Are You in the Cloud?

Published 13th February 2024

What are the benefits of cloud accounting?

In business, staying ahead of, or at least up with, the curve is crucial for success. Over recent years, one of the revolutionary tools that has transformed the way businesses manage their finances is cloud accounting. Cloud accounting offers many benefits over traditional, on-premise accounting systems. Let’s discuss some of them.

 

Accessibility
Traditional accounting systems often tie businesses to a specific location, requiring users to be physically present in the office to be able to access financial data. Cloud accounting frees a business from this constraint. It gives users access to real-time financial information anytime, anywhere. This kind of flexibility and access can be very valuable, allowing teams to collaborate and decisions to be made regardless of location.

Accessibility in cloud accounting refers to the ability for users to access their financial data and accounting software from anywhere with an internet connection, using a variety of devices such as computers, laptops, tablets, and smartphones. Here are some key aspects of accessibility in cloud accounting:

1. Remote access

With cloud accounting software, business owners and their team members can log in to the accounting system from anywhere, whether they’re in the office, at home, or traveling. This flexibility is particularly beneficial for businesses with multiple locations or remote teams, as it allows everyone to access the same up-to-date financial information regardless of their physical location.

2. Multiple devices

Cloud accounting software is typically accessible through web browsers or mobile apps, making it compatible with a wide range of devices including desktop computers, laptops, tablets, and smartphones. Users can choose the device that is most convenient for them at any given time, providing added flexibility and convenience.

3. 24/7 availability

Cloud accounting software is available 24/7, allowing users to access their financial data and perform accounting tasks at any time of day or night. This accessibility is particularly useful for businesses that operate outside of traditional office hours or have employees in different time zones.

4. Cross-platform compatibility

Cloud accounting software is designed to work across different operating systems (e.g., Windows, macOS, Linux) and web browsers, ensuring compatibility with a wide range of devices and environments. This enables users to access the accounting system using their preferred devices and software platforms.

5. Security measures

While providing remote access, cloud accounting platforms prioritize data security to ensure that financial information remains safe and protected. This includes implementing encryption, multi-factor authentication, regular security updates, and compliance with industry security standards.

6. Offline access

Some cloud accounting software offers limited offline access, allowing users to work on their financial data even when they don’t have an internet connection. Changes made offline are synchronized with the cloud server once an internet connection is reestablished, ensuring data consistency and continuity of work.

Overall, accessibility in cloud accounting ensures that users can access their financial data and accounting software from anywhere, at any time, using a variety of devices, providing flexibility, convenience, and efficiency in managing their business finances.

Cost efficiency
Cloud accounting operates on a subscription-based model, avoiding the up-front software licence costs usually involved in traditional accounting systems. Cloud accounting systems also typically receive automatic updates and maintenance, which can reduce the demand for IT support.

Cost efficiency is a significant advantage of cloud accounting for small to medium-sized enterprises (SMEs) in the UK. Here’s how cloud accounting contributes to cost efficiency:

1. Lower upfront costs

Unlike traditional accounting software that often requires a significant upfront investment in licenses, hardware, and IT infrastructure, cloud accounting operates on a subscription-based model. SMBs can access advanced accounting features and tools for a monthly or annual subscription fee, avoiding large upfront costs.

2. No hardware or maintenance costs

With cloud accounting, there’s no need to purchase and maintain expensive hardware or servers to host the accounting software. The software is hosted on remote servers by the cloud accounting provider, eliminating the need for businesses to invest in hardware, perform maintenance, or hire IT staff to manage servers.

3. Scalability

Cloud accounting software is highly scalable, allowing businesses to adjust their subscription plans and usage levels based on their changing needs. SMBs can easily scale up or down as their business grows or contracts, without incurring additional infrastructure or licensing costs.

4. Reduced IT costs

Cloud accounting eliminates the need for businesses to invest in dedicated IT infrastructure and personnel to manage and maintain accounting software. The cloud accounting provider handles software updates, security patches, data backups, and server maintenance, reducing IT-related expenses for SMBs.

