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6 advantages cloud accounting can provide for your business

13/04/2017 by Pascoe Partners Accountants

6 advantages cloud accounting can provide for your business

We’ve all heard people talking about ‘the cloud’, whether it’s in terms of cloud applications, cloud backups, cloud accounting or whatever. But what exactly is ‘the cloud’? And why has it become such a popular buzzword?

In simple terms, ‘the cloud’ is a massive computer that’s available from the internet. (In reality, it’s a massive network of computers and hard drives connected to the internet.) And instead of software being installed on your computer at home or at work, it gets installed on this ‘cloud computer’, which you then access like you would a website.

The term ‘cloud computing’ was first coined in the mid-90s. But with the availability of high-speed internet connections and inexpensive computer hardware, it’s now a viable alternative that everyone can take advantage of.

And cloud accounting certainly has its advantages. Here are six of them:

1. One of the biggest advantages of cloud applications is you can access them from anywhere at any time. And because they’re web-based, you can use them on any device with a web browser—computer (Mac or PC), smart phone, tablet, etc.

2. Online security. You may think having your information accessible on the internet would make it less secure. But most cloud applications use encryption and other security measures just like the banks. Providing you use strong passwords, your information will be safe.

A lot of cloud software applications also support two-factor authentication. Once you’ve successfully entered your username and password, it will ask for another password that is only available on your phone. They may send you the code via SMS, or have you use an app that generates a new code every 30 seconds. So even if someone does crack your password, they still won’t get access.

3. Physical security. How secure would your information be if someone stole your home computer? With cloud applications, there’s no need to worry because none of the information is stored on your hard drive.

And if there’s a fire or other disaster, your information will still be safe. Not only is it stored in another physical location, it’s stored in multiple locations around the world for safety.

4. Software updates and backups. Remember the dramas of updating the software on your computer? Will it fail halfway through? Will it still work on my computer? Will the latest version be compatible with my data files?

Fortunately, that’s not an issue with cloud applications. The software is updated automatically, so you’ll always be using the latest version. And the updates are included in your subscription.

You don’t have to worry about backups, either. The companies hosting the cloud applications will do them for you, and store in multiple locations for added safety. No more worrying about faulty hard drives or backups you can’t restore from.

5. Most cloud applications allow multiple users to access the same information (providing they’ve been given access, of course). For cloud accounting packages such as Xero, it means clients and accountants can review the same data at the same time.

Of course, accounting information is most useful when it’s current. Most cloud accounting packages allow for daily data feeds from most common banks. As well as saving time, it ensures the information is always up to date. Which is vital for making business decisions.

6. Integration with other software. Most cloud-based applications can integrate with other applications that provide specific functionality.

For example, integrating a cloud accounting package with a reporting package such as Spotlight Reporting gives small business owner access to real-time dashboards. They can quickly see how the business is performing, and even make ‘actual to budget’ comparisons.

These tools can help business owners forecast problems such as cash flow issues before they happen, giving them time to take preventative measures, another advantage of cloud accounting. Xero has more than 500 add-on applications in its Marketplace that can integrate and share its data with systems that look after inventory control, point of sale, time management, etc.

There are several cloud-based accounting solutions for a monthly subscription including MYOB, Xero, and Quickbooks. Unfortunately for our farming clients, Agrimaster still hasn’t made the transition despite our encouragement. The Figured application is also designed for farmers and will integrate with Xero, but it hasn’t gained much traction in Western Australia yet.

Of course, there’s one downside to cloud applications: If you lose internet access, you can’t use them. But with the NBN being rolled out across the country, and access to 4G internet from any mobile phone, this should rarely be an issue.

If you’d like to know more about cloud applications, and the advantages they could bring to your business, get in touch with us today.