Why Cloud Accounting Is Good For Business

Are you looking to make your accounting easier and more efficient? Look no further than cloud accounting! Cloud accounting is an innovative technology that allows businesses of all sizes access to easy, organised financial records. This cutting-edge software makes it easy to track income and expenses, manage accounts receivable and payable, analyse performance data, generate invoices, and more.

With the help of cloud accounting's many features, business owners can quickly gain valuable insights into their finances without ever having to step foot in a traditional office setting. In this blog post, we'll look at why making the switch to cloud accounting might be one of the best decisions you can make for your business.

Let's get started!

What Does “Cloud-Based” Accounting Mean And What Are The Advantages?

If you use a service that is cloud-based, your information will likely be saved on another person's computer instead of on your own. But picture a computer farm instead of your neighbour's antiquated desktop computer from 2010.

On this farm, the computers are treated with the same level of care and attention that is given to the price of dairy cows. There are rows upon rows of computers that are maintained at the ideal temperature and protected by both physical and virtual safeguards. These facilities are termed server farms. In contrast to the dairy farm, which cannot duplicate its cows, your information is constantly backed up in a secure manner, which means there is very little chance of any of it being lost.

There are three ways in which you will profit from having Xero Accounting take care of your information. To begin, as was just indicated, the safety of your information has been increased, and it is no longer in danger of being erased inadvertently.

Second, given that the cloud is accessed through an internet connection, you are free to perform your accounting tasks from any location you want. For example, are you required to provide an invoice while you are at the birthday party for your child? No problem! You can then send it from your mobile device by logging in to the application.

The ability of cloud-based accounting software to integrate into other cloud-based programs is the third and most important advantage it offers to the accounting needs of small businesses. For example, do you have internet banking? Consider that the accounting software you use always has the most recent version of your bank statements. No more wasting hours attempting to keep track of who has paid you and who hasn't while documenting activities and trying to balance the two.

One of the advantages of using cloud accounting is that the information you store there is safer. This is because you are able to view your information from any place and on any device you choose. In addition, you can save time by automating operations and establishing connections to other parties through your small business accounting software.

Similar to the fact that you might consider somebody who continues to use a physical general ledger book living in the dark ages, utilising accounting software not in the cloud is becoming increasingly archaic and should be avoided at all costs.

How Is Cloud Accounting Different From Traditional Accounting Software?

Accounting done through the cloud is a recent innovation in the accounting field. Cloud accounting is an alternative to traditional accounting, which depends on paper records and software installed locally. Instead of using these methods, cloud accounting makes use of software that is hosted on the internet.

The traditional method of accounting has a number of shortcomings, including the following:

• High costs for both the licence and the maintenance of the software
• It can be challenging to maintain backups.
• Because it is not automatic, upgrading is complicated and time-consuming.
• Accessibility can be tough to discuss with all important workers because of the single-user access.
• Since the information isn't being collected in real-time, it is possible that it is only sometimes current and accurate.

Accounting in the cloud has the following benefits over traditional accounting, which have helped it transcend these downsides:

• Keeping your financial data held online is not only more secure but also more handy.
• It gives companies up-to-the-minute information regarding how their finances are performing.
• Sharing information with accountants and other finance experts is made simpler as a result of this.
• Because it is hosted in the cloud, the software's backups and updates are performed automatically.
• Access can be granted to several users simultaneously from a variety of places.

Consequently, cloud accounting is rapidly developing into one of the most preferred options for new and fledgling companies.

Team Collaboration And Data Sharing

Access to reliable online accounting software makes it much simpler to collaborate with coworkers and distribute information to the appropriate parties. In addition, implementing accounting on the cloud makes the entire process easier to manage.

It is optional to use CDs or USB drives in order to send information to customers via courier at this time. Because everything is stored in the cloud, there is no requirement for your accounting team to engage in constant emailing back and forth. Signing into your email and social media accounts is now all that is required to participate in a collaborative effort.

Environment-friendly

One of the most significant benefits of using cloud-based accounting is that it gives you the opportunity to eliminate all paper-based processes from your workplace. In the past, accountants were required to deal with a mountain of paperwork, enter information manually, and physically produce duplicates of their work.

A configuration like this one not only wastes a lot of time but also has negative effects on the natural world. When you add compliance requirements and the handling of finances, it is easy for these activities to consume a significant amount of time. On the other hand, web-based accounting systems enable you to reduce the amount of paperwork you have to deal with.

