With the evolution of technology, moving your business or functions of your business to the internet is becoming more of a necessity. Cloud accounting, for example, can improve the effectiveness of your firm thanks to benefits such as flexibility, security and cost-effectiveness.
In this article, you’ll learn what cloud accounting is all about and why you should forget about traditional accounting.
What is Cloud-Based Accounting?
Cloud-based accounting is similar to traditional accounting where you have an accounting software on your desktop, but the twist is the software is located on the internet or remote servers. This is the same as the SaaS (Software as a service) model where all data is located in one central space – “the cloud”.
The functions you would perform on your desktop will now be done off-site. This means you’ll access the software from a remote location either through a local area network (LAN) or the internet through a cloud service provider.
One example of this model is G-mail. The software is located on Google’s servers and you can access it at any time and anywhere.
The Difference Between Traditional Accounting Software and Cloud Accounting
There are multiple differences between cloud and traditional accounting. Take a look at some of them:
Since the accounting service offered is cloud-based, users can access accounting data from any location and any time they wish as long as they have an internet connection. This is different from traditional accounting where you have to be at a specific location with a desktop installed with the accounting software to access the data you need.
In addition, if your company has other branches or departments, the employees in all these branches will be able to access similar data while also operating using the same software version.
2. Real-Time Updates
In traditional accounting, you have to save your work first, then transfer the same onto a portable storage device such as a flash drive to use it on another device. This means other employees or team members don’t get access to the latest updates until you send them a copy.
In cloud accounting, since all data is located in one location, any changes done on a particular document will reflect on everyone. This allows all team members to track real-time changes on financial information.
In traditional accounting, you have to install an accounting software on every desktop. First of all, that’s a time-consuming task. Second, it’s costly to buy licenses for all devices that need the software, not to mention the maintenance of various aspects like systems management, databases or other software involved.
In addition, if the firm acquires new hardware, it means more software has to be purchased. Cloud accounting eliminates this hassle. With cloud accounting, all you need is a subscription and you’re good to go. No more licenses or maintenance headaches.
The cloud service provider will take care of the access, maintenance, backups and updates. This means nothing is installed on the computer.
Cloud-Accounting Security and Benefits
When “the cloud” technology emerged, it was surrounded by numerous doubts about the security of data. However, as time went by, this technology proved itself to the world. The security of your financial information is in much better hands than in traditional accounting.
A simple example is the case of theft of company computers. With a simple hack, all data could be lost in an instant. On the other hand, cloud accounting doesn’t leave a trace of any financial data on any device. What’s more, access to this data is secured with encrypted passwords.
Sharing data is easier with cloud accounting. All that is needed is access rights for the people intending on accessing the data. Even better is you can restrict who can access which information and how they interact with it. Either viewing, editing, commenting or deleting.
This is the beauty of cloud accounting and cloud computing in general. Cloud service providers have more than one backup in multiple locations. This means you’ll never lose critical financial information as is the case in traditional accounting where devices can be destroyed by fire or lost due to a software crash.
Cloud accounting is the best way to manage your firm’s accounting data. The benefits far outweigh traditional accounting methods. Furthermore, you can contract financial experts like This website to help setup cloud accounting.
With the above benefits, you can streamline your accounting to help you with effective management reporting.