5. Pay-as-you-go pricing

Cloud accounting typically offers pay-as-you-go pricing, where businesses only pay for the features and resources they use. This allows SMBs to align their accounting software expenses with their budget and usage requirements, avoiding unnecessary costs.

6. Elimination of software upgrades

Cloud accounting providers automatically update their software with new features, enhancements, and security patches, typically at no additional cost to users. SMBs benefit from access to the latest software versions without the need to purchase or upgrade licenses separately.

7. Reduced administrative costs

Cloud accounting streamlines administrative tasks such as invoicing, expense tracking, and financial reporting through automation. This reduces the time and effort required to perform these tasks manually, freeing up staff resources and reducing administrative overhead costs.

8. Predictable pricing

Cloud accounting offers predictable pricing with transparent subscription plans and pricing tiers. SMBs can choose subscription plans that align with their budget and usage requirements, avoiding unexpected costs or overage charges.

9. Lower training costs

Cloud accounting software is typically user-friendly and intuitive, requiring minimal training for staff to start using the software effectively. This reduces the need for extensive training programs and associated training costs for SMBs.

Overall, cloud accounting offers cost efficiency for SMBs in the UK by eliminating upfront hardware costs, reducing IT expenses, providing scalability, offering pay-as-you-go pricing, automating administrative tasks, ensuring predictable pricing, and lowering training costs. By leveraging cloud accounting, SMBs can access advanced accounting capabilities while keeping their costs under control and focusing resources on growing their business.

Security
The security of financial information is naturally a top concern for a business. Cloud accounting providers use advanced encryption measures to ensure that sensitive information is kept safe. These providers usually have dedicated teams focused on monitoring and addressing security threats too. This provides a level of protection that may be difficult to replicate on your own premises. Cloud accounting systems also include robust backup processes, which reduce the risk of losing data because of hardware failing.

Data security is a critical aspect of cloud accounting, as it involves storing sensitive financial information on remote servers managed by third-party providers. Here are some key considerations and measures related to data security within cloud accounting:

1. Encryption

Cloud accounting platforms typically encrypt data both during transmission and while at rest on the servers. This ensures that financial information remains secure and unreadable to unauthorized parties, even if intercepted during transmission or accessed without proper authorization.

2. Multi-factor authentication (MFA)

Many cloud accounting platforms offer multi-factor authentication, requiring users to provide multiple forms of identification (such as a password and a unique code sent to their mobile device) to access their accounts. This adds an extra layer of security beyond just a username and password.

3. Access controls

Cloud accounting platforms allow businesses to set granular access controls, specifying who can access which financial data and perform which actions within the accounting software. This helps prevent unauthorized access and ensures that only authorized users can view or modify sensitive financial information.

4. Regular security updates

Cloud accounting providers regularly update their software to patch security vulnerabilities and address emerging threats. These updates are typically applied automatically by the provider, ensuring that the software remains secure and up-to-date without requiring manual intervention from users.

5. Physical security

Cloud accounting providers invest in physical security measures to protect the servers and data centres where financial information is stored. This may include access controls, surveillance systems, and other measures to prevent unauthorized physical access to the servers.

6. Data backups

Cloud accounting providers typically perform regular data backups to ensure that financial information is not lost in the event of a hardware failure, natural disaster, or other unforeseen circumstances. These backups are stored in geographically diverse locations to mitigate the risk of data loss.

7. Compliance certifications

Many cloud accounting providers undergo third-party audits and certifications to demonstrate compliance with industry security standards and regulations, such as ISO 27001, SOC 2, and GDPR. These certifications provide assurance to businesses that the provider adheres to stringent security practices.

8. User education

Cloud accounting providers often offer resources and training to help users understand best practices for data security, such as creating strong passwords, avoiding phishing scams, and recognizing suspicious activity. Educated users are better equipped to protect sensitive financial information and mitigate security risks.

