What is Cloud Accounting and Does My Accounting Firm Need It? 

As time goes on, more and more firms are using cloud accounting software as a way to modernize their business processes and financial operations. Not only does cloud accounting give a competitive edge, but it also helps to enhance efficiency and accuracy with your accounting practices. If your team is on the fence about switching to cloud accounting software, or if you want to find out more about the benefits of using cloud-based solutions over traditional accounting, then take a look below. 

What is Cloud Accounting and How does Cloud Accounting Work? 

If you want to know more about cloud-based software, then you’ll be glad to know that it has a very simple explanation. Cloud accounting refers to the practice of managing your financial data and performing any accounting-related tasks through online software. Unlike desktop accounting, which relies on servers and local computers, cloud accounting uses the Internet and remote servers to manage and store financial records. Cloud based solutions free up computing resources, reduce accounting errors and ultimately, help with inventory management. 

An Effective Way to Track Accounts Receivable 

Cloud-based software, unlike traditional accounting, means that your accountants can access the financial data they need, from anywhere, and at any time. You have multiuser access, which is great for small business owners who want help managing finances and payment processing without huge overheads. Additionally, cloud accounting facilitates real time financial data updates, allowing team members to collaborate while greatly improving your company’s general operation. This can contribute to more stable cash flow, as well as providing valuable insight into the financial health of the company. Not only that but choosing the right cloud accounting software can also greatly improve your bottom line. 

The Differences Between Cloud Accounting vs Desktop Accounting  

While cloud accounting software and desktop/traditional accounting software both serve the same purpose, they’re very different from each other. The most obvious difference is how the data is both stored and accessed. With cloud accounting software, the data is stored on remote servers, which can be accessed from any device, whether it is a phone, tablet, or desktop, as long as there is an internet connection. If you opt for traditional accounting software to manage cash flow, then you will install software, meaning that access is limited to where the software can be installed, and who has access to it.  

Cloud Accounting Software is Subscription-Based 

Cloud accounting software usually operates based on a subscription, which includes security patches, cloud storage, and even updates. New features are also released from the software provider over time, allowing you to continually stay ahead of the curve when tracking your finances and cash flow. This eliminates the need for costly hardware, and it also means you don’t have to invest your IT resources. The best cloud accounting software also allows financial reporting, along with the protection of sensitive financial data. With many cloud accounting solutions currently available, you now have more options than ever when trying to find the right cloud accounting software. 

No Manual Data Updates with Cloud Accounting Solutions 

In contrast, when you use traditional accounting software, you will have to conduct manual data transfers, along with regular updates. This can be time-consuming, and you also run the risk of errors and potential delays. From a security standpoint, cloud accounting software comes with robust security measures, including two-factor authentication encryption. This means your data is secure, with cloud accounting service providers often conducting regular data backups. In other words, you won’t have to worry about losing critical information if things go wrong, which can be invaluable when dealing with customer data. 

If you opt for desktop accounting software, then you will be responsible for your data, and backups, which when combined with the risk of human error, can result in dire consequences. 

94% of Accountants See the Benefits of Cloud Accounting 

With 94% of accountants embracing cloud services, and with 67% of accountants preferring cloud accounting to traditional methods when protecting their financial data, it’s safe to say that there has never been a better time for you to embrace this new era of technology. If you want to find out more about the potential of cloud technology and cloud accounting software, then take a look below. 

There are endless benefits when it comes to cloud accounting software. One of the biggest benefits is the flexibility it offers. By utilizing cloud accounting software, your team can access financial data anytime, from anywhere. Flexibility like this is invaluable with teams who work remotely, or who operate from multiple locations. With 81% of companies anticipating a significant increase in remote work, this showcases how important it is to stay ahead of the curve and embrace new working trends. In addition to flexibility, cloud accounting can also significantly reduce the costs associated with running an IT department. You don’t need to pay for on-premise servers, nor do you need to apply security patches. Everything is managed as part of your subscription, which can translate to lower operating costs. 

Real-Time Updates and A Suite of Business Tools 

Client communication is another benefit of cloud accounting. With cloud accounting software, financial data is updated in real time. This allows your clients to access their financial information at any time. Not only does this help to foster a sense of transparency, but it also helps you to address concerns quickly. Automation capabilities of cloud accounting also offer significant benefits. Many cloud accounting systems have several features that streamline the accounting process. From invoice generation to cloud calculation and even financial reporting, cloud accounting tools like this help to reduce the amount of time spent on tedious, manual tasks. As a result of this, your team can spend more time focusing on higher-value services, such as growing your business. 

