The way we do bookkeeping and accounting may just be undergoing a major revolution! Many business owners are discovering how cloud accounting software can save them money and also improve their business’s efficiency and security in a number of ways.
What is cloud accounting?
With cloud accounting, instead of purchasing and downloading software packages and ongoing updates, or making use of spreadsheets or manual bookkeeping systems, you get to access and use software over the internet for a monthly fee. Your data files are stored online and can be accessed from just about anywhere – as long as there is a secure internet connection available.
Like other cloud applications – such as email, free cloud storage and virtual fax – cloud accounting has the potential to provide enormous efficiency benefits for an SME. Five examples of these benefits are listed below.
How cloud accounting can be good for an SME
- Save time – research by MYOB showed the majority of surveyed businesses that made use of cloud accounting services reported substantial time savings on end-of-month processes, and also felt that their accounts were more up-to-date. In particular, the bank feeds function (for bank reconciliations) was shown to make bookkeeping processes more streamlined and much easier and quicker to do.
- Save space and money – savings can result from a reduced need for hardware and software. In addition, using online file storage may eliminate the need to keep printed copies of documents, in turn saving on the space and costs associated with printers, ink, paper, and storage space.
- Reduce disruption at year-end – by providing your external accountant with instant access to your files, you can reduce the inconvenience of transmitting or sending information such as financial reports, and also benefit from less disruption to your business while you wait for account audits.
- Keep your data files more up-to-date – if access is provided to multiple users, including sales personnel out in the field, files can be updated instantly, helping to ensure that they are as ‘real time’ as possible. This can also save time for office personnel in entering and processing transactions – sometimes hours or even days after they have occurred.
- Improve security – cloud accounting services generally come with data security guarantees. In fact, your data files may actually be safer and more secure with online accounting than when stored on your own server, due to the capacity of large online companies to access sophisticated encryption and security systems. The fact that your data files are stored online can also reduce or eliminate the need to make and store backup copies of your data each day.
Examples of cloud accounting
There are a number of cloud accounting services currently available, including:
- Xero – popular platform that comes with multiple functions and the capacity for various add-ons. Prices start at $25 per month.
- FreshBooks – easy-to-use small business online program that includes recurring expense tracking, time tracking and other features. Starts at $12.95 per month.
- QuickBooks – well-known accounting program for small businesses that includes synched bank feeds and many other features. Prices start at around $10 per month.
These are just a small sample of the cloud accounting programs available. Many cloud accounting systems also provide free trials, so you can test them out and find the one that suits your business best before committing to a paid plan.
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