What Is Cloud Accounting and Why Does My Small Business Need It?

Cloud accounting solutions are becoming more and more popular. They are being sold everywhere and for a good reason. These programs are capable of a lot. They categorize and track every penny that you spend and bring in, which reveals more detail about your company’s finances. They can also provide tax services, accounting help, inventory tracking, payroll assistance, and help with payment/invoicing. 

The money and time these tools can save is tremendous when compared to traditional software. 

Issues with Traditional Accounting Programs

Accounting software of the past can’t compete with cloud-based accounting. Formerly, data would only be kept in the system, and would never be updated. The software wouldn’t be regularly updated, either. Traditional accounting software can usually only be accessed from one computer, but the data can be moved around freely (like on a digital storage drive). These methods of storage aren’t reliable or secure. 

Typically, only one individual can access the program. It’s essential to keep important customer information and financial details accessible so that you can use them when needed. Often, traditional software for accounting is expensive and doesn’t offer the best options for customer service. Backups aren’t typically integrated because the hard data is stored on the machine, which is subject to failure.

But how can you know which application is best suited for your business and clients? It’s important to know exactly what cloud accounting is and to examine the benefits it offers carefully.

Cloud accounting apps offer the same advantages that desktop accounting programs do, but are hosted on remote servers and are run on a secure Internet browser.

Types of Cloud Accounting

Usually, cloud accounting is available in two forms: 

Software As A Service (SAAS)

SaaS is unique because it blends architectural and financial models for software. This type of cloud accounting software stores data on remote servers and comes in the form of a program or (more frequently) a secure online browser. 

With SaaS, you can easily access anything stored on the cloud because applications are often designed specifically for the industry they’re needed in. Online banking websites and social media are commonly used examples of SAAS solutions.

Hosted Applications

This can involve using your virtual or physical servers to host the software, and your software is then accessible by remote internet session. It’s just as efficient as if it were on site, and you can still use your data and software.

Benefits of Cloud Accounting

The many advantages of cloud accounting include improved security and access, plus automatic update installation and backups.

Accessible Anytime from Any Location with Internet

Any mobile device or Internet browser can pull up details about your operations in the accounting software. Ordinary desktop solutions for tracking accounting information can’t do this.

Improved Security

“The majority of software for cloud accounting functions out of a data center, which offers several tiers of security as protection for your data and the software. The security of the average data center is much better than what most small businesses have access to on-site,” explained Bill Blanton, founder of CINC Systems, a cloud accounting software. So, if any laptops or other machinery are stolen, the data will still be retained in the cloud. This data can’t be accessed by anyone unless they retain the login information. 

More Control Over Access Level and Revision History

If your team shares the same spreadsheets, you can update how much access each person has. The various access levels can allow for individual users to be view only, or they can edit. Most software allows for changes to also be logged and noted in the system. 

No More Scheduling Time to Update or Backup

Small businesses no longer have to work updates into their busy schedule when using cloud accounting software. The vendors are in charge of keeping everything current when it comes to supporting the software and installing updates and backups.

No Long-Term Contracts or Startup Expenses 

Cloud accounting software doesn’t require a significant upfront investment because it isn’t sold, it’s rented. Small businesses don’t have to purchase a lot of software or get on-site servers set up. 

Flexible for Use on Different Platforms 

There is a solution for any team whether your business uses PC or Mac systems. Also, many accounting cloud software programs run optimally no matter which web browser you’re using to access them.

Cloud accounting solutions are varied so it’s vital that you find the right one for your company. Be sure to have a backup plan, and only choose encrypted software to reduce the risk of data loss. 

The benefits that many cloud accounting applications offer are beginning to make a big difference in the small business world. With improved flexibility, small business owners can remain in control from any location, whether they are traveling, at the office, or sitting at home. Cloud accounting software will give you a current glimpse of how the company is progressing, anytime.