In this article, you will learn:
- What is Cloud Accounting Software?
- Problems With Traditional Accounting Software
- Why Does A Small Business Need To Switch To Cloud-Based Accounting Platforms?
- Signs Your Business is Ready to Upgrade its Cloud Accounting Solution
- Cloud Security Is World Class
- Reasons to Use Cloud-Based Accounting Software
- What Will Happen If I Don’t Adopt Cloud-Based Technologies?
- What Kind of Software Do I Need For Cloud Accounting and How Much Does It Cost?
- About QuickBooks Cloud Accounting
- FAQs on Cloud Accounting Software
Small business owners need to undertake a host of activities all by themselves. Right from finding customers, undertaking bookkeeping, and accounting to marketing their business to getting the right people in their team, almost everything is undertaken by the small business owner.
With so much to deal with, small businesses now understand the importance of cloud accounting.
According to Intuit, the top five tasks that small business owners are taking up today online include:
- Back-office work like bookkeeping and accounting
- Generating invoices and accepting payments from customers
- Managing relationships with existing customers
- Communicating with employees and business partners
- Building brand awareness
Thus, small business owners now understand that in order to save time, reduce costs, ensure data security, and make work more efficient, it is necessary not only for them but also for their clients to switch to a cloud accounting solution.
This guide will help you understand what is cloud accounting software, the reasons why you should use cloud-based accounting software, the benefits of working with the cloud, and how QuickBooks Cloud Accounting Software can help you manage your accounting tasks easily.
What is Cloud Accounting Software?
Cloud Accounting Software, also known as online accounting software, is accounting software that helps you maintain your books of accounts online. Unlike the traditional accounting software installed on your desktop, computing accounting software is hosted on a remote server rather than a server on your business premises. It is based in the cloud instead of being installed on your computer.
Thus, in a cloud accounting software, the accounting data is sent on the cloud, processed on a remote server, and then returned back to you as a user. In simple terms, cloud accounting software allows users to access software applications through the internet or other networks through a cloud application service provider.
Thus, you as a small business owner need not install accounting software separately on every desktop being used in your firm. Further, since everything is based online, your employees sitting in any part of the world can collaborate and access the data uploaded on the cloud accounting software from any part of the world at any time.
Problems With Traditional Accounting Software
When you are starting your own business, traditional accounting software may seem to be a good option for managing your books of accounts. But there are certain challenges with the traditional accounting software that you need to keep in mind before investing in such software.
The traditional accounting software licenses are typically expensive. Furthermore, shelling out money each time a software update is released or investing money for storing data can turn out to be costly as well as time-consuming for your small business.
Data Not Up To Date
The data stored in the traditional accounting software is not up to date unless one manually updates the latest invoices, expenses, incomes, etc. In addition to the data, the software updates do not take place regularly. This is because it is expensive, challenging, and time-consuming to upgrade the software with the latest updates.
Limited User Access
Since the traditional accounting software is individually installed on certain desktops, the financial information can be accessed only by limited users, that is, the persons on whose desktop the accounting software is installed.
Since the important people of the company are unable to access the financial information and client details, the teams are unable to collaborate.
Lack of Data Security
In the case of traditional accounting software, the financial data is stored either in computer hard drives, external hard drives, or USB devices. This increases the chance of the data getting lost.
Furthermore, the data is also prone to viruses, corruption, hacking, and maintenance challenges, it can make you lose your data anytime and could mean loss of time, effort, and money for your business.
Increased Errors Due To Manual Data Entry
Since you are manually entering data in the traditional accounting software, there are higher chances of errors. This could mean inaccurate financial data which could have a severe impact on your business decisions.
Why Does A Small Business Need To Switch To Cloud-Based Accounting Platforms?
As a business owner, you need accounting software that helps you save time, increase productivity and the one that is cost-effective.
You simply cannot rely on traditional accounting software as there are chances of committing data entry errors, subjecting financial information to data loss and viruses as a result of storing it in hard drives and USB devices, and shelling out huge amounts of money on data backups devices and software updates.
Thus, if you are still dependent on traditional accounting software, it’s time to switch to cloud-based accounting platforms.
Scale Your Business With Cloud Accounting
Scaling of business refers to growing business without increasing costs. With computing Accounting Software, you can grow your business in terms of getting more clients without the need to invest money in purchasing new software to store financial data into multiple accounts.
With Cloud Accounting Software, you can automate certain routine tasks of your business. This could include sending recurring invoices to your customers, sending payment reminders, etc.
Furthermore, with your bank accounts integrated with your cloud-based accounting software, there is no need for you to manually enter the data. This is because the online accounting software automatically fetches all your banking transactions.
