Not too long ago, accountants and business owners relied on paper ledgers to tediously track budgets or payroll for employees. Since these financial tasks are the core of every business, technology has evolved over the years to make bookkeeping and accounting easier and more efficient. Today, the majority of businesses use cloud-based accounting software to manage their finances.
What is Cloud Based Accounting?
Cloud-based accounting involves using an online software application to perform all financial duties. This means anyone can access the application from their own device, even remotely. Gone are the days of installing programs on individual computers, and hosting the data yourself. With a cloud-based accounting software program, such as Quickbooks, your data is securely backed up in multiple locations, all managed by the cloud software provider.
Cloud-based accounting has quickly become the preferred method of tracking finances for small to large-sized companies. With this, many traditional software companies are ending support services for their products. This leaves any on-site software unsupported and more obsolete with each passing day. Making the switch to cloud-based accounting is more critical than ever, and also comes with its share of benefits.
Traditional Accounting vs Cloud Based Accounting
Technology evolves quickly, and as a result, leaves some substantial changes from one method to the next. The key improvement of cloud-based software is that any employee can access the program by logging in from any device. This is a change from having to access the software on-site, usually near the server. Having the freedom to access the software anywhere saves businesses time and money by not having to set up a VPN or purchase extra machines and licenses to hold traditional software.
Cloud software, especially software-as-a-service systems, can also help save money and worry about maintaining your own server. With a cloud software subscription, you are paying for the package deal of technical support and server hosting. Now your own staff won’t need to be responsible for any updates or data backups.
Cloud-based accounting software scales with your business based on what you need. Adding accounts is a much less painful process than purchasing pricey new licenses. Online software is much more dynamic, where you can stay up to date with the latest technology releases by simply updating the software, just as you would update an application on a smartphone.
Types of Cloud-Based Accounting Software
Software-as-a-service (SaaS) is a system where the vendor takes care of all software maintenance. This includes saving all your information in a public cloud, shared with other companies. Although this is a popular choice, there is also an option of setting up and using a private cloud, or a hybrid of both. Many choose to work with SaaS companies since it eliminates the responsibility of the business owner to maintain the operation of a server themselves.
Benefits of Cloud Based Accounting
Just like traditional software once presented many advantages over manual accounting data entry, cloud-based software now offers numerous benefits over traditional on-site programs.
If you’re thinking about investing in cloud-based accounting software for your firm’s needs, here’s what you can consider:
- Cost Savings: Businesses typically only pay a monthly or yearly fee for everything you need when using cloud-based accounting software. Also, since cloud software is paperless, you’ll save on additional overhead expenses.
- Promoting Collaboration: Because you can access web-based software from multiple devices at once, anyone with a login can work within the software. You can even automate tasks to be done for you!
- Scalability: Starting out with cloud programs allows more freedom to grow. Paper ledgers aren’t sustainable for growing businesses unless you’re willing to pay another salary. And traditional accounting software makes it more difficult and expensive to install on more devices.
- Flexibility: Instead of hosting the software on a couple of computers, cloud software is accessible from nearly any device, all you need is a login credential.
- Data Safety: Many don’t realize your data is much safer in the cloud than on-site. Read more on this below.
With these advantages, it’s actually easier for even a new accounting firm to start out with cloud-based software from the start. It may be tempting to try inexpensive methods starting out, but making the initial investment will pay off down the road.
Is Cloud Software Safe?
For those uninitiated with the concept of cloud software, it can seem confusing or even intimidating. Without being able to physically see where your information is, many arrive at the conclusion that the cloud is unsafe. Turns out, the opposite is true. Cloud software is generally regarded as the safer option for your data.
With traditional software, all data stays on the individual device, or a server hosted on-site. This leaves your data vulnerable to loss from things like natural disasters or theft. Cloud software providers store and back up data in several locations. If something happens to the server at one location, your data is still 100% intact at a different location. Employees are also less likely to share data through insecure means, like flash drives or email. Cloud software requires password-protected accounts, where you can even set up two-factor authentication.
DHJJ: Cloud Accounting Professionals in Chicago
Cloud-based accounting software has made it easier for business owners to take accounting needs into their own hands. However, the complexities of accounting and finance remain the same. Even with all the advantages of cloud software, the initial setup may be a stressful transition for companies with many years of manual bookkeeping.
We are well acquainted with all kinds of accounting software and can help you select the right one for your business. Whether you need analytics, insights, or reports on the financial health of your company, we can help point you in the right direction. We love helping local Chicagoland businesses improve their workflows, keep compliant with reports, and create comprehensive views of their cash flow. If this sounds like something you want to get started with, then contact us today!
