You’ve certainly heard of the “cloud,” and have likely heard of terms like “software as a service,” and “on-demand software,” but you may not know just how common the internet-based software business model is. If you use Gmail, Google Docs, DropBox, or SalesForce, or even if you advertise on social media using popular sites like Facebook and Instagram, you’re already using the cloud and its benefits to maximize your business operations.
Cloud computing offers organizations the option of securely storing data and using computer tools without taking up space in your office or on your computer hard drives. But, like anything else, the novel idea of cloud accounting raises questions for those who are exploring the idea for their own use. Your accounting data is sensitive, and it’s smart to be cautious about where you’re storing it. Could the option of cloud accounting be right for your business; and if so, what are the dynamics involved in the cloud’s security? Read on to discover the answers to these questions and more from the audit and accounting experts at DHJJ.
What is Cloud Accounting?
Cloud accounting performs all the same functions as traditional, paper-based accounting. The difference between cloud accounting and traditional methods simply comes down to where calculations are taking place and where they’re stored: with traditional accounting, data is stored on paper or on the company computer hard drives. Accounting on the “cloud” simply means that the same information is stored on the internet, where there is theoretically infinite space available. With either method, your business can choose whether you’d like your own accounting staff or a third party to handle your accounting functions. The decision of who accesses your data is always yours to make.
Is Cloud Accounting Safe?
The companies that produce popular cloud accounting software are often very large firms, to which data security is one of the most important (if not the top) concern. Cloud companies adhere to strong cybersecurity and data encryption practices and are able to hire extensive teams to ensure airtight data protection. As a result, growing business’ security measures often pale in comparison to what is available via modern cloud computing systems.
The good news for smaller organizations is that by partnering with a cloud accounting service, they can actually increase their financial data’s security. According to a Microsoft Security blog, a recent small business survey reported that 91 percent of growing business owners “said the security of their organization was positively impacted after switching to the cloud.”
Safety benefits of switching to cloud accounting include:
Data backs up automatically and is always there: Cloud accounting provides autosaving of financial data and digital organization, so you never have to wonder whether you accidentally threw out your only copy of a customer’s invoice or where you put your stack of expense reports.
The proof is in the paper trail: Having an ever-present paper trail is great for your accounting department’s peace of mind. Not only will you be able to record every transaction and keep the record in perpetuity, cloud accounting offers a digital backlog of everyone who has logged in to your software, what time they were using it, and what changes they made.
Digital barriers to disasters: Removing your financial data from a physical space, whether that’s on paper or on your computer’s hard drive, also removes the risk that an unexpected event like a fire, a break-in, or even a spilled mug of coffee could destroy your files forever. In many ways, moving to the cloud is safer than having your data protected via a tangible barrier alone.
Expert encryption: Many popular cloud accounting software systems use the exact same level of data encryption as leading banks and financial institutions.
Is Cloud Accounting Right for Your Business?
Cloud accounting has many unique benefits as compared to traditional methods. Consider whether any of the below highlights are worth it for your business when it comes to making the switch.
Remote options: Unlike traditional methods, your employees do not need to be at the office to use cloud accounting functions. As a company, you can choose to grant employees access to accounting software from anywhere (or choose not to). With the popularization of remote work and with the increasing need to access information at any given moment, this capability can be attractive for many growing businesses. Remote capabilities also simplify the process of hiring a CPA from an outside firm when and if that need arises.
Mobile access: Many cloud accounting services also offer mobile applications, making accessing data on the go much easier. With cloud accounting, you can still hold your general ledger in your hand – you just may be looking at it through a tablet or smartphone. With the cloud becoming standard for a multitude of business functions, levels of security and support for businesses who go this route strengthens continuously.
Financial information integration and increased accuracy: Many internet-based accounting software options have the capability to fully integrate your organization’s banking information. This can offer your accounting departing time-saving automation and a constantly self-updating ledger. Transactions are always up-to-date, and you won’t have to worry about a typo causing confusion about your levels of available capital, incorrect due dates for bills, or a forgotten customer in accounts receivable.
Cost savings: When you move your accounting functions to the cloud, you centralize your costs. While you incur the new cost of the software as a service, you benefit from the entire workforce of the company producing the software. The software company is responsible for making updates, including those to IT support and security features. You’ll likely reduce your spending on hardware upgrades and IT as a result.
Greater functional capabilities: When you purchase cloud software, even the smallest businesses can take advantage of the accounting technology available to Fortune 500 companies. Tapping into the functionalities of the most popular cloud accounting services means that you’ll avail your organization of the efficiency benefits of current machine learning, artificial intelligence, and robotic process automation capabilities, as well as continual upgrades from the software company.
Always Reach Out to a Business Accounting Expert.
The appeal of cloud accounting is mounting. A recent study from Sage found a “50% year-over-year increase in the number of organizations using cloud-based or hybrid accounting solutions,” as reported by Yahoo Finance. Interested in cloud-based accounting, but don’t know where to start? Start by reaching out to an expert, and take the stress out of the remainder of the process. At DHJJ, our renowned business accounting experts are here to help.
DHJJ offers business advisory, accounting, audit, and tax services (and more) to organizations across many industries. Whether your company has a new accounting need or is interested in switching to QuickBooks or cloud-based accounting, give us a call at 630-420-1360 or contact us online anytime so we can help you get started.
