Top 5 Benefits of Cloud Accounting for Small Businesses

Cloud accounting is changing the way small businesses maintain their books of accounts. Until a few years ago, companies installed traditional accounting software on their office computers. But today, cloud accounting technology is available as a better alternative. Before giving up traditional accounting for cloud accounting, every small business owner asks himself: What are the benefits of cloud accounting?

It brings huge and significant changes for small businesses to move to cloud accounting solutions. Сloud based small business accounting is easier to manage and less expensive, with immediate access to real-time financial data. For this reason, most small businesses have started to use cloud-based accounting solutions.

This review will explore the five main advantages of cloud accounting and why cloud software will benefit small businesses and small accounting companies.

01 | What is Cloud Accounting?

Cloud accounting involves the management of a business's online financial data. Cloud bookkeeping relies on remote servers rather than having installed accounting software on the computer or the local server. All your accounting data is stored in these servers in the cloud, and you can access it from any location.

For one, the cloud accounting platform is more accessible than traditional accounting. Traditional systems limit users to the office computer on which the software is installed. Cloud accounting allows users to sign in from any device using an internet connection. This means they can always access their financial information from home, on a business trip, or even at the coffee shop down the street.

The popular websites for keeping accounts online have made it quite easy for small entities. QuickBooks Online, Eleven, Xero, and FreshBooks have user-friendly interfaces that even a non-accountant person can easily operate.

Cloud accounting systems are much more secure overall. Data is encrypted, and almost all cloud services perform regular backups against losses. That is, even if something happens to your device, your financial information will be safe and accessible.

02 | Our List of 5 Advantages of Cloud Based Accounting Software   

Benefit 1: Cost Efficiency

One of the major benefits of cloud based accounting software software for small businesses is that it's cost-effective. Traditional accounting software has a heavy cost associated with usage. You will be asked to buy the software licenses, install them, and invest money in the desktop software servers to store those data. Above all, recurring costs are involved in updates, perhaps technical support.

Lots of these costs disappear with cloud accounting. You do not need expensive hardware; everything is maintained and updated online. Rather than paying the steep software charge upfront, cloud accounting offers that you pay a monthly or annual subscription fee. It is far easier for a small business to manage cash flow since it can spread the costs over time.

Most cloud accounting platforms are available on subscription. For small businesses, they have become affordable since one can opt for a basic plan when starting out and then upscale resources with an advanced plan as the business grows. This flexibility means that you only pay for what you use.

Another cost-saving view regarding cloud accounting is that it eliminates all sorts of maintenance fees common in traditional systems. Most traditional systems require the business to pay separately for technical support or system maintenance. In most cloud accounting software programs, these services are all included as part of the subscription fee. The software automatically updates itself. Therefore, manually installing updates is not an issue.

This might save your business a lot in the long run, as you will not be required to invest in expensive servers or employ extra IT staff to maintain the setup. The option is cheap for small businesses that want to be efficient in managing their finances.

Benefit 2: Access to Real-Time Data

One of the most valuable features of cloud accounting is access to current financial data in real-time. For traditional accounting, you must wait for reports or manually input data before seeing the full financial picture. Sometimes, this delay can make an informed decision hard to make.

In a cloud accounting system, your financial information is updated instantly. Every transaction, cost, or income entry entered into the system automatically changes in the system in real time. This helps you know all of the updated and correct information about the financial health of your business.

Real-time data allows the owner to know exactly how things are going at any given moment, enabling him or her to make rapid decisions about the business. This helps avoid potentially costly mistakes, such as overextending the budget.

Another advantage of real-time data is that it allows one to observe the accounts and levels of business profits and coordinate expenses. It can also generate instant financial reports, as in cloud accounting.

Small accounting firms and CPA firms need timely access to accurate books and financial data to serve their clients' needs. Cloud accounting software for small accounting processes and CPA firms provides real-time updates and allows them to make more informed decisions, track client finances accurately, and produce instant reports if need be. Access to real-time data also enhances collaboration between internal team members and external clients.

