Cloud-Based Accounting & Why You Should Already Be Using It
So what is cloud accounting? Simply put, cloud computing is the delivery or availability of computing services via the internet. It could be for such things as storage services, software, analytics tools, or accountancy services. It gives users access to accounting technology on a subscription basis – you pay a monthly or annual fee, and the provider remotely and securely hosts the databases and servers. You can easily access your data from anywhere at any time by simply going online.
Let’s face it, if you are self-employed or running your own business, your bookkeeping obligations can be a bit of a drag. You got into this to do what you love and be your own boss – not to spend hours at a computer screen trying to make sense of invoices, transactions, and tax. Moving accounting from the traditional desktop method to the “cloud” has been a massive leap forward in financial management for many companies. Many small business owners have chosen to move to cloud-based accounting due to the increased ease, efficiency, and affordability. So if you are still doing your accounting the old-fashioned way, it might be time for a change!
Below are some key reasons outlining the main differences between the old traditional paper method and cloud accounting systems, and why one is undeniably better than the other!
Problems with traditional accounting systems:
- It’s inflexible – Older accounting software is installed on your computer and is usually limited to exactly that – your one computer. Data cannot be securely transferred from one place to another, it usually requires the use of a USB drive or something similar. That jeopardises the security of your information and limits where you can do your work – certainly not ideal nowadays with so many people choosing, or being required, to work from home.
- It’s risky – It’s also common to only have one account or user login because buying additional licences for other users is very expensive. This means if your computer is lost, stolen, or has a virus – you’re up the proverbial creek. Computers can be vulnerable to viruses, and if all of your data is stored on one PC, you could lose it in one hit.
- It’s outdated – As the software gets older, it gets more out of date and inefficient for your growing business needs. It can be an expensive process to upgrade existing software and keep access to your old data.
- It’s unreliable – Speaking of data, some older systems do not have the capacity to back it up at all. We’ve all accidentally deleted something that we really shouldn’t have. Not being able to get it back is a less than ideal situation.
- You’re on your own – It’s almost impossible to get help or support when something is going wrong with your old accounting software. There is usually a customer support phone number, which is either never answered or it’s disconnected.
Benefits of cloud-based accounting systems:
- Access from anywhere – Whether you have internet or mobile data, you can access your business information 24/7 from anywhere that you have a connection. This is essential for meetings on the go or for work trips where you can’t be at your desk but need to be able to see or edit your data. It also means that your accountants have a clear and up-to-date overview at all times. And with many people having to work from home these days, it’s a no-brainer that accessibility should be a top priority.
- It’s streamlined and real-time – Cloud-based accounting systems have been around for a few years now and they are constantly being redesigned to be more and more user-friendly, and largely automated. This cuts out a lot of the administrative work for you, giving you more time for other things.
- It’s really smart – Most cloud-based systems are sophisticated and go way beyond basic spreadsheets and calculations. They feature detailed budgeting and financial analysis and come with heaps of other features to help you run your business better. Not to mention, no more frantic searching for receipts and invoices at tax time!
- It Saves You Time – Systems like Xero offer one-click reconciliations, tax and GST reporting (with a direct link to upload to IRD), the ability to set up repeating invoices, automatic invoice reminders and so much more. Just think of the hours you’ll save by not having to complete these tasks manually.
In case you couldn’t tell, we’re cloud accounting advocates at Accountants Plus, but we do understand you might have hesitations. That’s why we’re here to help! If you have any questions, are just interested in learning more, or simply find the task too daunting and want us to manage the switch for you, then get in touch with us today. Accountants Plus are just a phone call or email away.