Over the years, business owners and accountants have used a lot of different accounting systems that resided on desktops or network systems and the data is stored on hard drives. Many business owners and accountants even prefer to store their data locally, on a laptop or other device. However, with current development in technology, many users have made the shift from “hard drive” accounting to a “cloud” accounting system, where the use of a particular physical computer is not essential as all the information are stored in the “cloud”.
So how does this revolutionary system work and is it reliable? Let’s read more below.
- Virtual accounting
A cloud-based accounting system eliminates the need to hire a data entry clerk or encoder, especially for small businesses. The internet, through the use of Artificial Intelligence (AI) acts as your personal virtual finance manager that categorizes the data based on passed transactions and learned behavior. Cloud-based accounting also provides a program wherein you can generate financial reports with no hassle.
The cloud-based accounting system does away with the need for a physical hard drive and computer storage. Instead, you access your files electronically through the internet. A computer or mobile device, and an internet connection is the only tool needed to use cloud-based accounting. Your subscription costs and accounting service needs will depend on how often you want to access the service and any additional features you’d like to add. And since cloud-based accounting is internet-based, the bookkeeping incremental cost is primarily only the subscription for service provider.
Seeing the ease, and affordability, it’s easy to see why many organizations have made the move from traditional hard drive systems to cloud accounting. Here are some other advantages:
- Accessibility of information
Perhaps the biggest advantage of a cloud-based accounting system is the accessibility of your financial and accounting information. In many of the online-based accounting systems, the financial and accounting data are stored on a cloud server which is accessible through practically any commercially available web browser. So, no matter where you may be in the world, you will be able to access your information safely and securely. This is particularly useful for business owners who are often travelling or simply don’t have access to the computer where their information is stored.
- Automatic back-up
Some people have concerns that the cloud-based accounting system is risky and provides opportunities for hackers to steal information. While this is a real threat, under the right conditions, cloud-based accounting is exponentially safer than local storage. In a cloud-based accounting system, nothing is stored on the hard drive of a computer. All the data is stored at data centers which have multiple layers of cyber security. These protection methods also prevent any data loss, because your files stored in the cloud are automatically backed up. This saves you time since the cloud system will automatically back up your data for you so you don’t have to copy all your files to a different location.
- Real-time accounting
Most cloud-based accounting systems also allows for real-time data input. So, as soon an update is made to the information stored in the cloud, the change will immediately be reflected in the financials. Thus, there’s no need to send any changes or submit huge batches of data. In fact, many systems are connected to the organization’s bank and credit card accounts. Which means that transactions are downloaded instantly. No matter the time or the place, your financials will be up to date. This is so beneficial when reviewing financial data and generating tax returns, which are usually long tedious processes.
- Automatic updates
Not only does cloud-based accounting allow for automatic data back-up, it also automatically updates without you lifting a finger. There’s no longer a need to update software or buy a new disk every time there’s a change in the script, and you, as the business owner, can save money and time from manually updating the programs you use every day. Cloud accounting can even do away with the need for hiring bookkeepers and accountants, saving you even more money.