What is cloud-based accounting software?
Cloud accounting uses software that is accessed through the internet and does not require installation onto a computer or local server. Because the accounting system is in the cloud, it can be accessed from anywhere and on any device that has an internet connection using an application or web browser. Cloud-based accounting software has the same features as traditional desktop accounting software such as invoicing, general ledger, transaction history, journals, and cashbook, whilst also adding significant productivity enhancements through technological innovation.
“To improve is to change; to be perfect is to change often.
Cloud-based accounting software is both innovative and disruptive, and it is here to stay.”
This article lists some of the key benefits of cloud-based accounting software for small and medium-sized businesses.
5 reasons to convert to cloud-based accounting software:
1. Increased productivity
2. Direct cost saving
3. Mobility
4. Innovation
5. Lower security risk
1. Increased productivity
Cloud-based accounting software provides real-time reporting of records that are continuously updated and requires limited manual data input which results in a significant increase in productivity.
Key productivity enhancements include:
Automated bank feeds
Allows for direct integration between the bank and company accounting records. Bank statement line entries feed into the accounting software, which enables the processing of banking transactions with limited manual input. Automated bank feeds do not require export or import of banking information resulting in less manual entry errors and omissions.
Optical character recognition (OCR)
OCR tools convert images of typed, handwritten or printed text into machine-encoded text, whether from a scanned document or a photo of a document and reduces data capturing and processing times.
Traditional accounting software requires significant data capturing for each entry, OCR allows the accountant to focus on the most important information of each transaction such as the nature of the transaction or the VAT treatment of an expense and saves endless hours of data capturing.
Its as simple as taking a picture of an invoice with your mobile phone and reviewing the information for capture into the accounting system.
Rules assigned to repeating transactions
Transactions are classified and recorded based on proposed entries by the system which is set up once-off by the user based on predefines parameters. As more and more transactions are captured, the system proposes entries based on past entries of a similar nature. This eliminates the time spent on repetitive routine monthly entries such as bank charges and other fixed expenses.
Following the review of the associated rule per record, the proposed entry is captured at a click of a button.
Recurring and routine templates
Prepare templates and reusable workflows that increase the capturing speed of raising quotes, purchase orders and invoices.
Simultaneous access by all users
All users can access, process and report information at the same time without the need of first batching, approving, or maintaining transactions and reports.
Updates and installation time
Updates to cloud-based accounting systems are directly accessible without any time spent by users on running backups and installation of software updates.
2. Direct cost saving
Cloud accounting software allows for a pay-as-you-go pricing plan, which means SMEs no longer need to fork out expensive and up-front annual licensing fees. A fixed monthly fee with unlimited user access means you are no longer billed per workstation or user license.
Modules can be added or removed as required and results in a marginal increase in monthly cost with no penalty for cancellation.
Supporting documents are digitally uploaded to each transaction resulting in a significant cost saving of printing and stationery.
Additional capital expenditure on IT infrastructure is unnecessary as reliable access to the internet is generally all that is required by users on any type of device.
3. Mobility
The ability to access accounting and business information remotely offers a significant improvement for SMEs. Recent history has emphasised the need for businesses to be able to access, process and report financial information without the need of being at the office.
The mobility of multiple users and devices means all levels of staff have access to the required level of information and improves the overall experience of using the accounting system daily.
Cloud-Accounting means your business is live and you no longer need to wait to receive periodic updates on your SME business performance because of limited access to the accounting system and reports.
The result is a shift to proactive financial management of your SME.
4. Innovation
One of the main drawbacks of traditional accounting systems is the dependency on expensive local servers as well as the accompanying software that become outdated and slow down over time.
As the entire accounting software industry has recently shifted resources to cloud-based accounting software, the latest technological innovation will continue to benefit the users thereof. The productivity enhancements of cloud-based accounting software listed in this article are but a few of the technological innovations that did not exist a few years ago.
Integration of applications to form best-of-breed software environments have allowed SMEs to build more cost effective and flexible solutions when compared to best-of-suite environments. SMEs can now cherry pick various applications from a range of developers which best suit their needs and integrate through API.
API or Application Programming Interface is the gateway that allows different pieces of software to connect with each other. In the case of cloud accounting, an API is necessary to connect third-party software.
Some of the most common examples and types of applications that interface with cloud-based accounting software through API include:
Ecommerce and online payment tools | Stripe, PayPal, and SnapScan
Payroll software | SAGE Payroll, SimplePay and hellohr
Customer Relationship Management (CRM) | Hubspot, Pipedrive and Accelo
Inventory management | Unleashed and Simpro
Project management | Fresh Projects
Point of Sale | Vend, iKentoo and lightspeed
Time Tracking | WorkflowMax and Deputy
Approval workflows for expenses and projects |ApprovalMax
Reporting Tools |Syft and Spotlight Reporting
5. Lower security risk
According to an Rapidscale, 94% of businesses that switched to the cloud, saw an increase in security.
One of the common questions business owners ask me when considering the move to cloud-based accounting software is “where will my data be stored”.
Cloud-accounting information is stored in big data centers, which are secure and managed 24 hours a day. The cloud host monitors security as a core function unlike in-house systems where SMEs must divide their effort between various IT matters of which security is only one.
Ultimately, cloud-security is about access to data.
Preventing unauthorised access to data is all about focusing on how data is transmitted. In cloud-accounting software, data is transmitted through encrypted connections.
User specific access rights ensures users can only use functions included in the software to the extent that they have been assigned the relevant rights. For instance, a financial manager may require access to the full suite of functions on the accounting system, whilst a purchasing manager may focus on a purchase order, bills, and supplier module.
Additional controls include strong password requirements and 2 factor authentication.
One of the prevailing business continuity risks to SMEs is ransomware, imagine not being able to sell, invoice or process any of your business transactions because of your local server being encrypted by ransomware. Not to mention having to first pay a hacker a large sum of crypto currency for the decryption key that may or may not restore all the encrypted files.
Ransomware encrypts files on local servers and pc’s which is not one of the primary risks in a cloud-based accounting environment.
Through Fusilier’s cloud-accounting service offering, we continue to see a significant increase in the overall productivity of our converted SME clients.
As Winston Churchill put it, to improve is to change; to be perfect is to change often.
Cloud-based accounting software is both innovative and disruptive, and it is here to stay.