Because invoices are now generated digitally and sent to customers via email, the expense, effort, and time previously spent on printing and mailing have been eliminated. Your payment procedures will become completely paperless and significantly quicker. In addition, it is possible to scan and store receipts and bills that have been received digitally.

Integration With Various Other Services

Integration with a variety of well-known programs, such as the file-sharing tool Dropbox, which gives users the ability to save and exchange files online, is one of the advantages of using sophisticated online accounting software. You can also integrate them with a variety of other software programs through the use of connectors.

Excel- Not So Excellent, Anymore

Excel is the tool of choice for accountants and finance professionals all around the world. Nevertheless, in addition to being a very lengthy process, the programme needs to include a variety of important functions that accountants require.

There are also a handful of desktop software versions available on the marketplace. These software programs may be downloaded and installed on personal computers, and then they can be utilised without an internet connection. On the other hand, these applications do not offer the several advantages that cloud-based accounting software does, like adaptability, privacy, and a variety of other capabilities.

Let us take a closer look at all of the advantageous characteristics of cloud accounting that make it the ideal alternative for proprietors of small businesses.

1. Management of Inventory

Consider, for example, individuals who are engaged in the retail market and are required to maintain a stock of the items that are currently on hand. The ability to keep tabs on inventories will be extremely useful for proprietors of such modest enterprises.

In more sophisticated versions of accounting software, there are capabilities like alerts that are triggered when inventory is running low and notifications that keep you informed anytime you are required to place an order for more inventory.

2. Generating sales data

A function that gives retailers the capability to monitor the items that are currently being sold is an extremely valuable one, and it can have a significant influence on the retailers' revenues and overall sales.

For example, if you run a business, it would be useful for you to have the ability to determine which brands and goods are moving off the shelves more quickly and generating a higher profit margin than other items that have been on the shelves for a longer period of time.

Access to such information enables you to arrange your supply more and guarantee that your items with the highest demand stay active. It will additionally help you cut costs by reducing the amount of money spent on things that aren't selling, as well as keeping the appropriate number of employees.

3. Management of your contacts

The proprietor of a small or medium firm needs to have a strong network of contacts, whether those contacts are customers, vendors, channel partners, service partners, workers, or other associates. They are all essential components of the sales environment that you have.

Consequently, it will be beneficial for your company to make use of accounting management software that grants you the ability to sync your connections automatically and to deliver pertinent push notifications, invoices, sales orders, and other promotional emails to those contacts through email.

4. Budget management

Your information from the preceding week, month, quarter, or year can be analysed by a reliable accounting programme in accordance with your preferences. As a result, you are able to obtain an accurate prognosis of your financial projections.

It provides you with the option to create individualised sales reports, as well as information on profits and losses, investments, personnel costs, and operating expenditures. With the help of these reports, your company should have no problem maintaining a healthy financial position throughout the coming year.

5. Client estimates

Forecasts for customers can be drafted up quickly and easily with the help of cloud accounting software. For example, consider the scenario in which you are a landscape developer who has received a customer enquiry for the landscaping of 30 acres. After the surveying is complete, you will have no trouble feeding the data into the cloud computing program you use, and it will assist you in preparing an itemised estimate for the customer.

You will be provided with the choice of preparing the estimate on your desktop computer, portable laptop computer, or even your tablet computer and then emailing it to the customer. After the project is finished, more advanced programs have the capability of converting an estimation into an invoice.

6. Managing payroll

Payroll functions can be integrated into more advanced accounting software packages, giving users the ability to convert employee timesheets directly into paychecks. This gives you the ability to continue making salary payments by utilising direct bank transfers or printing checks in accordance with the standard business procedure of your organisation.

7. Managing your taxes

You can simplify the process of determining and gathering the correct quantity of sales tax from your consumers with reliable cloud-based accounting software. In addition to this, it can help cut down on mistakes and make certain that you will not be fined for depositing incorrect tax amounts. You may also utilise the software to compute the income tax, which simplifies the process of filing your taxes in a timely manner.

8. Keeping a record of time

One of the most significant expenses that your company will ever face is one related to its human resources. When you use an online accounting program, you will have the choice of keeping track of the time that employees put in.

Suppose you are a mechanic, doctor, lawyer, landscape developer, or professional service provider. In that case, this allows you to accurately calculate labour expenses or billable time and then instantly deliver the invoice or report to the customers.

