Cloud-based accounting software offers a wide range of advantages over traditional desktop or local systems. With a fully remote system, your accounting software is managed and updated by the software provider. All you have to do is transition your books online and then access the software over the internet while paying for the service on a subscription basis. There’s no need to buy or install any software on computers in your office, and cloud software is less expensive to implement and deploy to multiple locations.
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Here are the top 10 benefits of a cloud-based accounting system:
Accessibility/availability: Authorized users can log in from any location, 24/7, through a web browser or mobile app. They can approve payments or send invoices without having to be back in the office. Accounting team members are always plugged in to the most current financial information and real-time analytics. Because all data is stored in the same cloud-based system, it’s easier to share electronic documents among staff who are working at home or on the road.
Collaboration: Because all financial data is stored online in a single secure database, team members can collaborate more easily. There’s no need to manage multiple versions of the same file, or copy data onto thumb drives to share it with others, so there’s no more wasted time while teams try to figure out which version of a spreadsheet is correct. Employees can work together from anywhere, as long as they have internet access. This can accelerate the financial close process and simplify other tasks, such as forecasting. A single, central, authoritative data set also ensures consistency across all accounting processes and financial reports.
Data security: Cloud providers apply multiple levels of security, including advanced encryption and access control, to ensure that only authorized users can access data. They also automatically back up your data so you don’t run the risk of losing vital financial records. If an employee loses a laptop or an office is damaged by fire or flooding, your data is still secure since it is stored online. The cloud providers help-desk (or your IT team) can then focus on securing endpoints and making sure employees have the proper access rights for their roles.
Scalability: You can scale and flex your accounting system to match your business needs. You can start with basic accounting functions and add features and users as your business grows. For example, if you’re a startup with expansion plans, you won't be stuck with a system you’ll outgrow in a year. As your company grows, you can add modules that handle almost every aspect of the business on-the-fly, from payroll to inventory management, marketing and ecommerce, and still view overall business performance without significant system overhauls.
Automation: Many accounting and banking tasks can be automated, reducing error-prone manual work. For example, the software can automatically import bank and credit card transactions, produce recurring invoices, schedule reports, pay subscriptions and post transactions to the correct ledger. It can also automatically calculate discounts and taxes (provincial, national, and international) and flag exceptions where invoices don’t match purchase orders. Integrated business apps allow sharing of the same central database to provide an accurate, real-time view of financial data across the entire business. Less time spent on administration frees staff to spend more time on the productive activities that grow your business.
Ease of compliance: Private and public companies alike rely on cloud-based systems for tax compliance by producing accurate financial statements, quarterly tax estimates, and yearly tax returns. This helps business owners avoid under-reporting tax liability, which could prompt audits or fines, or over-reporting and paying too much. By automating domestic and international tax calculations, cloud platforms also help ensure compliance with all applicable tax regimes. Some leading cloud accounting solutions even automate revenue recognition to comply with accepted accounting standards.
Paper-free/eco-friendly: In today’s digitized world, it’s both inefficient and unnecessary to physically store archived paper records or manually distribute paper reports to investors, lenders and other parties. Vendors can often send you invoices electronically, which can be imported directly into your system. Paper bills and receipts can be scanned for processing. Invoices can be emailed to your clients directly, which eliminates printing and postage costs, and fast-tracks payment turnarounds. Reducing energy consumption by reducing servers and hardware usages has an even greater impact.
Real-time reporting and data visualization: Real-time access to centralized financial data provides authorized users with an up-to-date view of the company’s financial position. You can build personalized dashboards that provide each user with an at-a-glance view of their most important metrics and other information. Built-in analytics tools help translate complex data into easy-to-understand charts and key performance indicators on-the-fly. Visualizing data enables the team to gain new insights and quickly identify trends that impact the business.
Disaster-recovery: As part of a comprehensive disaster recovery plan, cloud-based systems can help protect key accounting data files and custmomer documents. You don’t have to perform regular backups of important financial data, because your accounting provider automatically does that for you (and makes it easy to restore). Financial data in the cloud can't be physically lost or stolen, and you don't have to worry about maintaining difficult and costly office servers, or deal with non-responsive IT consultants. Paper documents no longer need to take up space, and your records won't become damaged or fade.
Software is always up-to-date: Because the software is in the cloud, you always have the most up-to-date version. The cloud provider automatically updates the accounting software to include changes to tax rates and accounting rules and adds new features. You don’t have to worry about upgrading your software to stay up-to-date; whenever you log in, you’ll immediately get access to the latest version.
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Whether you’re a growing small business or a sole proprietorship, a cloud-based accounting system can increase efficiency and provide real-time visibility into financial performance. A comprehensive system can also integrate with a broad range of apps to scale and customize to adjust to the needs of your business.
At Arria CPA, we embrace the technology revolution of the accounting world, and encourage our clients to upgrade to a cloud-based accounting system. If your company still uses desktop software or spreadsheets for accounting, it may be time to consider upgrading to a cloud-based accounting system. Contact us for a free, no-obligation consultation to learn more about how we can help your business make the transition to the cloud.
Disclaimer: Please note that this is only a brief summary and is based on current accounting regulations and tax law interpretations. Accounting regulations and tax laws are subject to continual review and change, so should the facts provided to us be inaccurate or incomplete, or should the law or its interpretation change, our summary may be inappropriate for your uses. This article is written for educational purposes only, and as such, we recommend you consult a professional before making an accounting or tax decision. If you have any concerns, or would like further consultation regarding this matter, please contact us.
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