You may have heard of cloud-based accounting systems, but you may not be familiar with how powerful cloud accounting can be for your business. Before getting into a discussion on the benefits of cloud-based accounting systems it is first important to understand what the term cloud computing refers to.
Cloud computing uses a network of remote servers to store, manage, and process data. It eliminates the need for data to be stored on a local server or on personal computers.
Cloud-based technology allows us to run apps using a shared data centre, rather than having the data centre infrastructure ourselves. It is more scalable and reliable.
Google Drive is a prime example of how the cloud is changing the way that we work. Not only is Google Drive an efficient sharing tool but with Google Drive we can eliminate the need for clunky external hard drives that we used to buy to store large files.
We use cloud-based technology every day when we use Facebook, Instagram, Pinterest, online banking, or even our Starbucks app. The presence of cloud-based technology is already huge. The cloud will continue to impact the way that we work as different industries move their systems to the cloud. The accounting industry will be no different and change is already occurring.
Cloud-based accounting systems
Cloud-based accounting systems allow many different parties access to the same file each using a unique login. The client, the bookkeeper, and the CPA can all access the same information in real-time which streamlines the accounting process considerably. Since they are web-based applications these systems can be accessed from anywhere.
Cloud-based accounting systems also offer superior security to their desktop counterparts. Desktop accounting will create problems if a computer hosting the system is damaged or stolen.
Cloud-based accounting systems offer the level of sophistication needed for a variety of different users. While they are simple and easy-to-use for the smallest businesses, they offer users the ability to enter complex accounting entries as may be required.
Many cloud-based accounting systems allow for bank statements to be pulled in as transactions occur and make recommended account classifications based on historical transactions. The process is highly efficient and can save significant time.
In addition, other functionality can be obtained through apps that are compatible with the accounting system.
If you have cash collection issues you can plug-in Invoice Sherpa to your cloud-based system to automate the follow-up process with customers. Invoice Sherpa will send automated reminder emails to your customers prior to the invoice due date and will follow-up if payment is not received for an outstanding invoice by the due date. Messages can be customized to suit your business needs.
If you need a robust tool for expense reimbursements Expensify also integrates seamlessly with many cloud-based systems. In their words, Expensify has created “expense reports that don’t suck!”
With Expensify, the process of reporting expenses for employees is simplified through optical character recognition that reads receipt images and extracts text from the image to reduce the amount of information to be entered manually. The expense reports get imported into the accounting system and get posted with a simple click.
The list goes on and on. There is now great technology available to address a variety of business needs that had to be addressed through laborious processes. It all fits together very well through a cloud-based accounting system.
Cloud-based accounting is definitely here to stay. Its adoption has been widespread around the globe. Seven-year-old New Zealand-based Xero, for instance, has an estimated 600,000 active users and a market capitalization of $USD 2.2 billion (as of close of business on January 29).
Xero is an entirely cloud-based accounting platform designed for small businesses. Having used Xero, it is clear that the system was designed for a far superior user experience to traditional desktop accounting systems that I have worked with.
QuickBooks Online is another platform that is growing very quickly and is gaining widespread adoption in the United States.
In the next five years, it is likely that cloud-based accounting systems will dominate. In fact, Intuit is focusing much of its development efforts on QuickBooks online, rather than QuickBooks desktop.
Should you switch?
The benefits of cloud-based accounting systems are obvious. In most cases, converting from a desktop platform to a cloud-based system is quite simple. Why not get ahead of the curve and start gaining the efficiencies today.
Let Us Help!
Working with Enkel gives you access to our team of bookkeeping experts that will help you implement a refreshed, more efficient bookkeeping system to help streamline the process. We even have a full-time technology solutions analyst on staff to further support the implementation process. Contact us today to learn more about our partial and full cycle bookkeeping services for small businesses in Vancouver, Calgary, Edmonton and Toronto!