Cloud computing is a term used to refer to a model of network computing where a program or application runs on a connected server or servers rather than on a local computing device such as a PC. This hosted application can be accessed by any internet enabled device such as PC, tablet or a smartphone.
In simple words, cloud accounting means online accounting. Instead of accessing the software from your computer’s hard disk, you access it using internet. So, instead of installing the accounting software from a disc to your computer, you can just open your favourite browser and start managing your financial transactions.
Cloud accounting software like Cheqbook, Xero, FinancialForce Accounting, Freshbooks etc have quickly followed your business suit and rolled all of the inherent benefits of cloud based technology into something that will truly benefit the way you keep track of the finances of your business. Cloud based accounting software works in essentially the same way as all other cloud based software. Files that would normally be stored on a hard drive are stored online. Because the information is stored in such a way that it is always accessible, you can log into cloud software and perform accounting practices on any computer on the planet with an Internet connection.
Like desktop accounting software, cloud-based software handles your basic bookkeeping and accounting functions. While there are many options on the market, the main players all perform the same basic functions: tracking accounts payable and receivable, invoicing, customer and vendor profiles, bank synchronization and reconciliation, bill management, financial reporting, and cash flow snapshots. Many also offer payroll, inventory, quotes, and other services as an add-on, or as part of the package.
Cloud-based accounting software can help streamline all of your accounting processes and it benefits your business in several different ways.
- Cloud accounting requires few overhead expenses from the user’s end. A computer and Internet connection are the only can’t-do-without investment. Besides, your virtual accountant is open for you to input new information or generate a report any time of day, while a flesh- and-bones accountant has limited work hours. Depending on how often you access your cloud accounting service, your subscription may cost less than what a professional would charge for the same availability. Using cloud accounting software frees the business from having to install and maintain software on individual desktop computers.
- Cloud accounting software updates financial information automatically and provides financial reporting in real-time. This means account balances are always accurate and fewer errors take place due to manual data entry. They are also better able to handle multi-currency and multi-company transactions more efficiently.
- Cloud accounting requires far less cloud accounting solutions provide an equally secure and sometimes even more secure method of storing financial information than traditional accounting software.
- Sharing data is also less worrisome. With cloud accounting, two people simply need access rights to the same system with their unique passwords.
- Companies that use cloud accounting require less initial server infrastructure to store data, and IT staff is not required to maintain it or update the cloud accounting system. Fewer overhead expenses and no new software purchases mean greater savings for businesses.
- The cloud provider completes the backups, updates occur automatically and nothing needs to be downloaded or installed on a company computer.
- Data is sent into “the cloud,” where it is processed and returned to the user. All application functions are performed off-site, not on the user's desktop. In cloud computing, users access software applications remotely through the Internet or other network via a cloud application service provider
- One of the best things about using cloud-based accounting software is the amount of available tech support. You have several different ways to contact the tech support department of the software company, including phone, chat, and forum support.
If you don’t like compiling financial reports for your accountant, using cloud-based accounting software is a good option for you. Because the software and all of your financial information is hosted in the cloud, it can be accessed from anywhere and you can set up access for your accountant so they can log into the software as needed. You can also control the amount of access you give to your employees.
Ultimately, transitioning to cloud-hosted accounting software is a big step. But it’s a step that helps you save a lot of time and money. If your bookkeeping process stresses you out and the thought of reconciling your accounts makes you dread paperwork, consider switching to a cloud-based accounting software as soon as possible.