What is cloud?

In a non-weather context the term “cloud” describes the on-demand availability of remotely stored computer system resources, via an internet connection. Essentially, this means data centers made up of many servers which store and process information as required, accessible to users over the world wide web. The emphasis here is not just on the storage of data but also the processing, via software applications, which are also remotely accessed, thus giving rise to the term “cloud software”.

What is cloud accounting?

In an accountancy context, traditional accounting software was stored locally on desktop PCs and laptops. Nowadays, the software is remotely stored on the cloud, thus cloud accounting, where it is used to process accounting transactions. Therefore, there is no need for local installation or storage on desktop PCs and laptops of accounting software.

Is it secure?

Online security is an issue for all organisations. Cloud accounting solution providers meet internationally recognised high standards for cyber security, such as ISO/IEC 27001:2013. This is an information security management system (ISMS) standard.

Furthermore, providers, like Xero and Quickbooks, provide Multi-factor authentication (MFA) access to data. MFA combines username or user email and password with an authentication app on a smartphone or tablet. This two-tier verification provides greater security making it harder to gain unauthorised access.

Benefits of cloud accounting

  • Remote access

    The very nature of cloud accounting software, means that it is available for use from anywhere, be it the office or while working from home. This has been especially important during the COVID pandemic.

  • Integrated functionality

    As cloud accounting software have evolved, they have integrated many functions of a business, such as quotations, sales invoicing, expense bills and bank transaction feeds. In so doing, the integrated functionality offers organisations real-time snapshot of income and expenditures, balance sheet and cash flow, i.e. the financial position of the organisation.

  • Access to real-time information

    This makes it more efficient to run an organisation, especially as multi-user access allows for different levels of the organisations to view and use the information, appropriate for their level, in real-time.

  • Dashboards for decision-makers

    Therefore, it is important for organisations to dedicate some time and effort into establishing management dashboards which will yield more beneficial information to decision-makers.

  • Backups

    Cloud accounting software normally offer flexible automated backup protocols, including multiple off-site backups as well as local backups. For business continuity planning, cloud accounting allows of easy access to accounting information from different locations, if and when required.

  • Time savings

    The integrated functionality, like sales invoicing, means there is no need to separately generate sales income off-system, print and post them. Sales invoices can be generated from the cloud accounting software and emailed to clients straightaway. Furthermore, the sales invoice would also be recorded as an accounting entry, updating general ledger, debtors, stock (if dealing with physically goods), etc. Thus, time saving can be considerable with cloud accounting, allowing organisations to streamline their accounting functions. Savings can be used to increase sales and product development teams to help grow the business further.

  • Version update

    Updating to latest version of cloud accounting software is normally automatic and done by the provider, removing the needs for manual update of software on local desktop PCs and laptops. This is important for any software security updates, which software providers will be able to provide immediately. Thus, removing the risk of delays in software security updates which may have to be manually run on local desktop PC or laptop versions of an accounting software.

  • Scalability

    The nature of cloud accounting software means that as the accounting team grows, additional users can be easily added allowing for much more rapid expansion than traditional locally installed desktop PC and laptop software. Training for new users can be done online using up-to-date training material.

Which cloud accounting software to use?

There is an array of software options to choose from. Broadly speaking, the following are some key criteria to consider when selecting cloud accounting software.

Functionality

Does the software meet your requirements? For example, FreshBooks is a popular software designed specifically for small business owners. Sage 50 has been a favourite with charities for many years. Charities are likely to require gift aid processing and reporting, which SMEs may not need at all.

Integration

How well does the cloud accounting software integrate with other third-party apps? Any organisation is likely to be using an array of apps, or cloud-based services, like PayPal, MailChimp, WordPress, etc. It is important to know how easily the accounting software integrates with other cloud-based services. For example, Xero can integrate with Stripe, PayPal and other payment apps. Quickbooks favours integration with PayPal.

Cost

The monthly cost per user to access the cloud accounting software is clearly an important factor. Prices can range from under £10 to over £50 per month, with additional charges for payroll functionality. Some banks offer free cloud accounting solutions as long as you bank with them. Therefore, it is important to do research into the best offers available.

Also, remember with could accounting software, switching from one provide to another it not as onerous as it would have been for locally installed software on desktop PCs and laptops. Talk to your accountants as they will be able to help you switch to a cost-effective cloud-based solution.

However, take care to ensure your accountant is not tied to a rewards program with one the many cloud accounting software providers. Ensure you get independent advice.

Beyond the standard

Cloud accounting is a standard service which any accountancy firm will be offering. The key is to ensure that your accountant offers cost-effective value add insights for cloud accounting, from making the most of real-time dashboards to functionality integration with other third-party cloud-based apps to help you run your organisation as efficiently as possible. Such digital transformation undertaken with the right corporate culture and attitude will yield significant returns.

Find out more

To find out more about any of the matters covered above, please contact us. Tel: 07708 753 510 Email: ashish@ashlynwood.com

Share This Article On Social Media