What is cloud accounting?

Traditionally, accounting was prepared using software hosted locally on your desktop computer’s hard drive (e.g MYOB, Quickbooks Desktop). Cloud accounting, on the other hand, is accounting that is prepared using software that is hosted remotely on the cloud – i.e online.

In 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, Which has disrupted and transformed many industries over the past several years, allowing businesses to operate more efficiently, cut costs, and amplify results.

What are the benefits of cloud accounting?

The cloud accounting software landscape encompasses many solutions designed to serve a number of accounting/bookkeeping functions. For instance, Xero is cloud-based accounting software, whereas Expensify is a cloud-based solution to help manage employee expenses (which integrate with accounting software).

Although benefits will vary between solutions, on a general level, some of the benefits of cloud accounting applications include the following:

• The ability to automate many manual accounting and bookkeeping processes. These automation capabilities enable accountants/bookkeepers and their clients to save time and increase efficiency, allowing them to spend more time on business growth.
• The ability for data to be accessed regardless of location or device. This facilitates remote services and “anytime” communication, which will help to build stronger relationships between an accountant/bookkeeper and their clients.
• The ability for data to be updated in real-time. Being able to access financial data and information quickly (i.e, in real time) will empower businesses to make informed decisions sooner rather than later.
• The ability to easily scale to meet growing business needs. Let’s say your business currently makes 0-100 transactions per month, but experiences rapid growth that causes this number to jump to 10,000+ transactions per month. Your cloud accounting software should be able to easily support this growth.
• The ability to facilitate a paperless This will eliminate the need to physically store and manage paper documents, which is not only beneficial from a cost and office space perspective, but also for the environment.
• The ability to provide automatic updates. This will help to further improve the functionality of the application and better enforce security.
• The ability to reduce costs. Cloud-based software does not incur the costs associated with traditional software (including maintenance, upgrades, system administration, etc).
• The ability to integrate with other cloud solutions. These integration capabilities will improve the efficiency and increase the power of your cloud accounting technology stack.

Is the cloud secure?

Given the sensitivity of the data associated with cloud accounting applications (e.g. banking and financial data), security is a top concern in the cloud accounting space.

When compared to traditional desktop accounting software, which could be compromised if a company computer is stolen, lost, or damaged; cloud accounting software has many security advantages. Each cloud accounting solution should have its own security policy outlining how it protects sensitive data. Most solutions use state-of-the-art measures such as multi-factor authentication and encryption, ensuring sensitive data will remain secure.

What will happen if I don’t adopt cloud-based technologies?

The cloud is the future. Even if your on-premise accounting solution seems to function “just fine”, or if you’re diligent about managing your traditional processes, the world of accounting is inevitably changing, and its important for your business to keep up. The risks associated with maintaining old processes isn’t a question of capability – rather, it’s a question of whether or not you want to grow your business and maintain a competitive edge.

Change can be difficult, but if the potential business benefits outweigh the costs, then its worth your consideration. As daunting as a transition to the cloud might seem, don’t be intimidated – our team will be happy to answer any of your questions and help to make the transition as easy as possible.

– Nathan Lindsay, Accountant & Partner

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Do you think cloud accounting could assist your business?

At Lawrence, our diverse team of specialists will be able to help see how this could simplify and streamline your business operations.

Contact us today for an obligation-free chat about how this may suit your business.

This article is general information only. It does not give business, accounting, taxation, financial planning or other professional advice or service. It does not consider your specific situation, objectives or needs and if personal advice is required, a detailed analysis of your particular circumstances would need to be sought. Please see our Privacy and Disclaimers page for further information.