A guide to cloud accounting software

November 10th 2023 | Posted by phil scott

Although modern accountants and businesses are now using ‘the cloud’ to help run their finances, some companies still feel unable to move away from their old systems.

There is an underlying mistrust of this new format because it can be perceived as more difficult to understand. However, this is not the case and is holding many businesses back.

Here’s a brief explanation of how cloud software could be beneficial to businesses and accountants.

What is cloud accounting software?

In reality, cloud accounting software is not that different from traditional systems, except the application functions are all performed offsite.

Hosted on remote servers, rather than onsite
Allows data and software accessibility from anywhere at any time from any device
The hard drive is no longer the central hub
Employees can collaborate effectively
Maintenance and updates are managed by the provider
Wherever you are, you can grab the information you need

What are the benefits?

When it comes to expenditure, a cloud accounting software system has proven long-term benefits:

No installation or manual maintenance: just a monthly subscription to a remote database is required. IT staff are not required to maintain it.

Secure remote access: All employees can work with the same data instead of manual transfers.

Flexibility: A monthly subscription does not tie companies into a predetermined contractual obligation, so they can try out different their ideal provider.

Eco-friendly: It’s all on the cloud so no paperwork is required.

No main expenses: IT staff members not required to maintain or update the cloud accounting systems – again, this is all done remotely.

What are the problems with traditional systems?

Some drawbacks of sticking with a traditional system include:

No effective cohesion: Only one person has access to the data on one hard drive at a time, meaning that key people may not be able to immediately access the financial or customer details they need, when they need them.

Complex sharing: You cannot easily share your data through hard drives, unless you use a USB device.

Less security: transferring via USB devices or email is generally not as secure.

Manual upgrades: Maintain and upgrade the software on individual hard drives can get expensive.

Is the cloud safe?

Cloud accounting is actually very secure compared to traditional methods:

• On the cloud, there’s no need for a manual data transfers.
• Individuals have passwords and can access data centrally
• Only people with the appropriate access can view and use data.
• The risk of information being taken by an external source is far les than a security breach occurring.
• Cloud provider have multiple servers so if one server goes down for any reason, accountancy firms should still be able to access their data.
• All shared data is in one place
• It’s safer from external threats than traditional accounting.

Risks of using cloud accounting software

However, there are a couple of risks to consider:

• Cloud accounting software relies on a secure WiFi network and reasonable computers.

• Remote employees may choose to connect to the local WiFi which may not be as secure, running the risks of a data breach (although providers have tackled this with a two-factor authentication process).

What’s next for online accounting?

Accountancy is inevitably changing and businesses must keep up. By 2020, it is likely that nearly 80% of small businesses will rely on cloud technology to function. If you want to keep up and grow your business and be competitive in the marketplace, it’s an important step.