Save Time and Cost
Unlike the traditional accounting system, where you have to do everything manually, cloud-based accounting software helps you save time and cost in a variety of ways. For instance, you can send recurring invoices and set payment reminders for your customers.
You can further automate your accounting process by integrating your bank accounts with the online accounting software that fetches your banking transactions automatically. You can even generate business reports within no time and send them to your customers anytime, anywhere.
Third-Party Integrations Make Accounting Easy
Cloud-Based Accounting Software comes with third-party integrations like payroll, inventory, expenses management, etc. This gives you the flexibility to work with apps you are comfortable working with.
Further, there is no need for you to switch between different apps to manage various aspects of your business as you can manage the same all in one place.
Regular Software Updates
Cloud-Based Accounting Software releases regular software updates for security as well as the latest accounting features. Such updates make your financial data safe and also give you the advantage of the new-age functionality. This saves you time and helps you take your small business to the next level.
Unlike traditional accounting software, you can Fast Track payments by creating and sending invoices on-the-go from any device to your customers with cloud-based accounting software.
Likewise, you track data such as sales and expenses and create and send business snapshot reports to your customers anytime, anywhere. Also, you can collaborate with your remote teams on the same financial data and allow them to work on such data simultaneously.
Signs Your Business is Ready to Upgrade its Cloud Accounting Solution
Your Accounting Software Takes Your Majority Time
With no facility of linking your banking accounts to your traditional accounting software, you are entering all the financial data manually. Likewise, you are sending customer invoices and processing payroll manually that consumes time which you can probably invest in core business activities.
Lack of Support For Multi-Currency Transactions
You are losing serious business to your competitors if your accounting software does not support the multi-currency feature. This is because due to lack of this feature, you would be unable to bill your vendors and customers, denote price in foreign currency, undertake banking transactions, manage credit card accounts, etc thereby making you give up on the business opportunity.
Less Or No Automation
Accounting software should be such that it automates your accounting process so that you get time on your side for core business activities. If with your current accounting software, you are still:
- Preparing and sending invoices manually to the customers whom you give the same service month after month
- Manually entering the data and spending good time on reconciling the bank statements
- Using physical copies of expense receipts and entering data manually
Then it’s time to shift to cloud-based accounting software.
With companies increasingly shifting towards remote working, it is important that your accounting software allows you to manage your books of accounts on-the-go. If your accounting software requires you to be desk-bound, it is certainly an indication that you need to switch to cloud-based accounting.
No Software Updates
Your accounting data is subject to serious security issues if it is not regularly updated for advanced security. Similarly, if the accounting boards release certain changes in accounting rules or tax reforms are released by the government that are not updated into your software, you lose out on the latest features that can make your accounting process effortless.
Restricted Third-Party Integrations
If your current accounting software is not integrated with a good number of third-party integrations, you would be required to switch between various apps for different tasks. This would mean less automation and increased complexity for you will have to move between different apps for various tasks.
Cloud Security Is World Class
The local storage on your desktop is not a safe place to store your valuable accounting data. Lack of software updates in traditional accounting software for security and regular generating of data backups in external hard drives or USB devices subject your accounting data to viruses and ransomware.
Further, storing valuable information in the servers at your office is something that may seem easy or convenient, but it is certainly vulnerable to data loss if there is a natural disaster, a simple coffee spill, or your server crashing.
Thus, accounting data stored on a single computer on your office premises can put you in a risky situation. This is where cloud security outshines your office servers for it keeps your valuable information safe in various ways.
The data on the cloud is stored on multiple physical servers. These servers are genuinely placed in large rooms or warehouses and are connected to the internet.
The cloud accounting services providers have servers in various locations just to ensure that your valuable financial data is not just located in one place but at multiple locations in order to build redundancy.
This means that the multiple copies of your accounting data are backed-up and stored in different servers at various geographical locations. Such redundancy reduces the risk of your information being destroyed completely as a result of fire, natural disaster, crashing of a server, etc.
Therefore, cloud accounting services providers ensure that you continue to have access to your financial data just in case there is any mishap.
Another feature that makes cloud accounting software security outstanding is the encryption of data. In computing accounting, you upload the financial data on the cloud where it is stored.
Since you are transferring the financial data to the cloud, you would certainly want such transmission to be encrypted. Encryption rewrites your accounting information into a code.
Thus, understanding this code is out of the question for hackers or unauthorized entities who try to access your accounting information. There are different types of encryption used by cloud accounting services providers.