9. Data sovereignty

Businesses may have specific requirements regarding the location where their financial data is stored due to data privacy regulations or company policies. Many cloud accounting providers offer options for data sovereignty, allowing businesses to choose the geographic region where their data is stored to comply with relevant regulations.

Overall, data security within cloud accounting involves a combination of technical measures, physical security, compliance certifications, user education, and data management practices to ensure that sensitive financial information remains secure and protected from unauthorized access, breaches, and data loss.

Automation
With many cloud accounting systems – or by means of subscribing to linked automated data entry software – data entry can be automated. By uploading a copy of the invoice or receipt the software can ‘read’ the data and create the entry needed by the accounts system. While such systems rarely achieve 100% accuracy, the time-savings can be considerable and allow those dealing with finance to concentrate on more strategic work.

The benefits of cloud accounting can be transformative to a business and give you a competitive edge in today’s dynamic market. Embracing this technology is not just a trend but can be considered a strategic move towards a more agile, responsive and prosperous business.

Automation within cloud accounting refers to the use of technology to streamline and simplify various accounting tasks, reducing manual effort, minimizing errors, and increasing efficiency. Here are some key aspects of automation within cloud accounting:

• Invoicing – Cloud accounting software can automate the process of generating and sending invoices to clients or customers. Users can set up recurring invoices for regular payments, customize invoice templates, and automatically send reminders for overdue payments. This saves time and ensures timely billing.

• Expense tracking – Cloud accounting platforms can automatically import and categorize expenses from bank accounts, credit cards, and other financial accounts. Users can set rules to automatically categorize transactions, attach receipts, and reconcile expenses with bank statements. This eliminates the need for manual data entry and reduces errors.

• Bank reconciliations – Cloud accounting software can automate the process of reconciling bank transactions with accounting records. By syncing with bank feeds, the software can match transactions in the accounting system with corresponding transactions in bank statements, flagging any discrepancies for further review. This speeds up the reconciliation process and improves accuracy.

• Financial reporting – Cloud accounting platforms offer customizable reporting features that automate the generation of financial reports such as balance sheets, income statements, and cash flow statements. Users can create predefined report templates, schedule automated report generation, and share reports with stakeholders. This streamlines the reporting process and provides insights into the financial health of the business.

• Inventory management – Cloud accounting software can automate inventory management tasks such as tracking stock levels, recording inventory purchases and sales, and calculating cost of goods sold (COGS). Users can set up automatic inventory adjustments, reorder points, and notifications for low stock levels. This optimizes inventory management and ensures accurate financial reporting.

• Payroll processing – Some cloud accounting platforms offer integrated payroll processing features that automate payroll calculations, tax withholdings, and payment processing. Users can set up recurring payroll schedules, calculate employee salaries and deductions, and generate payslips. This simplifies payroll administration and ensures compliance with tax regulations.

• Tax compliance – Cloud accounting software can automate various tax-related tasks such as calculating VAT/GST, generating tax reports, and filing tax returns electronically. Users can configure tax codes, set up automatic tax calculations, and track tax liabilities in real-time. This reduces the burden of tax compliance and minimizes the risk of errors.

• Workflow automation – Cloud accounting platforms often offer workflow automation capabilities that allow users to create customized workflows for specific accounting processes. Users can define rules, triggers, and actions to automate repetitive tasks, streamline approval workflows, and improve efficiency.

 

Overall, automation within cloud accounting encompasses a wide range of features and capabilities. They streamline accounting processes, reduce manual effort, minimize errors, and increase efficiency. By leveraging automation, businesses can save time, improve accuracy. They can also focus on strategic activities that drive growth and profitability.

 

At Simas Accounting & Tax we have experience of various cloud accounting systems. If you would like an assessment of your current system to see how cloud accounting might help you, please do not hesitate to contact us!