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Cloud accounting is one of the latest revelations in the field of accountancy. Herein the data of the business is securely stored online, and the software that can access the data is hosted online instead of the computer’s hard drive. It provides accounting functions that are similar to the Software as a Service (SaaS) model. This allows users to access accounting data and reports from anywhere with an internet connection. In cloud accounting, the data is sent to the cloud where eventually it gets processed and stored. All the functions under this service are performed on the internet instead of the traditional desktop.
Cloud accounting software is also referred to as online accounting software or web-based accounting software. Most of the application providers levy their charges based on the number of users and degree of usage. Also, while using cloud accounting, the users will not have to install and maintain any software on individual computers, and it allows the employees to access the same data and the same version of the software irrespective of where they are located.
Cloud Accounting vs Traditional Accounting
Although both cloud accounting as well as traditional accounting use the same financial standards and abide to the same policies that are recommended by the Financial Accounting Standards Board of the country, they use different tools to perform the required functions.
Here are the major differences between Cloud Accounting and Traditional Accounting:-
- Accessibility: The first difference is accessibility as with cloud accounting, you can access your files by just logging in securely via a web-based interface from anywhere. On the other hand, using traditional accounting software, you can only access the files when using the computer on which the particular software is installed.
- Up-to-date data: You can also access your financials from any device at any location which is not possible with traditional accounting software, where you can only access financials from a specific device. Also, cloud accounting updates all your data in real-time as soon as any new entry is made, however with traditional accounting software you need to update your data manually from the same computer on which the software is installed.
- Installation: With cloud accounting, you need not install any software on your system and the service provider offers plenty of storage space for your requirements. Any number of users can access the software. The traditional accounting software, on the other hand, needs installation on every individual computer which will be using the software and separate license code is required for every user.
- Maintenance cost: As cloud accounting stores all the data on a remote server, it reduces your association with hardware. So, you need to pay a subscription fee only for the server storage you use. With traditional accounting software, you need to manually maintain the servers and this way you need to keep on investing for new servers which are quite expensive as compared to the cloud accounting system.
Benefits of cloud accounting for a modern business
There are many benefits of cloud accounting that modern-day businesses cannot afford to miss. Some of them are explained below:-
- Easy to use: With cloud accounting, it is easier to update your accounting records as it offers you with all the functionality and reliability of the desktop accounting system with additional benefits that you will get only with the help of the online technology. Cloud technology has not only been beneficial for the business but also revolutionized the way businesses are run.
- Useful for small businesses: Cloud Accounting is also beneficial for small business owners as it keeps them connected to their data and their accounts 24×7. It is easier for them to integrate the software as it is scalable, cost-effective and easier to use.
- Secure storage: With cloud accounting, you will get world-class security and you need not worry about the security of your data. The cloud accounting software is more secure than the traditional accounting software, as with the cloud accounting, no one can access your personal data and information unless they log in to your cloud account. This particular technology also ensures that your information is always safe, as constant updates are provided by the developer.
- Real-time updates: In case of financial reports, cloud accounting gives you real-time updated financial reports which mean that you will be getting updated view of your businesses financial conditions and based on this you can make informed decisions for your business.
- Customization: Another benefit is that cloud accounting is that it is customizable for your business. It allows you to integrate add-ons and offers you customizable accounting solutions. This helps the management access all essential information in a single place. This also, in turn, helps in maintaining relationships with the vendors, buyers, distributors and other co-workers. The use of cloud accounting has also made the process of filing taxes much easier.
- Flexibility: Also, with the use of cloud accounting, it is easier for your employees to complete their work from any device and from any location. The only thing required is a good internet connection, and you will be getting the flexibility to conduct your business works remotely from anywhere. This way you do not have to worry about your accounting records, and you can easily ensure that your work is being done and is up-to-date.
- Time-efficient: Cloud Accounting is also time-saving as it provides you with live feeds which means it is a quicker and easier way to stay up-to-date with your work. You do not have to wait for the paper statement from the bank and this way you need not spend that much time on bookkeeping.
- Better insights: With cloud accounting, you get better business insights, as it gives you instant updates and streamline your workload and also provides instant financial reports as and when required.
These days, security is a major concern for all the business owners, and so it is seen that both small and large scale business are opting for cloud accounting, as it offers great data security and also allows data accessibility from anywhere in the world. It is also considered as a better choice because it is a cost-effective and time-saving solution. Thereby most business owners consider choosing this solution for its ease of use and also for bringing out effective solutions.