Cloud accounting 101

Cloud accounting software is a must have and mainstay for any business owner who is looking to enhance productivity, and increase efficiencies. The importance of cloud accounting and the impact across businesses has been felt more and more, and especially since the impact of COVID-19. 

Online based work has seen a surge and small and large businesses alike have pivoted, and cloud based software applications has seen a similar surge in growth as it has become more popular across Ireland as businesses have shifted. 

While there are many reasons for the shift but most notably cloud accounting software is an easy solution to small business accounting. From collaboration to secure data storage, as well as ease of use, it has allowed for more control and management than ever before.

We look at the key areas of cloud accounting and the impact on your business:

• What cloud based accounting software is
• The differences between cloud based and traditional accounting software
• The benefits of cloud accounting software
• The associated costs
• If cloud based accounting software is right for you
• The future of cloud accounting software

What is cloud-based accounting software?

Cloud-based accounting software is based in the ‘cloud’ rather than installed on your desktop or manually maintained in ledgers and journals. The software for cloud accounting is hosted on a remote server instead of a server on your business’ premises. Your accounting data is sent to the cloud, processed on the remote server, and then sent back for you to access.

None of the accounting processes occur on your desktop. The application functions entirely in the cloud. This frees your business from installing and maintaining software on multiple computers throughout your company. Your accounting or HR department can access the exact same version of the software as you and access real-time data within your account.

Differences between cloud accounting & traditional accounting systems

Cloud accounting and traditional accounting have some key differences. Cloud accounting is much more flexible, allowing anyone who has access to your cloud account to crunch real-time numbers from any device, anywhere, as long as there’s an internet connection.

Owners and accountants can utilise online apps and services to access and collaborate on a number of projects and key metrics. In fact, balances reflected by your entries with cloud accounting have a high level of accuracy, as far fewer errors occur in cloud accounting than in traditional, manual accounting.

Benefits of cloud accounting

There are many benefits of cloud accounting and for new businesses, starting fresh with a cloud solution is easy as signing up. Established businesses, however, will need to plan ahead for migration to ensure that critical data is kept intact, and everything continues to run smoothly.

Fortunately, major cloud accounting providers such as QuickBooks allow seamless transition from older, traditional desktop based solutions. Many business owners who migrated to cloud accounting technology have reported cost savings and greater efficiencies in day to day operations.

Cloud accounting has several benefits, such as:

• Secure Storage of Financial Data

Cloud accounting technology can provide a more secure method of storing financial information than desktop-based software. Data is routinely backed up to servers in multiple locations by the SaaS provider, and there are no physical hard drives or computers containing sensitive data that can be stolen. Since financial information isn’t kept on-premise, the risks of fires and natural disasters are also mitigated.

• Sync data automatically

Cloud accounting software does the heavy lifting so you can spend your time on other important business tasks. Automatically sync your bank accounts so you don’t have to manually import transactions or verify expenses. 

• Pay as you grow

Small businesses often experience growing pains, which makes choosing software with future growth in mind a priority for many. Cloud accounting software allows businesses to purchase what they need and increase their spend as they grow. This includes adding more storage space, users, and more advanced features.

• Centralises your most important tasks

Several aspects of your day-to-day business operations, like managing inventory, invoices, payroll, and even portions of your customer relations management can all be tied into your cloud accounting software and many third-party systems integrate seamlessly with systems like QuickBooks.

• Simplify tax compliance

Cloud accounting software helps by showing you things like how much tax you owe (even down to specific invoices) or how much you’ve paid overtime on a specific tax. Cloud accounting software like QuickBooks makes it much easier to compile the information you need to file a successful return.

• Analysis tools

Cloud accounting software not only gives you tools to customise your own reports, they even suggest reports for you based on the type of business you own.

There’s a report you can run for virtually every question you have regarding your business’ financial health. Wondering which of your clients haven’t paid you yet? Run an Accounts Receivable report.

• Accuracy

The accuracy of your numbers is crucial and cloud accounting software does the calculations for you. It also maintains other necessary information, like inventory on hand, supplies on hand and which vendors you use for which products. 

Is cloud accounting right for your business?

There is little doubt that cloud accounting software has benefits for small and large businesses, it can help you manage your payroll expenses, tax remittances and other business expenses.

Whether it is right for your business depends on the nature of it, but due to the ease of use, flexibility and agility, as well as cost savings, it makes sense for businesses, small or big to consider it as a strong option.

How much does cloud accounting cost?

Costs can vary greatly among different cloud accounting service providers. QuickBooks Online offers a free, 30-day trial of its online accounting software.

All Quickbooks packages allow you to, track income and expenses, send custom invoices and quotes, connect your bank, track VAT and much more.

The tiers are as follows:

The Simple Start package at SGD21.40 per month is ideal for small businesses and teams starting out that only need one user, plus your accountant.

The Essentials package at SGD32.10 per month is ideal for businesses that are growing with three users, plus your accountant and includes all the features included in the Simple Start package, as well as insights and reports, manage employees, and multi-currency options

The Plus package at SGD42.0 per month is ideal for businesses that are starting to scale, with five users, plus your accountant and includes all the features included in the Essentials package, as well as recurring transaction, inventory, projects and more

Quickbooks cloud accounting online software offers the usual online compatibilities, as well as Android and iOS mobile applications.

The Future of Cloud Accounting

The future of online based work and cloud based software applications has never been more relevant, or exciting and will impact the future of South African small businesses. The benefits will be felt with AI, continued integrations as well as continuous improvements and rollouts. 

Machine Learning and AI

Artificial intelligence and machine-learning algorithms are already starting to make a difference in how small businesses in South Africa are handling their accounting in cloud-based software.

As small businesses across South Africa take in ever-increasing volumes of data, a sorting mechanism must be employed to make sense of it and draw reasonable conclusions. With the right machine learning systems, it becomes possible to not only track the income and expenses for a single company, but to track those of an entire industry across decades of recorded data and derive likely projections from it. This has obvious applications for both up-and-coming small businesses and large organisations alike.

Using advanced processing and various data points, AI can make predictions about the financial health of your company.

It can aslouse key signals to further make predictions about which customers, clients, or markets are good, or bad bets. A good AI system could help you see any potential opportunity or problems in particular locations.

Useful for both planning, pivoting and scaling, AI will add a range of benefits to assist small businesses make the best decisions possible using their custom data.

Continued Integration

There are various methods of continued integration across cloud-based software systems, with compatible apps with software being commonplace, with various banking connections available.

Seamless integration of apps with different capabilities is an ongoing project for many app and accounting software developers. This trend can only continue, until something like a market standard for compatibility is common to every app, and a cloud-based solution is available for virtually any need that could arise.

Another approach is layering applications and allows for a fully customised solution for businesses. Everything from payroll security, and more is possible with application layering. While this is already possible with the integration capabilities of QuickBooks, it is safe to say that layering will be an essential aspect of cloud-based systems of the future.

Overall, the future of cloud-based accounting systems has never looked brighter.

Ready to dive in? Online accounting software like QuickBooks offers several different cloud accounting features depending on the size and type of business you own. Over 5.6 million businesses use QuickBooks. Join today to help your business thrive.