Cloud Accounting has the potential to revolutionize many industries, including the banking industry, IT services, and insurance. Because of these large number of potential benefits and advantages, many companies are choosing to use cloud computing to streamline their operations. With cloud accounting, there are a few differences when compare to desktop accounting and the potential for greater benefits and greater cost savings.
How does cloud based accounting work?
Cloud computing is typically based on a server-based approach. By using an on-premise, desktop-based operating system, you’re effectively tied into your office. With cloud accounting your important financial records and financial data are securely stored and encrypted on a cloud service. You can open any application you want, be it an excel spreadsheet or perhaps an accounting application like sage accounting. While you might not have to think much about cloud computing, it’s still a great idea to educate yourself on the basics so you don’t end up paying for cloud services that are unnecessary.
Why is Cloud Accounting good for business?
Cloud accounting provides many advantages. Because they are cloud based, these benefits include cost savings, reduced risk, and faster transactions. With an on-premise, desktop-based operating system, you’ll need to buy hardware, licenses, software, and servers to run the system.
If you use a desktop-based system, you’re tied to your office for both time and money. The hardware costs are the biggest factor here; because you’ll be purchasing more hardware than with a cloud-based system, you’ll need to purchase licenses for software as well as the servers for your cloud accountants to work with. While cloud-based systems are cheaper, in most cases they provide better operating systems.
One of the biggest disadvantages is that if you decide to change your business, the entire system needs to be rebooted. This can be expensive if it means having to shut down your entire cloud computing business in order to make any changes to the company’s accounting system. Also, because your records and financial information are on the cloud, you have less control over the security of your financial reports and you’ll be dependent on the cloud service for the timely retrieval of important information.
Cloud-based services aren’t as secure as they could be because of the encryption methods that are used to protect your information and prevent identity theft. There’s also a lack of control over the amount of time your business spends on the cloud, which makes it difficult to monitor how much time your employees spend in front of the computer.
Lastly, many cloud services make the mistake of over-charging for their services. Since the service providers are charging their clients based on how much data they store and transfer, you may find that you pay over £100 per month for a business that only stores one-third of the amount of data that you would normally expect. While the cost may be cheaper, the savings are nothing compared to what your business would spend if you had to buy your own hardware and license everything.
Cloud Accounting may not be for everyone. There are advantages and disadvantages, and the right decision will likely depend on your business needs, the amount of time you have to devote to the business, and how much data you need to store to be productive.
Cloud accounting has the ability to save businesses tons of money by freeing up office space for your computer. However, you will still need to maintain your accounting files and you may need to hire professionals to do it. Also, you may not have access to a dedicated support team, so your management team will still need to be involved in the process of maintaining the business’s accounting records.
Cloud accounting has the potential to reduce costs in other areas as well. For example, instead of buying separate hardware to store, track, and process your books, you could just pull them all off the cloud and store them on a server, where your staff can access the files remotely. And even edit them. When you do, you’ll be able to do everything from filing your taxes to keeping track of sales figures without having to print anything out.
Cloud accounting may not be for every business. If you’re not sure, talk to an accountant about it and see what they suggest. Also, if you’re interested in working with a professional service provider, ask if they have a demo that you can try.