9. Scanning of receipts

The major benefit of cloud-based accounting is that it allows you to scan receipts by just taking a snapshot of them with your smartphone and transferring them to the cloud software you use for filing. As a result, the entire process of receiving management is made more effective and expedient as a result of this.

10. Management of bills

The accounting process can be integrated with your bank account through the use of online software, and this software can also keep a record of and pay your bills for you. There are alternatives available to set up automatic payments for items like rent, utility bills, and payments to suppliers. You are notified of upcoming payments by automated notifications sent to your phone, and the software in your financial records is kept up to date with the latest costs.

11. Bank account reconciliation

A sophisticated accounting software is able to handle all of your money transfers thanks to an extremely high level of connectivity, safety and smooth integration. It has the capability of transferring any money that is acquired in real-time and seamlessly to your bank account.

12. Smartphone applications

In the rapidly changing commercial landscape of the 21st century, you need to maintain a constant state of mobility. In addition, it is not uncommon for a contemporary company organisation to make use of freelancers and remote workers to do their work. Therefore, mobile accounting software typically comes with integrated mobile app features.

Cloud Security Is World Class

As the owner of a small company, you may have certain reservations about entrusting the storage of your information to a cloud service provider. On the other hand, storing data in the cloud is among the safest methods available.

If you save your data on the cloud, for instance, even if your laptop is stolen, no one will be capable of accessing it unless they know the login information for your online account. Instead of being stored on your computer's hard drive, the information you create using cloud software is kept in a safe location online on multiple servers.

Being hosted in the cloud ensures that a company's production will not be negatively impacted in the case of an emergency, such as a fire or a natural catastrophe, because there will be no downtime. Offsite, in a location that is both safe and protected, is where all of your data is kept. If you have access to any computer or mobile device that is linked to the internet, you will be able to get back online and continue operating normally.

In addition, you can regulate the level of access that users have to your information if you invite them to view it. Transferring a USB stick with your information on it or sending out an email with your documents attached is a lot less safe method than using this more modern alternative.

Software businesses that store information in the cloud ensure that the data they store about you and your business is always protected and kept private. If you currently do your banking online, you are in a good position to start using cloud accounting.

When Should Your Business Use Cloud Accounting?

Accounting in the cloud is an excellent choice for companies that want financial data and key performance indicators in a timely manner and considerable detail.

The following are some examples of possible applications for cloud computing:

1. Financial Reporting

Companies are able to produce actual financial reports on their financial results, allowing them to swiftly detect any problematic areas and make the necessary corrective changes.

For effective financial planning, it is absolutely necessary to possess correct accounting information as well as up-to-date financial reports.

2. Invoicing and billing

Companies now have the ability to automate previously manual processes, such as issuing invoices and tracking payments, thanks to cloud accounting.

This will result in time savings during the process of pursuing payments and will provide a greater comprehension of the accounts receivable that are pending at any given moment.

3. Inventory management

If you are in the business of selling tangible items, maintaining track of your stock can be a task that is both time-consuming and susceptible to mistakes.

Because cloud accounting allows you to check and adjust your stock levels from any location effortlessly, you will always have a complete understanding of what you have available in your store thanks to this feature.

4. Tax Compliance

You may keep track of all of your operations in real time using cloud-based software and then easily convert that data into appropriate tax return forms.

When tax season rolls around, it will be much simpler for your tax accountant to compile the required info if you have maintained records of your transactions in the cloud. By doing things this way, you can ensure that you comply with the tax laws and prevent any fines.

5. Remote working

Cloud accounting provides your company's management staff and finance department with remote monitoring of all critical information, making it possible for them to view it from anywhere in the world where there is internet connectivity. This makes the advantages of remote or mobile employment possible to realise.

If you maintain records of your transactions in the cloud, it will be simple for your accountant to compile the data they require when it comes time to file taxes. In addition, by doing things this way, you can ensure that you comply with the tax laws and prevent fines.

Since it will constantly synchronise with the device you are using during that particular moment, you will no longer be at risk of missing a crucial operation.

Gain The Edge Over Competition

Even though cloud accounting is becoming increasingly popular, most accounting businesses still use more traditional methods of doing business. Well, the option is ultimately up to them. Still, businesses that choose to operate offline and in silos put themselves at a competitive disadvantage compared to those savvy enterprises that opt for cloud-based accounting software and effectively use its benefits.

