5 reasons why cloud accounting works

Cloud accounting has been around for a few years now and there is no doubt it is becoming more popular as small business embraces the digital economy. The days of desktop programs are pretty much numbered, with even Microsoft Office now available online through its 365 product.

Why is it then that this mode of keeping track of your finances is getting more and more traction?

Here are some of things that stand out to me.

1. INTERNET IS GETTING FASTER

For many years the idea of running a program that looked after your business accounting needs on the internet was balked at for a number of reasons, including: speed; reliability; and security. With the NBN roll out, internet speeds are becoming quicker so that the time to run an internet-based program is much faster. In the past, slow reaction times when processing was not an attractive option.

Whilst it is true that the fear of having no internet due to it being down would mean no access to the program, and not being able to process invoices, these days the likelihood that the internet will be down often or for long periods of time is much smaller. To cover this, some have opted for a reserve provider just in case, and a reduction in access costs to the internet means this can be a cheap source of insurance.

When cloud accounting first came out, there were major concerns about security and access to people’s information and accounts. As the popularity of banking apps has increased, the willingness to trust the security of cloud-based programs has also increased. Of course, care needs to be taken in this area as there is still malware out there that can hack into systems just like any program. Protection programs such as Trend Micro and AVG are still recommended, as is the prudent use of passwords.

2. USE OF APPS AS PLUG-INS MEANING FLEXIBILITY

Many cloud accounting programs have what is known as ‘plug-ins’. These are programs that talk to the cloudbased accounting program and are an extension of it, providing what could be called ‘optional extras’. Debtor management systems that improve cash flow by automatically emailing out statements and assisting to chase up outstanding monies, meaning less time required by humans, is just one example. Complex stock systems are another application that can be used where required.

The beauty of plug-ins is that the program itself can be adapted to suit certain needs of various businesses, whereas in the past the accounting system itself may have been too basic.

3. UPDATES SEAMLESS

One of the big advantages of cloudbased accounting systems is that, generally, they are updated automatically. This is particularly so of Xero (but not MYOB). Because updates are simple and require less attention, and because accountants don’t have to run various versions of the software for their clients, this is an extremely big tick!

4. BETTER SUPPORT FROM SMALL BUSINESS ACCOUNTANTS

Being able to log in where authorised means small business accountants can: see how clients are going live and can easily compare budgets to actuals via three-way budgets and cash flow forecasts;

provide support where clients have trouble knowing how and where to process certain transactions; hold meetings more regularly without having to be face to face (although at least once a quarter is recommended).

5. AUTOMATION OF TRANSACTIONS SAVING TIME

Most banks download transactions into programs like Xero nightly, and the accounting system then uses its smart technology to work out where these transactions should be put, and that speeds up processing time by hours – if not days! The software memorises and recognises regular transactions and suggests where they should go.

CONCLUSION:

Cloud accounting is not the be all and end all but there is no doubt it is becoming smarter, faster and more affordable than its competitors.

If you think it could help your business, you are mad if you are not looking further into it so you can enjoy the many benefits on offer!