The days of clunky, PC-based accounting software, or worse, old-school physical bookkeeping, are over.
Like so many other services, accounting has transitioned to the cloud. This improved technology offers some incredible benefits to business owners, accountants, part-time bookkeepers, and everyone else connected to your business’ finances.
So let’s take a closer look at cloud accounting, how it works, and what it can do for you.
What is Cloud Accounting and How Does it Work?
If you’re familiar with the cloud, you’ve already understood one of the crucial parts of cloud accounting. However, for those who may need a refresher, the cloud is a general term that refers to the massive, interconnected network of online storage options.
While ordinary people primarily use the cloud to back up their photos or other important files, it also allows entire applications to be run online, letting users tap into powerful programs simply through their web browsers.
When it comes to cloud accounting, companies will need to pick a service to use, with common options including QuickBooks or Xero. These keep all your relevant bookkeeping and financial information online in one place.
In many cases, they connect directly to your banking and credit card accounts to automatically upload transactions, saving you or your employees valuable time.
Anyone with proper access credentials can log in to view or update the data, whether it’s an owner checking how things are going or an outside accountant helping prepare tax returns or other documents. It’s that simple!
Limitations of Traditional Accounting
If your organization is skeptical of cloud accounting, it’s crucial to point out that traditional, old-school accounting also has its drawbacks.
Without diligent work from your employees and financial staff, data may not always be up to date. At the same time, your business is exposed to the risks of human error and issues with manual input.
Data kept on a PC or in a physical ledger is also both:
- Less convenient to access
- Less secure from potential breaches or equipment failure
Plus, traditional accounting tasks like logging expenses and receipts take up significant amounts of time that could be better spent on growing your business or solving the many other issues that confront owners and managers on a daily basis.
Benefits of Cloud Accounting
Cloud accounting may seem new or unfamiliar, but it offers solutions and improvements to many parts of the business’s financial process. Here are a few of the most significant:
Easy Integration
Proper accounting relies on the right information making it to the right place, and cloud accounting helps do exactly that. Common packages like QuickBooks or Xero seamlessly integrate with:
- Your bank account
- Credit card accounts
- Other software and apps
When all of your technology plays well together, you’ll find yourself unlocking new insights and saving lots of time.
It’s Efficient
For the above reasons and many others, cloud accounting is much quicker than traditional methods. Plus, through automatic updates, you’ll be able to see the most up-to-date data anytime you need to. In a world of rising costs and busy employees, efficiency like this can be a lifesaver.
More Accurate
Have you ever heard of a “fat finger” error? That’s when someone manually inputting data makes a mistake simply because they pressed the wrong key. This kind of error can turn a 10 into a 1 or a 100, for example, which can dramatically affect your understanding of your finances and may take extensive time to root out and correct.
With cloud accounting and automatically integrated transactions and information, you can be far more confident that the data in your system is accurate, with little to no opportunity for human error.
Collaborative and Scalable
When your accounting data is all kept in one place, it’s much more difficult for multiple team members or outside help to view and interact with it. Cloud accounting makes it easy not only to collaborate with your bookkeeper but also for other team members who can learn from the valuable data.
Plus, your cloud footprint is virtually unlimited, meaning your storage and collaborators can grow as your business does.
Secure
No one ever wants to deal with the nightmare of doing extensive accounting work and losing all of their data to a power outage, crashed hard drive, or other catastrophes. Cloud accounting programs typically save your work automatically, ensuring you’re always up to date.
With professional storage also comes the benefit of extensive backups, meaning you’ll never lose your files. Finally, you can rest assured your data is securely stored and encrypted when using any reputable cloud accounting service, keeping it away from those who shouldn’t have access to it.
What Does Cloud Accounting Look Like When You Work with a Bookkeeper?
Cloud accounting allows you, any staff, and your bookkeeper to all work collaboratively on your books – even at the same time! The key is finding the right way to integrate the many features of cloud accounting services with your business needs.
At Vertical CPA, we help determine your ideal tech stack, so all the apps and software work together seamlessly.
Interested in Learning More About Cloud Accounting?
As you can see, cloud accounting is a revolutionary technology that can transform a business’s financial system. It allows easy collaboration, reduces human errors and time spent on menial data entry, and offers a secure but shareable storage solution.
If all of this seems a bit overwhelming, don’t worry. Vertical CPA‘s experienced financial professionals are experts in cloud accounting and are ready to help. Contact Vertical CPA today to learn more!
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