What is cloud-based accounting software?
It’s accounting software installed not on your desktop computer but on remote servers, which you access through the internet.
What can cloud-based accounting software do?
Everything you would expect from an accounting package, including the tracking of payable and receivable accounts, generating invoices, synchronizing with your bank accounts, managing bill payments, generating financial reports and cashflows … and much more.
Why has cloud-based accounting software become so popular?
As a business owner, you have a number of book-keeping and accounting options available, including using spreadsheets or traditional desktop software. Or you can opt for cloud-based accounting software which, as well as giving you the full range of book-keeping functions, is easy to implement. You don’t need to worry about installing software or managing updates, as everything is taken care of by the provider, including the maintenance. And because you pay by monthly subscription, you can very easily add or remove users to reflect the changing needs of your company. Such convenience and flexibility is increasingly attractive to many businesses.
How easy are these packages to use?
In the past, accounting packages were designed primarily for book-keepers and accountants, so they could be rather difficult to understand and use. However, with the advent of the cloud, packages have become much more user-friendly, to better meet the needs of business owners who find book-keeping the least enjoyable part of running their business and just want a straightforward tool.
When you’re dealing with sensitive financial information, how secure is cloud-based accounting?
Some businesses have been hesitant to move to cloud-based accounting solutions because of worries about the security of data. However, online banking, which so many of us do, is just one example of a very sensitive application using the cloud to make our lives easier, so there should be no real concern about using cloud-based accounting systems.
It also means that your data is stored ‘off premise’, so your financial information won’t be compromised in the event of major disaster such as a fire. Statistics from the U.S. Institute for Business and Home Safety reveal that a quarter of small businesses don’t reopen after a major disaster.
Is cloud-based accounting software cost-effective?
Very, because you pay a monthly subscription to use the software, so there is no hefty upfront fee to buy it in the first place, or to upgrade later.
Can you share this financial information with others?
Yes, very easily. Because the information is stored on the cloud, you can give access to off-site employees, accountants or financial advisers, wherever they are.
How do you stop people potentially working on different sets of figures?
Data is updated in real time, so there is no opportunity for different people to work on different sets of figures at the same time. What one person sees, everyone sees.
How often do you need to update the system?
You don’t. Updates are carried out automatically by the software provider.
How can I make best use of cloud-based accounting software?
Accounting and bookkeeping are two examples of how traditional services are being revolutionized by cloud-based business software. Any business that wants to be as productive and efficient as possible needs to think about adopting a wider, more comprehensive digital strategy. This should include not just the introduction of cloud-based accounting software, but also CRM, email marketing and PBX technology for phone systems.
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Cloud-based accounting – Glossary
Cloud accounting – an accounting system that is accessed through the internet.
Cloud application – a software application that is never installed on a local machine and is always accessed over the internet.
Cloud portability – the ability to move applications (and often their associated data) between different cloud computing environments offered by different cloud providers.
Cloud provider – a company that offers a cloud-based platform, infrastructure, applications or storage services for others to use.
Online book-keeping – the day-to-day tracking of financial information using online accounting services.
Perpetual license – payment of an upfront fee to own a software program and to use it indefinitely. This is the traditional licensing model used for on-premise software.
Software license – a legal agreement that sets out terms for the use of software for a fixed or unspecified amounts of time.
Subscription license – software you don’t own but can access by paying a subscription to access and use. Subscription-based licensing is the usual way to pay for cloud-based software.