Statistics show that 87% of companies have felt an acceleration in their businesses by adopting the cloud as well, so when you break it down, the data regarding cloud accounting does speak for itself. Take a look below to learn more about leading cloud accounting solutions and how they can help you manage your financial records. 

The Challenges of Cloud Accounting and How to Overcome Them 

One of the main concerns that a lot of accountants have when transitioning to cloud accounting software is security. After all, financial data is very sensitive, and as an accounting firm, you want to make sure that the information is protected at all costs. That raises the question, is the cloud secure? The truth is that most reputable providers have very strong security measures in place to protect data. This typically includes multi-factor authentication and encryption. This, combined with regular data backups means that you have nothing to worry about. Data encryption ensures that your financial information is always stored in a format that means it can only be accessed by someone who is authorized. Multi-factor authentication for cloud accounting also adds additional security, as users have to verify their identity via a password, or a code sent to a mobile device.  

To ensure compliance, many cloud accounting software providers also meet GDPR or SOC 2 standards. While it’s normal to have concerns regarding your data security and the cloud, choosing the right provider who has a track record for success is the best way to alleviate them. 

Top Challenges 

Even though there are many clear advantages to using cloud-based accounting software, some firms are rather hesitant to make the transition. 

Migrating to Cloud Accounting Solutions 

One challenge is migrating data from desktop accounting systems to the new cloud format. Transitioning data to a new platform is understandably daunting, but many cloud providers offer the chance to migrate your data, so you can ensure that the process always goes smoothly. They may also provide training, as well as additional support to help your team adjust to the new cloud-based accounting system. 

Cloud Software and Internet Connectivity 

Another concern that a lot of people have with cloud accounting, and cloud solutions, is internet access. Cloud accounting requires an internet connection, so firms with unreliable or slow internet connections may face some difficulties here. With that said, a lot of cloud providers now offer online modes, in combination with mobile apps. This allows users to continue using the cloud-based accounting system, even when there is no internet connection. 

Cloud Accounting and Change Management 

Lastly, change management can be a significant hurdle when it comes to transitioning into cloud accounting and cloud software. Employees may resist adopting new cloud-based accounting software because they are unfamiliar with the technology. To overcome challenges like this, it is so important to adopt effective communication, and to also make sure that training is provided. Cloud accounting providers sometimes offer tailored training sessions, along with webinars and user guides. Cloud accounting platforms are also designed to ensure that teams are equipped to be able to use the platform efficiently. Involving key stakeholders in the decision-making process regarding cloud-based accounting, while providing ongoing support is also critical if you want to create a culture of acceptance, along with a smoother transition that leads to business growth. 

In addition to cloud accounting, cloud-based practice management software is a good way for you to enhance how efficient your firm is. Cloud accounting platforms provide a central platform that helps to manage client relationships, as well as tracking projects. Internal processes can be streamlined as well. With cloud-based practice management software, you can also create seamless workflows that go on to support every single aspect of your company’s operation, eliminating manual data entry while safeguarding financial data.  

Cloud Accounting Solutions Aren't Just a Trend 

Ultimately the shift to cloud accounting isn’t just a trend. It’s a critical move for accounting firms who want to stay competitive in this fast-paced environment. Cloud software offers flexibility, cost-savings and real-time collaborative opportunities. When combined with enhanced security, it’s clear to see that cloud accounting has so much to offer. Cloud accounting software is also an attractive solution for companies of all sizes. While transitioning from desktop accounting software to cloud accounting solutions may present some challenges, the long-term benefits far outweigh the initial effort that it takes to migrate.  

Learn More about the Best Cloud Accounting Software 

By embracing cloud accounting software for firm management, it becomes possible to not only stay ahead of the curve but to also make sure that you are offering a better service to your clients. If you feel as though you are ready to take that next step in your cloud accounting journey, or if you would like to learn more about cloud software in general, then contact us today.  We'd be happy to talk to you about cloud-based accounting software, and the cloud accounting solutions available for your business to adopt today. As one of the most reputable cloud accounting providers on the market, we're confident we can help.