BUSINESS ARTICLES
Why every business should use cloud accounting
The days of desktop accounting are over. No matter your organization’s size or setup, you can benefit from the flexibility, security, efficiency and reliability of cloud-based accounting software. And we can help.
In terms of managing a business’ financial data, cloud-based accounting software is one of the greatest technological leaps of all time. It’s a tool that every business can and should be using—no matter their size, budget or industry.
In the past, most businesses have stored their financial data locally, on computer desktops or paper ledgers. (It’s been this way for a long time. In fact, many of humanity’s earliest written documents are financial records.) This worked well enough for most businesses, but even the most powerful computers have their limits.
During the early days of COVID-19, some businesses saw this first-hand. As employees were sent home, many remote workers complained that they were unable to access the accounting software and financial data they needed. It was sitting on a desktop in the office.
COVID-19 was a sudden and extreme disruption, but it highlighted a key weakness of local data storage and desktop-based accounting software: These technologies lack the flexibility to adapt to remote work.
They can also be a security liability. Hackers love financial data that’s stored on a desktop. It’s much easier to hack a personal laptop than the kind of server used for cloud services.
Storing your financial data and accounting software stored on your desktop makes it significantly more vulnerable to hackers. Coffee, too. If financial data can be destroyed by a spilled cup of joe, it’s not secure.
Traditional, desktop-based accounting software has been used by businesses for decades. And while it was always an imperfect technology, its vulnerabilities are clearer than ever in today’s dynamic economy.
Fortunately, a better solution is here.
What is cloud-based accounting?
If you use Netflix or another streaming service, you know all about “the cloud.” The cloud is simply a network of servers – supped-up versions of the hard drive in your computer – on which information is stored. The cloud stores the shows you watch on Netflix, the photos you share on Facebook, and the docs you save to Google Drive.
The cloud can also store financial data and cloud-based accounting software. Rather than storing your data and programs on your computer desktop or a private server at your business, you can store these resources on servers at data centers: secure, remote facilities equipped to store sensitive data.
When accounting software and financial data are stored on the cloud, they can be accessed anywhere, from any device connected to the internet. This enables your accounting software to be seamlessly integrated with other programs and opens new doors for flexibility, security and efficiency.
The benefits of cloud accounting solutions
Security and peace of mind: The first and most obvious benefit of cloud-based accounting is that your sensitive financial data is safer. While cloud-based services are not immune to hackers, data-storage and cloud-service companies have robust cybersecurity solutions and teams working around the clock to protect their clients’ data. The probability that your service provider is hacked is significantly lower than the likelihood of your own computer being attacked.
You’re also protected from clumsiness. If you spill coffee on your laptop and fry the circuit board, at least your valuable financial data is safe. You can simply pick up another device, log into your account, and all of your information will be preserved. (Beyond accounting, this is a good reason to migrate the majority of your data to cloud-based services.)
And finally, you’re protected from fires and any other natural disasters that might strike your business. While a disaster can destroy a business’ brick-and-mortar location, your most valuable intangible assets are much safer on the cloud. (Disasters can strike data centers, of course, but data centers are usually located in low-risk areas. Plus, cloud service providers will typically back up sensitive data – like financial information – on multiple servers in different locations, so your data is safe even when disaster strikes.)
Flexibility: With cloud accounting, your team is no longer dependent on a single device or set of devices. Instead, you can access your accounting software and data simply by logging in through a web browser or mobile app using any device connected to the internet, including your phone. That gives your team the flexibility to work remote, while allowing multiple team members to simultaneously access and edit documents in real time.
Cloud programs also give you the flexibility to admit new users and grant access to specific portions of your financial records. For example, you can grant your accountants full access to your data, while granting members of your sales team more limited access to transactional information and other data relevant to their work. This makes it more feasible to outsource work that requires access to your business’ financial records.
Streamlined workflow: With traditional, desktop-based software, there was always the concern that your files didn’t match someone else’s, that someone on your team was working with outdated information.
Clearly, working with the most up-to-date files and financial information is critical, so many businesses found themselves scrambling to move data from one desktop to another, with employees and contractors constantly verifying that they were working with the most current files. And no matter how careful you were, there was always the fear that someone would create a report or file taxes based on old information.
Cloud accounting eliminates that fear. Since documents are shared via the internet and updated in real time, you can be confident knowing you are working with the most up-to-date files and operating systems at all times.
Freedom from localized programs: While desktop-based accounting software relied on the power of your local operating system, cloud accounting software is stored and run remotely.
Rather than downloading the software to your computer, cloud-based software lives on a set of remote servers. You can log into the program through an internet browser or app on any device, similar to how you stream videos on Netflix. This means you never have to worry about downloading the latest version of your accounting software – the software is updated remotely – and you have more space on your computer’s internal hard drive.
Automated data input and analysis: Since cloud accounting occurs on the internet, your account can be linked to other online accounts, including bank accounts, transaction software and more.
While you once had to manually input data from these accounts into local software, a cloud accounting program automates the process, saving you time, reducing the risk of error, and keeping everything updated in real time. Most cloud programs also include data-analysis tools that automatically generate financial reports, giving small and mid-sized businesses access to powerful information once reserved for large corporations.
Streamlined tax compliance: Often, one of the most time-consuming aspects of compliance is locating and compiling all the files you need. Cloud-based accounting automates this process, revealing precisely how much tax you owe at any given time, while compiling the information needed for filing.
That saves you time and resources, while helping ensure compliance.
It’s not just for big businesses
One of the most valuable aspects of cloud accounting is that it takes services once prohibitively expensive or logistically impossible for small or mid-sized businesses and makes them affordable and feasible.
You no longer need unlimited resources, powerful computers or a large internal financial department to take advantage of sophisticated accounting services. And since most cloud accounting software is available in tiers, you can invest in a package that’s right for your business’ current size and scale-up as you grow.
How we can help
While cloud accounting is affordable for most businesses and relatively easy to use, these programs have nuances that won’t be obvious to new users. And since you will be working with sensitive data, you’ll want to make sure you are using the software correctly.
At Dugan & Lopatka – an accounting firm in the Chicago suburbs – our CPAs are certified QuickBooks ProAdvisors. That means we are trained to help others navigate QuickBooks, the most popular cloud-based accounting software program.
If you use QuickBooks, we can help you:
- Ensure that you are correctly inputting data and that your financial statements accurately reflect your business’ performance.
- Set up your account.
- Master tricks and techniques to work smarter and more efficiently
- Customize your QuickBooks software according to how you do business.
- Understand the full breadth of services available via QuickBooks and learn to use the tools you need.
To learn more about Dugan & Lopatka’s QuickBooks advisory and other cloud financial management solutions, click or tap here.