Secure Sockets Layer (SSL) is the most commonly used encryption method which allows for the safe transferring of data from websites and browsers. Cloud accounting services providers generally use 128-bit encryption which is the same security measure used by financial institutions and banks worldwide.
With cloud-based accounting software, you do not need to be worried about not saving the business snapshot reports or copies of your invoices. This is because such an accounting software provides an automatic backup facility that takes the backup of your accounting data after every few minutes.
This allows you as a user to restore the previous versions of your accounting reports or anything that you do from a particular point in time. And with cloud-based accounting software providing for redundancy, your accounting information does not get lost for there are multiple copies of your financial data stored at various locations.
Reasons to Use Cloud-Based Accounting Software
Get Time On Your Side With Automation
Cloud accounting software helps you automate various tasks in the accounting process. For instance, you can upload the vendor information into the accounting software and create an automatic workflow that pays the vendor automatically when the due date arises for such a payment.
Likewise, you can set payment reminders and recurring invoices that automatically send invoices to customers who invoice you for the same products or services on a regular basis.
Get Access To Real-Time Data
Cloud accounting software seamlessly integrates with your bank accounts allowing you to track sales, expenses, and inventory. If you are updating your invoices and all the accounting information regularly, you certainly get real-time data at your disposal.
With cloud-based accounting software, you are no more bound to your office desk for accessing financial information. Computing accounting allows you to manage your books of accounts wherever you are, that is, in the office, at home, and through multiple devices like smartphones, tablets, laptops, etc.
If you find it challenging to compile your accounting reports on your own, you can give access to your accounting information to your accountant. Cloud accounting software allows for multiple user access. Thus, with just a simple login, your accountant can work on the accounting reports and generate financial statements even if he is located remotely.
Further, cloud-based accounting also gives you control over giving access to users. For example, you can give access to limited reports to few users just in case you do not want them to have access to your complete accounting information.
Since your bank accounts are linked with your cloud accounting software, there is no need for you to manually enter the data. Further, with computing accounting, you do not have to undertake various calculations, be careful of various accounting rules or formulas as it does it automatically for you.
Therefore, whenever you need to generate financial reports, you simply need to regularly enter your income and expense information. The rest is taken care of by your accounting software.
No Installation Needed
Unlike the traditional accounting software that needs to be installed on individual desktops, cloud accounting software does not need any such installation. As they are based in the cloud, you simply need to put the requisite URL in the web browser and sign in to your accounting software.
24×7 Customer Support
The best part of cloud accounting software is the tech support that is available 24×7. You can contact your cloud-based accounting software provider through phone, chat, or forum support.
Forums specifically get you in touch with the other small business owners and their advice on the similar issues that they are facing as you, thus giving you a chance to build relationships with them.
What Will Happen If I Don’t Adopt Cloud-Based Technologies?
If you are not switching to cloud-based accounting, you lose on several grounds as a business entity.
- There is a serious threat to your data security for your traditional accounting software is subject to viruses, data loss, and natural disasters.
- With no in-built redundancy, there is a high risk of losing accounting information for the entire data is stored on a single computer.
- Relying on traditional accounting software is expensive as software updates and additional data backups come at a cost.
- You are investing way too much time in managing your books of accounts due to a lack of automation.
- In times where remote working is the new norm, traditional accounting software keeps you desk-bound and does not give you the flexibility to manage your books of accounts on-the-go.
- Your accounting information is not regularly updated unless you manually update all your accounting records. Furthermore, the lack of software updates does not give you access to the latest features that make you lose business to serious competition.
- You are prone to accounting errors for you have to manually enter the accounting information into your traditional accounting software.
What Kind of Software Do I Need For Cloud Accounting and How Much Does It Cost?
There is a host of cloud accounting software that is available. But you need to choose the one that fulfills your business requirements. Below are certain key points that you need to consider when selecting cloud bookkeeping and accounting software for your business.
Identify Features Required As Per Business Need
Prepare a list of the key features your cloud accounting software must have before making a purchase decision. Thus, while evaluating accounting software for its features, you need to understand what accounting tasks the software can do to make the accounting process easy.
Do you need software that offers basic accounting features like generating invoices, tracking expenses, managing inventory, etc.? Do you need third-party integrations to automate your accounting process? Are additional services like payroll processing, time tracking, etc needed? Will your accounting software make your tax filing easy? What kind of reports do you want your accounting software to generate?
Consider Your Budget Limitations
Different accounting software is priced differently based on the features that each of them offers, the number of users they allow access to, and various other factors. Consider how much you can spend on cloud bookkeeping and accounting software has given your business needs in terms of the features that you need.
