Cloud Computing has opened countless new avenues for businesses of all size and industries. Accounting is one of the most critical functional areas of any business, as a company’s long term sustainability hinges around financial stability.
In a nutshell, accounting is all about crunching numbers and playing around with stats. At the end of day, any business would like to properly document each revenue and expense item. This in turn will generate very useful financial data.
When analyzing accounting data, each company wants to increase its revenues and curtail expenses. This can be achieved effectively only if a company documents its financial information in a structured way and this info is readily available as well.
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What is a Cloud Based Accounting Software?
A cloud based accounting software falls under the domain of Software as a Service or SaaS model. In such a solution, all the hardware over which the accounting software will run will be procured and managed by a third party Cloud Service Provider (CSP).
In addition to the hardware, the accounting software itself will run over the CSP’s infrastructure. The company which is using the cloud based accounting software will use the internet and a login device such as laptop to access the accounting software.
All the data entry and other accounting tasks will be entered over the cloud based accounting software using a login device such as smartphone, tablet, laptop or desktop. Once work is complete, the user will simply log out from the cloud software.
Advantages of a Cloud Powered Accounting Software
In this post, we will also highlight some compelling advantages of cloud-based accounting software and how it would help your organization.
If you keep your cloud accounting software up to date, you can extract the financial reports about your business in real time, with just a few clicks. The software will automatically compile your company’s financial data and extract the financial reports or statements.
Businesses of all sizes have to contend with tight taxation schedules. As soon as you go past the deadline, your company may be subjected to heavy fines and other regulatory actions. Compiling accurate financial data for taxation purposes is a daunting task.
Secondly, a company may have to apply different tax rates for its various products or customers on the basis of geography. In order to make these processes free of error or omission, cloud based software can be automated for taxation treatment.
Once you have defined the taxation rates for various customers and geographies, they will automatically be applied to customers or vendors. Further, arriving at your company’s tax liability at the close of accounting period will also be a few clicks away.
Cloud based accounting software enable you to automate many recurring tasks that otherwise take up unnecessary time and human resources. Take the example of paying your outstanding invoices. This process can be automated to avoid non payment.
Real Time Data
Accounting and finance is all about playing with the latest data. In some industries, accounting data may be required on a day end basis due to the extremely rapid operations of a company. It is possible only through a cloud based accounting solution.
Ease of Access
If your accounting software is installed on premise, productivity and data extraction is limited to the office premise. This is not at all the case with cloud based accounting software. Management and employees can access the software from anywhere.
Financial data is sensitive in nature and management won’t like to give unregulated access to data across all employees. Cloud based accounting software allows you to manage the access rights of each end user, thus protecting corporate privacy.
Finance is just one operational area of any business. It needs to maintain close coordination with other functional areas such as operations or marketing. So, access to functional areas that need some pertinent financial data can also be granted.
Take the example of marketing department that is planning to launch a promotional campaign. Marketing can have access to the available cash flows in real time so they can plan the budget for their campaign.
Most businesses tend to maintain accounting data over software that is not exclusively designed for this purpose. A very common example is the use of spreadsheet software such as Microsoft Excel.
Although there is no inherent flaw in Excel, it is not meant for this sensitive task. By using purpose built accounting software available over the cloud, the process of maintaining financial information will become highly structured and free of error or omission.
In cloud based accounting software, your company won’t need to procure costly hardware such as a powerful server. The other alternative is to install the accounting software on each individual computer across the organization.
This will be a major administrative hassle as the accounting software will need regular updates and patching. In case of a cloud based accounting solution, keeping the software up to data and fully patched is managed by the CSP.
Updating and patching a cloud native accounting software is otherwise really easy because it will need to be update and patched over the central repository once. All the virtualized instances of the software will be automatically up to date.
One of the great advantages of the cloud is its instant scalability. So, as the size of your organization grows, so will the need for expanding the users of the accounting software. To cope with this higher demand, your company won’t need to procure new hardware.
Users of the accounting software can be increased in real time as the operations grow, or the company is in expansion phase. For each new user created, the cloud tenant will pay its CSP an incremental usage fee.
Similarly, when a company is experiencing a period of slack or is otherwise restructuring, it can reduce its expenses by reducing the number of software users. Scaling down the cloud powered accounting software is also as swift as scaling up, which is great.
Accounting and financial data is very sensitive information. Malicious actors and even competitors remain on the lookout for extracting a company’s financial data to gain insights or otherwise inflict damage to a company’s repute.
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In case of cloud based accounting software, the cyber security of your company’s financial data is ensured by the CSP itself. It achieves this goal by keeping your financial data encrypted and authenticating users before granting access.
All you have to do is properly manage each user and the access rights granted to each user on the basis of organizational role. The employees also need to be sensitized about ensuring their login credentials are not misused by any nefarious actor.
CSPs, whether they offer accounting software or some other cloud based service, strive to deliver 24/7 customer support. This is a great help, especially in cases where financial data is required on a priority basis.
Further, as a cloud tenant, this support by CSP is available across many mediums such as email, telephone, chat or video conference etc. This multi faceted support is very helpful in case you need technical or financial advice.
If your accounting software is powered by the cloud, you can engage the most suitable accounting and finance professionals from any corner of the world. They don’t even need to come up physically to the workplace.
This will have two advantages for your organization. Firstly, you can engage the best finance professionals that can give you valuable and timely financial advice. Secondly, remote workers cost less, so it can also drive down costs.
Most good accounting software over the cloud offer a reasonable trial period free of cost. Before fully committing to such a solution, you can first gauge the functionality and suitability of the accounting software for your organization.
In view of the many advantages highlighted above, we can make a strong case in favor of cloud-based accounting software. However, the true benefits of this solution can be achieved only if it’s done with proper planning.