In every industry, there exists fierce competition amongst businesses in order to become the most preferred and loved brand in the eyes of customers. This is true for the accounting industry as well, which is witnessing an increase and change in customer expectations owing to the digital and modern era of 2020. To meet these expectations, accounting firms need to streamline their processes to not only enhance in-house operations but customer service as well. One of the best approaches in this regard is that of moving your accounting process to the cloud.
Cloud accounting refers to using software similar to desktop software but which is hosted on third-party servers and can be managed and controlled from anywhere. As per the reports of Accounting Today and Statista, cloud accounting is used by 58% of large companies and 64.4% of small companies, respectively. This is the reason that the global market value of cloud accounting was $2.62 billion, and may reach $4.25 billion by the end of 2023, explains Flexi. So, let’s get started and know about the top benefits of moving your accounting process to the cloud.
Source: 23 Stats Every Accountant Should Know
Top 10 Benefits of Cloud Accounting
1. Instant Financial Information Access
One of the biggest benefits associated with accounting is the fact that it is able to link to your firm’s bank feeds directly. This means your entire financial transaction records can be pulled out from the bank into your cloud accounting software by simply linking with it. This will save you a lot of time since you would not be required to upload bank statements directly. This enables you to have instant access to the financial information and also the cloud keeps your financial records updated by capturing bank transactions, along with supplier and debtor invoices.
The great convenience is assured with cloud accounting software as you can gain access to financial information stored on the cloud from anywhere and at any time. This means you do not have to be present in your accounting firm to see the financial records as you can do it remotely as well. Moreover, most of the cloud software offers app versions too, enabling you to access it through your Smartphones itself.
3. Direct link to your board, investors, and advisors
It is imperative to have advisers whom you can trust to guide you in managing the finances of the company. With the help of cloud accounting, your team and advisors can share a single platform and exchange information that is in the best interest of the company. This assures investors of good strategy making to boost productivity and profitability, giving a clear picture of the company to the board of directors.
4. Instantaneous Transactions
You have the option of getting the transactions entered electronically the moment they occur. It is a superior option as compared to keeping physical records of all the transactions since it saves you time, effort, and money as well. In case you are dealing with multiple currencies, cloud accounting software has the potential of calculating the exact amount with respect to the exchange rates and currencies, making your transaction recording process truly streamlined.
5. Security and Backups
Every accounting firm is concerned regarding the security of its sensitive financial data, and with the increasing number of cyber-attacks occurring; this concern is getting bigger and bigger. Data stored in the desktop software of a firm's system is always at the risk of a loss due to theft and natural or man-made disaster, which is a growing concern amongst businesses, especially small businesses. As per the Accountancy Age report, 78% of the small businesses will be dependent on cloud accounting by 2020. The simple reason being cloud data access is encrypted and protected by a strong password, along with having additional security in the form of network firewalls and access filtering processes. Apart from this, the robust quality of cloud software offers unmatched backups of the important financial information which can be recovered any time owing to a natural or man-made disaster.
Source: Why Cloud Accounting Is Right for Your Small Business
6. Access to the App Ecosystem
With the help of open APIs, you can easily add multiple tools and different third-party apps to expand and make your core business system more powerful. Apps for online invoicing, cash flow forecasting, and tools for project management and other essential tasks can be easily added. With these on board, you get to identify problems in advance, reduce resourcing costs, and save time, eliminating your administrative pain on the whole eventually.
7. Boost Accountant-Client Relationship
Cloud accounting fosters relationships between accountants and clients since they are able to exchange information in the form of tax and other documents on a single platform that ensures transparency but makes the overall process a lot easier. Remote accessibility enables accountants to serve their clients even better as they can assist their clients from anywhere at any point in time. This paves the way for enhanced client service and satisfaction levels, leading to boosting the account and client relationship to a great extent.
8. Simplified Tax Compliance
It is imperative to stay compliant with the IRS guidelines since not doing so can result in heavy penalties. Cloud accounting helps you in this regard in a more refined manner. It lets you know of important things like the tax amount you paid overtime on a particular tax or the tax amount you owe concerning specific invoices, and more. Cloud accounting software such as Quickbooks makes it effortless for you when it comes to compiling the entire information needed to file an error-free remittance.
9. Better Financial Processes’ Control
With the help of cloud accounting software, you are able to enhance the efficiency of your financial processes, along with managing and controlling them in a better manner. This is because cloud accounting allows you to have a clear outstanding debts’ overview, breakdown of the amount owed by your every customer, expected income view, and more.
10. Analysis Tools
It doesn’t get easier managing a business while having a great advisor on your side. However, you do not need a human advisor every time for your accounting firm to gain valuable financial insight. You can do this through analytical tools as well. Cloud accounting helps the accounting firm owners in customizing their reports, along with giving them valuable inputs on choosing the best report as per their business type. For instance, you can simply run an Accounts Receivable report to know who all are amongst your customers who have not paid yet. All this lets you see the bigger picture of your firm and make futuristic decisions based on the same.
List of Top Cloud Accounting Softwares:
1. QuickBooks Online:
Intuit’s Quickbooks Online is one of the most popular and preferred accounting software available in the market. Its powerful features and cost-effectiveness make it a favourite amongst both the businesses and self-employed individuals.
Xero is a great in-budget cloud option for businesses for managing payroll, inventory, invoicing, and more, which includes the 24/7 live chat support option as well.
3. Wave Accounting:
If you are looking for a free of cost accounting software that can provide you with basic accounting features like bookkeeping, invoicing, etc., Wave is the name for you.
4. Sage Business Cloud Accounting:
Its key functionalities include Office 365 integration, customizability, detailed item and contact records, robust inventory management tools, great (mandatory) support options, and more.
5. Fresh Books:
This is an apt choice for solo business owners and freelancers, especially when it comes to managing reports, tracking, payments, and inventory. Also, it is extremely easy to use this software.
6. Zoho Books:
This software is highly preferred by small to medium-sized businesses. Its key benefits include easy-to-understand graphs and dashboards, automated payment reminders, and tools for managing banking, inventory, and more.
Look no further than FreeAgent if you wish to track your time and receipts, monitor your cash flow, create multiple invoices and estimates, etc. You can assess its potential by starting its 30-day free trial!
MYOB has been highly popular accounting software in New Zealand and Australia for many years, and now, they have their own cloud accounting product.
It was established in 2005 and has been used at large by businesses and individuals for quite a few years now.
So, in a nutshell, it is clearly established that accounting firms reap multiple benefits by moving their accounting processes to the cloud. As per a Sage Practice of Now 2018 Report, 67% of accountants prefer cloud accounting now since it not only enhances the security of your data but makes it easily accessible and shareable amongst you and your clients. This makes it a must for accounting firms to invest in cloud technology and benefit from the same. However, a lot of CPAs and firms are unable to leverage cloud technology due to a lack of time or resources owing to a plethora of clients to deal with at the same time.
In such a case, using outsourcing accounting services is a viable option as its team of professionals can provide you with the same quality output using even more advanced technology and that too at a lower cost. This is already proved with a Forbes report which states that cloud accounting brings down the labor cost by 50%.