What is Cloud Accounting?
Forget pen and paper, those days are long gone! In the more traditional method of accounting, businesses would keep large collections of paper-based invoices and receipts, to keep track of their finances. For those who used accounting software packages, the software and data were stored locally on your computer or laptop.
To better understand what is meant by “the cloud”, here’s PCMag’s definition of cloud computing:
In the simplest terms, cloud computing means storing and accessing data and programs over the Internet instead of your computer’s hard drive. The cloud is just a metaphor for the Internet. It goes back to the days of flowcharts and presentations that would represent the gigantic server-farm infrastructure of the Internet as nothing but a puffy, white cumulus cloud, accepting connections and doling out information as it floats.
In other words, with cloud accounting, the software and data are stored by your service provider and information is usually accessed by logging into the software through your internet browser.
What are the Benefits of Using Cloud Accounting for Business?
Cloud accounting provides the same functionality of traditional accounting such as emailing invoices or attaching copies of receipts or bills, reducing the need for paper copies. In both methods, data is updated in real-time, aiding in quick decision making. Bank accounts can be linked and transactions uploaded which allows the user to save time, plus the software is updated automatically. So what’s the big deal?
Cloud accounting software and data can be easily accessed from multiple devices like smart phones and tablets. This means you can provide quotes or invoices on the fly. Receipts can be also photographed and uploaded to your cloud-based software, saving time. Easy accessibility also means it’s easier to share data with your bookkeeper and accountant. Other cloud solutions or apps can be added to or used to enhance your cloud-based system, improving on administrative efficiencies.
Why are Some Companies Cautious About Using Cloud Accounting Software?
Organizations may be uncomfortable with adopting a cloud-based accounting solution because of security concerns. And with good reason – this is highly sensitive information. However, most cloud accounting platforms offer a level of security that is on par with major banks. Cloud accounting vendors understand this concern and will typically earn your confidence by giving you a free trial period to determine if it works well for you.
Cloud based accounting systems are priced on a subscription basis and can run anywhere from $22 to $400+ per month depending on your business and what apps you add on. For example, a home-based service business with no employees would be on the low end of the scale. A manufacturing company with many employees would be on the high end, versus a traditional desktop solution that ranges from a one-time fee of about $300 to a subscription of $120 per month.
Some companies are not comfortable not knowing where their data is stored. With cloud-based systems your data could be stored in Canada, the USA, or offshore. In the traditional desktop systems your data is stored locally.
Cloud Accounting is the Wave of the Future
Trends are steadily moving towards cloud accounting options for businesses of all sizes. With the ease of use, mobile access to information, and convenience, cloud accounting is becoming increasingly popular.
To find out if a cloud accounting system is right for your business, contact Pam Little at firstname.lastname@example.org.
Pam Little is a Chartered Professional Accountant with over 20 years of experience. She helps small and mid-sized businesses manage their revenue and expense accounts and maximize tax benefits. To book a consultation contact Pam Little, CPA at email@example.com or call 416-268-1605.