MANY BUSINESSES ARE ADOPTING CLOUD ACCOUNTING, SHOULD YOU?
With cloud computing on the rise in recent years, many industries and professions are also adopting cloud technology to grow their businesses. One of these includes accountancy.
Based on the article ‘An Outline of Cloud Accounting Software’ which was published in Accountancy Age in October 2018, it is predicted that 78% of small businesses will adopt cloud accounting by 2020.
So what are the advantages of cloud accounting over traditional accounting such that so many businesses are adopting it?
Like with most new technology, cloud accounting comes with similar advantages such as automation, improved efficiency and convenience, as well as lower costs.
Cloud accounting increases efficiency in many ways. It improves cash flow collection by integrating with various online payment gateways such as credit cards, Paypal, Stripe, etc.
Reminder emails for overdue invoices can also be automated as with many other tasks such as customer invoicing and recurring expenses recording. Cloud accounting also eliminates the need for paperwork, thereby reducing human error when transferring information from paper to computer systems.
There are also multiple add-ons available to customise the accounting system to the different needs of businesses including inventory management, e-commerce, HR management and others. These improvements in efficiency means that the work becomes less tedious and stressful for business owners.
Increased Accessibility and Data Visualization
Having data stored in the cloud means that data can be accessed anywhere, anytime and on any device that has an internet connection. Data can also be visualized at a glance based on real-time information, and this can allow businesses to make better decisions.
Going cloud-based means that fees associated with traditional accounting such as user limit, maintenance fees, version upgrades, software licenses and hardware equipment would be eliminated. The costs associated with cloud accounting only includes a small monthly fee and possibly some training.
No additional hardware is required as it can be accessed on any device and updates to the system are also complimentarily provided. Traditional accounting software on the other hand, requires an initial payment for a license and the hardware required, as well as regular updates by fee.
With the increased accessibility, one of the concerns about cloud accounting is the security of the data. However, contrary to these concerns, cloud accounting may actually be more secure.
Firstly, there would be minimal server failures and downtime compared to traditional accounting. Secondly, data would still be safe and intact when a desktop computer containing it breaks down or is hacked. Lastly, cloud servers used are provided by reputable platforms such as Amazon Web Services and Microsoft Azure.
With their IT specialists maintaining the servers, the likelihood of them getting hacked or breaking down is relatively lower as compared with the internal IT support teams in small businesses.
While cloud accounting provides many benefits, there are also a few considerations businesses should note before adopting it.
Firstly, it might be hard to change a company’s accounting system completely when an entire team/ department is used to their old ways of managing tasks. Training would be required, and businesses have to be aware of the varying support given by each cloud-based provider.
Secondly, although it is usually more cost-effective to adopt cloud accounting, the price may increase if further customization and multiple add-ons are required.
Similarly to other industries which have to adopt new technology to stay relevant in the changing world, the demand for more efficient systems in accounting is on the rise.
Business leaders are also increasingly aware of the benefits of cloud accounting and have begun to adopt it to manage their businesses more effectively.
However, there still exists several barriers to embracing this technology and businesses may not know their options well enough to choose what is best for themselves.
If you are keen to know more about the available options of cloud accounting for your business, please feel free to contact us.
(Statistic reference: https://www.accountancyage.com/an-outline-of-cloud-accounting-software/)