounting software because a computer with the software installed could be stolen.
In contrast, cloud accounting leaves no traces of financial data on computers and the data is encrypted and password protected. Unlike traditional accounting applications, data sharing is highly controlled. Previously, data had to be shared via USB drives that could easily be lost.
Typically, cloud providers have backup servers that support the system in the event of a server failure. Even if this happens, you can still have access to your data without interruption due to technical failures.
Should you use cloud accounting?
If you want to make the most of technology, save time and effort at work and have a lower margin of error in your accounting, the answer is yes.
The connectivity that technology offers us today is a great opportunity to better manage time and money. Cloud accounting allows us to obtain real-time data that helps us to quickly access financial breakdowns, performance indicator metrics, and detailed analysis.
Another advantage of using online accounting software is the configurability it provides. You can customize functions according to your company’s needs and choose from a variety of options to automate tasks.
Automated accounting reduces your team’s workload. This means greater efficiency in tasks and time saved to attend to other tasks.
With instant access to real-time reporting and analysis, you and your team can make more informed and sound decisions to drive business growth.
The team can work remotely and flexibly. Today’s hectic lives don’t allow for being in an office too many hours a day so remote work is a good option for businesses. Cloud accounting makes it easy to access data remotely so that employees can work from wherever they are.
Companies that use cloud accounting require less initial server infrastructure to store data and do not require specialized staff to maintain and update the system so you can save money and use it to grow your business.
If you want to move your accounting from traditional software to one in the cloud, there are different options of providers from which you can choose. You can either choose to host your accounting software online, or start fresh with a cutting-edge solution that puts the cloud, your company’s financial security, and accounting expertise first.