Guide to Cloud Accounting Software: What You Need to Know

There was a time when cloud technology was available only to enterprise-level companies. As of 2018, however, almost three-quarters of Canadian organizations had moved to the cloud in some capacity. Today, some 5.6 million businesses rely on QuickBooks alone for their cloud accounting software requirements.

Moving to the cloud not only supports remote collaboration and ensures business continuity, it provides real-time visibility into your cash flow and other accounting data. And that’s especially important during times of financial uncertainty.

Cloud computing processes are clearly here to stay. So if your business has yet to take advantage of all the benefits cloud accounting software has to offer, here’s what you need to know.

What is Cloud Accounting?

Before we discuss cloud accounting specifically, we need to get clear on what cloud technology is.

In practical terms, the cloud is simply another name for the internet. So data and software programs you’d normally store and access from your desktop computer’s hard drive are stored and accessed online instead.

With traditional desktop accounting, for example, you install software directly onto your computer by way of a disk or download and perform all your accounting functions from there.

With a cloud-based version of the software, all your accounting solutions and applications are virtual and are hosted by remote servers that:

• Process your accounting data,
• Store it securely, and
• Provide users access to it only with your authorization

Cloud accounting delivers a range of options for navigating your bookkeeping functions more efficiently – from small business accounting software like Xero and QuickBooks Online (QBO), to receipt management solutions like Receipt Bank.

7 Great Reasons to Use Cloud Accounting Software

With the growing trend toward workplace flexibility – and the ever-present threat of a health or financial disruption – it’s no surprise that cloud-based accounting software and solutions are on the rise.

The biggest benefits of cloud accounting include:

• Enhanced security,
• Greater convenience,
• Increased efficiency, and
• Bigger cost-savings

So let’s take a look at some of the top reasons why so many small business owners are choosing to keep their books in the cloud instead of relying on traditional accounting software.

1. More secure data

Cloud accounting software stores and backs up your financial data across multiple data centres. It takes advantage of password-protected login, firewall-protected servers, and bank-level encryption technology. Since remote data centres have better security than most small businesses, you stay better protected against data loss and privacy issues.

2. Improved collaboration

Because you can both grant and control access to your cloud-based data from anywhere, your team can work from home when they need to. You also have the option of sharing your financial information with your accountant remotely.

3. Better financial clarity

Cash flow visibility is crucial at the best of times, but never more so than when your business’s financial health is at risk. During an economic downturn, for example, remote access to the same data means you and your accounting team can make important decisions any time, from anywhere, such as:

• Where to quickly reduce company expenses, or
• How to best shore up cash reserves

Immediate access to your company’s accounts receivable listing, meanwhile, lets you stay on top of which clients you should be collecting payments from as soon as possible.

4. Real-time updates

Because it connects directly to your bank and credit card accounts, cloud accounting software can help you pull bank feeds and run your business more efficiently by letting you track real-time changes in inventory, expenses, and income.

5. Automated workflows

You can integrate your cloud-based software with any number of automated, cloud accounting solutions, including apps like:

• Receipt Bank
  OCR (optical character recognition) technology lets you use a mobile app to scan receipts and invoices, extract relevant data, and export it directly to your cloud accounting software.
• Plooto
  Do away with cheques by sending and collecting payments digitally, automating recurring payments, and syncing payment data with your cloud accounting software.

6. Scalable business growth

With a virtually unlimited capacity for transaction data, cloud-based online accounting is ideal for helping you meet your expanding financial needs as you scale up your business.

7. Time and cost savings

Cloud accounting software can save your business time and money by:

• Automating bookkeeping workflows to reduce manual data entry, and
• Eliminating the need to maintain and upgrade desktop-based bookkeeping programs

You’ll also minimize your cash outlay by trading a large, upfront investment in software for a subscription-based, pay-as-you-grow accounting expense that lets you add storage space, users, and advanced features as needed.

Is Moving to the Cloud Right for Your Business?

The first thing you should know if you’re considering making the move to cloud accounting software is that programs like QBO were designed to accommodate businesses of all sizes, with a variety of bookkeeping needs.

Secondly, if you’re concerned about how safe cloud accounting really is in terms of processing and storing your financial data, rest assured that it offers equal if not greater security than desktop-based software:

• Encrypted data centre storage means never having to worry about losing your accounting information to fire, flood, or physical theft.
• Information loss resulting from file corruption or missed data back-ups is no longer a problem.
• You retain full access to your data even if you misplace your laptop, smartphone, or other synced device.

Finally, you don’t need to worry about integration issues with your existing system when you switch to the cloud because so many bookkeeping apps, tools, and solutions are designed to merge seamlessly with QBO and similar programs.

Plus, most accounting software that is hosted remotely comes with a free trial period so you can explore its compatibility with your everyday bookkeeping needs.

Transitioning your business to the cloud is simple.

And as a bonus, using cloud accounting software makes it easy to outsource your bookkeeping duties to a back-office specialist like Enkel when you need to. So if you’re keen to make the move, but you can’t seem to make the time, Enkel can help you with that.