What would it feel like if you could access all your accounting documents and information from any device? Imagine being able to review any account, at any time, on any device, whether you’re at home, at work or on vacation. How much stress would that save you?
Well, you don’t need to imagine much longer, because software that can do exactly this and more is already available. With cloud accounting, businesses around the world, and in Trinidad and Tobago, are now able to simplify, automate and de-stress their accounting processes.
If you have heard about cloud accounting at one time or the other but are still having difficulty wrapping your head around what it does, much less the concept of an electronic “cloud”, this article is for you.
We will explain exactly what cloud accounting does, how it works and how it stacks up against the traditional accounting software you know. Cloud accounting is already changing the way businesses operate for the better. Your business deserves a chance at this too. Here’s what you should know.
What is cloud accounting?
To really get your head around the concept of cloud accounting, it makes sense to start from what we mean by the “cloud”.
The cloud gets its name from what is called cloud computing. It simply means the practice of storing and accessing applications and programs over the internet instead of your computer’s hard drive. Essentially, it outsources things like computer space and access to certain programs, files, or documents to a remote server, instead of hosting them locally on your hard drive.
The use of the word “cloud” itself came from an industry quirk that viewed the internet and its vast network of servers as a cloud. But in reality, your information and computer programs will be hosted remotely (in a physical location). This saves you the concern of always needing more memory or space on your computer and lets your computer function solely as a gateway.
Flowing from this, cloud accounting refers to accounting software that you access and utilize from a remote server rather than from your computer. It is essentially internet-based accounting.
Cloud accounting versus traditional accounting
Accounting is done by most businesses in Trinidad and Tobago by means of locally hosted software such as Sage 50 or QuickBooks Desktop. But this software will often have to be updated and if you have to operate them on more than one computer, you must do this across a network system. It gets more technical when this network consists of different physical locations requiring what is called a VPN to bring them all together.
Traditional accounting software create a lot of manual and time-consuming processes. They tend to limit what you can really do with the data on your hands. For instance, it will be more difficult to get broad insights and cross-reference data across several sources. For example, integrating your website sales with inventory management or point of sales with your accounting software.
Perhaps most importantly, it is much harder to automate tasks on locally hosted software. This means that you have to intervene physically more often than not, taking valuable time you could have spent elsewhere.
And you’ll be losing all the extra advantage of deeper insights that will seem almost like a whisper from God telling you exactly what steps to take in your business.
Accessing all your information from wherever you are in the world and on any device will be much easier. Essentially, with cloud accounting, you will be able to do more with less, freeing up more time to spend of income generating tasks and creating better chances at growth.
How does cloud accounting work?
The most important cornerstone to cloud accounting is the Software as a Service (SaaS) functionality that certain vendors provide. SaaS simply means that cloud accounting software vendors such as Xero, sell you access to their cutting edge software as a service. So, instead of paying a one-time fee to buy this software, you pay periodically to access the software on the remote server usually on a monthly or annual basis.
When you subscribe to one of these services, you will have your own exclusive interface/portal through which you can conduct all your accounting. The software will work faster, smoother and will require no updates from your end since it is hosted remotely.
All you have to do is enter your data, which will be sent over the internet, and choose how you want to organize it. SaaS vendors usually provide data backup services as well. This way you know that your data is safe and accessible from wherever you are.
Most vendors also provide integrations with third party applications such as point of sale, inventory management, ecommerce, payment processing, and customer relationship management (CRM) software. This can provide one of the biggest advantages to your business. Essentially, you’ll be able to aggregate several data sources in one centralized location so you can more quickly determine the state of your business, and make decisions faster.
Is cloud accounting safe?
Since data is sent over the internet and hosted remotely, there may be concerns over whether your data is safe. But there are often various rigorous measures put in place to prevent your data from being compromised.
Most vendors use multi-factor authentication, encryption and several other measures to ensure the integrity of sensitive data. In fact, these measures far outstrip anything you can provide on your own while your accounting software is hosted on your local drives.
Nevertheless, it is important that businesses take necessary steps to protect their sensitive data from unauthorized access and use. We’ve compiled several tips for protecting your cloud data as a business owner.
Does your business need cloud accounting software?
Cloud accounting has disrupted and transformed many small businesses by enabling them to operate more efficiently, cutting costs and reducing time spent on repetitive tasks. This is why, according to research from Intuit, 78% of businesses will rely on cloud accounting in 2020.
Although you may feel your locally hosted Sage 50 or QuickBooks Desktop accounting software is “just fine” as it’s doing the job for you, it is important to realize that the world of accounting is inevitably changing. More businesses are adopting leaner and faster technologies to maintain a competitive edge and stay ahead of the curve. This is even more important now than ever before in a world where copycat businesses and competitors are rising rapidly. Your business needs a chance to differentiator itself, and cloud accounting allows this from the automation of systems and processes perspective.
The question you must now ask is: can your business afford to get left behind? I am always weary to make blanket statements that recommend one option over the other without understanding context. Whether cloud accounting is right for your business will depend on several factors including its size, the nature of business, its existing systems, controls and culture. But you cannot make the decision based solely on a reluctance to change.
Conclusion
In conclusion, cloud accounting is a great opportunity for small businesses to reduce the costs and hassle of maintaining a physical, on-premise IT infrastructure. While there are disadvantages to adopting the cloud, the benefits far outweigh it. Small businesses are now recognizing the benefits of cloud accounting and how it can impact on achieving real time financial reporting, improving cash flow and driving data-driven decision making.
We recommend that all small businesses consider the adoption and integration of cloud accounting technology into their day to day financial operations to automate and streamline their business processes. Financial recording and reporting are tedious tasks which can be easily automated with the right cloud accounting software.
If you have any questions about how to effectively adopt cloud accounting for your business or how to integrate it with complementary third-party software applications, schedule your free consultation today. We will be happy to answer any questions you have and support you for a painless and stress-free transition.