You will gain an advantage against your rivals if your company is the first to deploy accounting technology focused on the cloud. You are likely to be adept with cutting-edge technologies when your competitors realise cloud computing is the way to go and make the transition.

Content Summary

• Cloud accounting is an innovative technology that allows businesses of all sizes access to easy, organised financial records.
• This cutting-edge software makes it easy to track income and expenses, manage accounts receivable and payable, analyse performance data, generate invoices, and more.
• With the help of cloud accounting's many features, business owners can quickly gain valuable insights into their finances without ever having to step foot in a traditional office setting.
• There are three ways in which you will profit from having Xero Accounting take care of your information.
• Second, given that the cloud is accessed through an internet connection, you are free to perform your accounting tasks from any location you want.
• The ability of cloud-based accounting software to integrate into other cloud-based programs is the third and most important advantage it offers to the accounting needs of small businesses.
• One of the advantages of using cloud accounting is that the information you store there is safer.
• Cloud accounting is an alternative to traditional accounting, which depends on paper records and software installed locally.
• Instead of using these methods, cloud accounting makes use of software that is hosted on the internet.
• Keeping your financial data held online is not only more secure but also more handy.
• Because it is hosted in the cloud, the software's backups and updates are performed automatically.
• Access to reliable online accounting software makes it much simpler to collaborate with coworkers and distribute information to the appropriate parties.
• In addition, implementing accounting on the cloud makes the entire process easier to manage.
• Because everything is stored in the cloud, there is no requirement for your accounting team to engage in constant emailing back and forth.
• One of the most significant benefits of using cloud-based accounting is that it gives you the opportunity to eliminate all paper-based processes from your workplace.
• On the other hand, web-based accounting systems enable you to reduce the amount of paperwork you have to deal with.
• Integration with a variety of well-known programs, such as the file-sharing tool Dropbox, which gives users the ability to save and exchange files online, is one of the advantages of using sophisticated online accounting software.
• You can also integrate them with a variety of other software programs through the use of connectors.
• On the other hand, these applications do not offer the several advantages that cloud-based accounting software does, like adaptability, privacy, and a variety of other capabilities.
• Consequently, it will be beneficial for your company to make use of accounting management software that grants you the ability to sync your connections automatically and to deliver pertinent push notifications, invoices, sales orders, and other promotional emails to those contacts through email.4.
• As a result, you are able to obtain an accurate prognosis of your financial projections.
• Forecasts for customers can be drafted up quickly and easily with the help of cloud accounting software.
• After the surveying is complete, you will have no trouble feeding the data into the cloud computing program you use, and it will assist you in preparing an itemised estimate for the customer.
• You can simplify the process of determining and gathering the correct quantity of sales tax from your consumers with reliable cloud-based accounting software.
• You may also utilise the software to compute the income tax, which simplifies the process of filing your taxes in a timely manner.
• One of the most significant expenses that your company will ever face is one related to its human resources.
• When you use an online accounting program, you will have the choice of keeping track of the time that employees put in.
• Scanning of receiptsThe major benefit of cloud-based accounting is that it allows you to scan receipts by just taking a snapshot of them with your smartphone and transferring them to the cloud software you use for filing.
• The accounting process can be integrated with your bank account through the use of online software, and this software can also keep a record of and pay your bills for you.
• Therefore, mobile accounting software typically comes with integrated mobile app features.
• On the other hand, storing data in the cloud is among the safest methods available.
• Offsite, in a location that is both safe and protected, is where all of your data is kept.
• Software businesses that store information in the cloud ensure that the data they store about you and your business is always protected and kept private.
• If you currently do your banking online, you are in a good position to start using cloud accounting.
• Accounting in the cloud is an excellent choice for companies that want financial data and key performance indicators in a timely manner and considerable detail.
• You may keep track of your operations in real-time using cloud-based software and then easily convert that data into appropriate tax return forms.
• When tax season rolls around, it will be much simpler for your tax accountant to compile the required info if you have maintained records of your transactions in the cloud.
• If you maintain records of your transactions in the cloud, it will be simple for your accountant to compile the data they require when it comes time to file taxes.
• Even though cloud accounting is becoming increasingly popular, most accounting businesses still use more traditional methods of doing business.
• Still, businesses that choose to operate offline and in silos put themselves at a competitive disadvantage compared to those savvy enterprises that opt for cloud-based accounting software and effectively use its benefits.
• You will gain an advantage against your rivals if your company is the first to deploy accounting technology focused on the cloud.