What is Cloud Accounting & How Does it Work?
Cloud accounting software can revolutionize the efficiency of your bookkeeping, streamline your financial administration and provide a real-time view of your key numbers. But with so many platforms on the market, how do you know which one is right for you? In this article, we’ll guide you through the core benefits of switching to cloud accounting, with advice on which platforms are available to suit you.
What is Cloud Accounting?
Recording the income and expenditure of your small business to keep track of your historical financial performance is nothing new. Double-entry bookkeeping has been around for centuries and accounting software has existed for decades, giving finance teams the ability to record and track the money coming into, and out of, the company.
So, how does cloud accounting improve on this? Let’s take a look at the key differences:
Traditional accounting software
Prior to the cloud, most accounting software was desktop-based. In other words, the actual application was installed and run from the hard drive of your office desktop computer. This has a number of drawbacks, including limited access to your data, the need for constant software updates, and the ongoing cost of backing up all this financial information.
Cloud accounting software
Cloud accounting (or online accounting) has all the same functionality as desktop accounting, but moves the whole process to the cloud and expands upon it. There’s no desktop application – you log in to an always-up-to-date online solution and all data is safely stored on a cloud server. Most cloud platforms will also have an open API, which basically means third-party software can connect with your system to provide even further value to you as a business owner.
Benefits of Cloud Accounting
Moving accounting from the desktop to the cloud has been a huge leap forward in financial management, with many of the drawbacks and cost implications of traditional accounting being removed from the equation. But how exactly does cloud accounting benefit your business?
Below are the key areas where a cloud accounting system adds real, tangible value.
Access your accounts anywhere
Accounting software like QuickBooks cloud accounting gives you access to your key business numbers 24/7, from any location where you can access the internet, removing the need to work from one central office-based computer. Log in via a web browser from your laptop, or use your provider’s mobile app to access your accounts from your phone or tablet.
Access to real-time information
By keeping your bookkeeping and bank reconciliation up to date, you can achieve real-time reporting. Instead of looking at historical reports that are days, weeks, or even months out of date, you have an instant overview of the company’s current financial position. This real-time overview is vital when looking at your cash position, planning future spending and when making big financial and strategic decisions as a management team.
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