Benefit 3: Scalability

Another advantage of cloud accounting is its scalability. As small businesses grow, their accounting needs will change. They will need to buy new software, upgrade hardware, and even add staff to help them manage the system.

Cloud accounting allows you to scale your operations quickly. Most of the cloud platforms exercise different levels of service. As your business grows, upgrading your subscription plan with more features or users is easy. This, in turn, allows the accounting system to grow as your business expands while eliminating costly upgrades.

When you start, you just need simple accounting, such as expense tracking and invoicing. As time goes on, however, your business may grow to the point where you will need payroll management or inventory tracking. With cloud accounting, adding these at any time, as your needs change, is relatively easy.

Another benefit of scalability is adding new users within the system. If your team grows and you want more employees or an external accountant to access it, you can easily upgrade your plan and allow additional users. This allows for growth, and businesses will not have to change their entire accounting system.

Scalability also extends to storage. As a business grows, the amount of financial data being managed is more likely to increase accordingly, at an increasing rate. Cloud accounting platforms offer scalable storage options so that you will never have to be in a condition where you are out of space.

Benefit 4: Enhanced Security

Data security becomes paramount for a small business, mainly accounting and CPA firms dealing with clients' sensitive financial information. Using traditional accounting systems, this data usually rests on an easily stolen, damaged, or lost local computer or server. A cloud-based online accounting software platform uses advanced security. Most cloud services employ encryption to secure your information, thus making it very difficult for unauthorized users to access it. Encryption makes it impossible; even if someone intercepts the data, he cannot read or exploit it in any way.

Cloud accounting platforms constantly update their security to combat newly developed threats. This includes firewalls for malware protection and two-factor authentication, which gives heightened security. Now, a person's login requires an extra check through verification through a code sent to their cell phone.

Another primary security feature concerns data backup. Cloud platforms automatically back up your data at regular intervals. This means that even if your gadget gets lost, stolen, or damaged, your financial information remains safe in the same cloud provider. You can easily access it from another device without losing any crucial data.

Where a traditional system may need to remember to back up to date or misplace its reserve data, cloud accounting instantly creates backups. Cloud accounting automatically backs up data, so you can be secure in knowing that your information will always be safe.

Benefit 5: Collaboration and Remote Access

A very important factor in any business is teamwork, and with cloud accounting, it will be easier than ever to work with your team or accountants. With classic systems, collaboration often involves manual processes such as sending files away via email or giving someone access to your computer.

Cloud accounting eliminates these barriers. From any location, multiple users can access the same financial data simultaneously. This way, business owners, accountants, and bookkeepers can quickly help in real time. This improves efficiency, reducing the need for physical meetings, and thus, one can efficiently work with clients or team members remotely. Small-scale accounting firms can offer better service with these cloud accounting services, regardless of where the team or clients are.

You could allow an external accountant access to your cloud accounting. They can log on, review all your financial information, and make the necessary adjustments without ever setting foot in your office, and that way also saves so much time.

Another positive aspect of cloud computing is remote access. Cloud accounting enables your team to access financial information anywhere, whether they work from home or travel to a different office. It requires only an Internet connection.

During the COVID-19 pandemic, remote work became common in many businesses. For businesses using cloud technology for accounting, remote work simply meant their business didn't get disrupted because they could access applications from anywhere. Small companies need to try to stay agile now.

03 | Conclusion

The benefits of a cloud-based accounting system for small businesses and small accounting firms vary, from cost-effectiveness and real-time access to financial data to scaling your business, offering heightened security, and facilitating collaboration with much more ease.

Cloud accounting helps the owner of a small business simplify finance processes and cut costs, enabling him to make better decisions. If businesses with data security and access moved manual data entry to the cloud-based system, it would save time, money, and resources.

Cloud accounting is the right choice in cases where you seek a solution that would grow with your business. Now might be an excellent time to think about investing time and resources in cloud finance solutions by learning about different cloud accounting platforms and how to take full advantage of the many merits they have.

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