While making a decision for purchasing accounting software, you need to decide how and who all can use your accounting software. For instance, see if your accounting software offers multi-user access so that you can collaborate easily with your business partners and accountants.
Likewise, see if the accounting software offers mobility by being based in the cloud and allowing you to manage your books of accounts anytime, anywhere, and through any device.
Consider The Right Questions
Once you have shortlisted, you can register for a free trial to see if the accounting software has the required features that you need to manage your books of accounts, ask important questions to the marketing teams of the accounting software such as:
- The security standards it uses.
- Does it offer tailor-made solutions to fulfill your business needs?
- What is the number of users who can simultaneously get access to the accounting software?
- Is accounting software good for your industry?
- How can accounting software help you in complying with the accounting and tax regulations, tax preparation, etc?
- Is the backup of your data available?
- What is the cost of cloud-based accounting software? Are there any setup charges?
- What is the kind of customer support available?
How Much Does Accounting Software Cost?
The cost of accounting software varies based on the features and the user access it offers. The majority of cloud-based accounting vendors offer software as a service (SAAS) in place of license for such software.
Thus, they bill you in the form of a subscription fee that could be monthly or annually depending upon the plan you take. There are a number of plans that an accounting software vendor offers which fall in different price bands.
The accounting software on the lower side of the price band comes with basic accounting features. However, the ones of the expensive side offer advanced features like inventory tracking, purchase order management, sales, and expense tracking, automatic invoice reminders, creating and sending customized invoices, etc.
Such accounting software comes with third-party integrations to offer additional features, thus enhancing the accounting capabilities of such software. The accounting software vendors also offer discounts if you choose a yearly subscription plan over the monthly plan.
About QuickBooks Cloud Accounting
QuickBooks is cloud-based accounting software that helps you manage your books of accounts on-the-go. It offers smarter tools so that you can manage your business in a better way. Furthermore, your accounting data is safely hosted on the cloud for you to access the same anytime, anywhere, and across any device.
With features like sales and expense tracking, inventory management, payroll processing, invoice generation, customized report development, etc, QuickBooks Online makes cloud bookkeeping and accounting seamless.
Let’s have a look at how QuickBooks can make your accounting tasks easier and helps you run your business on your own terms.
Manage Your Business On The Go
QuickBooks Online lends mobility as you can manage your business from anywhere, at any time, and across multiple devices. Since all the accounting information is hosted on the cloud, you do not have to be bound to your desk to access important information.
You can create and send customized invoices within seconds to your customers, generate reports, and collaborate with your remote teams seamlessly at any time from any part of the world.
Track Your Expenses
You can easily and accurately report your income and expenses with QuickBooks Online and make sure that you do not miss out on any expense to claim desired tax deductions. QuickBooks enables you to integrate your bank accounts to automatically import transactions and categorize expenses by setting custom rules.
Furthermore, QuickBooks learns from such expense categories over a period of time and thus automatically sorts expenses into tax categories. You can even capture your expense receipts which are then automatically matched with your expenses.
Create and Send Business Forms
QuickBooks Online enables you to generate and send customized business forms such as invoices, sales receipts, estimates, etc to your customers and vendors within minutes so that you pay as well as get paid on time. It also allows you to use custom templates, send payment reminders, and recurring invoices making the payment process further simpler.
Know Where Your Business Stands
With a dashboard giving you a snapshot of your business such as profit and loss, open and overdue invoices, account balances, etc. you can instantly see how your business is performing. The customizable reports also help you in giving a fair overview of where your business stands.
Take Control of Your Cash Flow
With QuickBooks, you can easily see what comes in and goes out of your business and take charge of your finances. QuickBooks allows you to track and organize your accounting data and generate a cash flow statement. The cash flow statement helps you to know how much money is coming into your business so that you can make your vendor payments accordingly.
Cash is essential to run your business successfully and thus by knowing the cash position, you can make informed business decisions.
Free Unlimited Support
You can seek help in case you face any issues with your QuickBooks Online Accounting Software through customer support available 24×7 via phone, email, or chat. In addition to this, you can seek instant help, advice, and answers from other small business owners who are facing similar problems like you on QuickBooks Online Community. Furthermore, you can learn about QuickBooks features, functions, and benefits through QuickBooks webinars, step-by-step videos, and other resources like articles, how-to guides on the QuickBooks blog.
FAQs on Cloud Accounting Software
How Does Cloud Accounting Work?
How Secure is Online Accounting Software?
What are the Benefits of Working in the Cloud?
How Cloud Accounting Software Can Take Your Business To The Next Level?
What Type of Industries are Using Online Accounting Software?
What is Cloud Accounting Software?