With a rapidly changing business environment, adopting innovative technologies has also become crucial to survive the competitive market. One such technological advancement revolutionising financial management is cloud accounting. If your company is still using the traditional accounting method which includes desktop software or spreadsheets, then it is necessary to consider upgrading to the cloud-based accounting system.
Cloud accounting systems offer benefits that help cater to the dynamic needs of modern businesses.
In this blog, we will be exploring the top benefits of cloud accounting for modern businesses focusing on security enhancement, increased efficiency, and cost effectiveness in relation to accounting and payroll outsourcing.
What is Cloud Accounting?
Hosting of accounting software on remote servers is referred to as Cloud Accounting. Unlike traditional accounting software that was installed on local computers, cloud accounting provides the significant benefit of storing all the financial data online rather than on in-house servers and hard drives, enabling businesses ease of access and management from anywhere through internet connectivity. Thus, it helps in modernising the accounts department of the organisation with the help of the latest digital infrastructure and processes. This modernisation includes automation, advanced analytics, and cloud computing along with facilitating real-time updates and data synchronization across multiple devices.
Benefits of cloud computing
With the changing business environment, more and more businesses are now turning towards technological advancements, which include using accounting applications hosted by the cloud. Cloud-based accounting software has several benefits such as saving valuable time spent on organising day-to-day finances, feasibility of access, and much more. We have mentioned the most significant ones below:
Enhanced Accessibility and Flexibility
- Anywhere, Anytime Access
The most significant benefit of cloud accounting is the ability to access financial data from any location and at any time. It is highly beneficial for those businesses that are set up in multiple locations or have remote employees.
The benefit of any-time and anywhere access helps managers and accountants to process invoices, monitor cash flows, and review financial reports without being tied to a specific location.
- Real-Time Data
Cloud accounting systems facilitate real-time data updates, which means that any financial entries or transactions will immediately be reflected in the systems. This benefit is crucial as it helps businesses provide prompt responses to any financial issues or make informed decisions.
Cost-Effective Solutions
- Reduced IT Costs
Implementation of cloud accounting systems benefits with significant cost savings. While in the case of traditional accounting, substantial investment towards software licenses, hardware, and IT support was necessary, cloud accounting eliminates all these expenses. In the case of cloud accounting software, it is hosted by remote servers; therefore the service provider of the server facilitates the maintenance. It also reduces the cost involved in IT infrastructure. Hence cloud accounting is a cost-effective solution for all businesses irrespective of their size.
- Subscription-Based Pricing
Traditional accounting software is costly, as the only option is to purchase the software and maintain it. Even updating software costs a lot. Cloud-based accounting services operate on a subscription-based pricing model, which is much cheaper. Businesses pay a predictable monthly fee, which includes software updates, maintenance, and support, thus, eliminating the need for large upfront investments and providing a scalable solution.
Improved Collaboration and Efficiency
- Seamless Collaboration
Cloud accounting facilitates better collaboration among team members. Multiple users can access the system simultaneously, making it easier to collaborate on financial tasks. For example, accountants, auditors, and financial managers can work together seamlessly, sharing important data like UK VAT numbers without any version control issues. This collaborative approach ensures accuracy in financial reporting and tax compliance.
- Integration with Other Systems
Cloud accounting provides ease of integration with other systems such as ERP, CRM, and payroll software. This integration helps streamline the workflows and enhances overall efficiency with reduced data entry errors. For example, integrating with payroll software will facilitate a seamless payroll process without any errors.
Enhanced Security and Reliability
- Advanced Security Measures
Storing sensitive information always involves security concerns. However, cloud accounting services provide enhanced security measures for businesses in several ways. These measures include multi-factor authentication, data encryption, and regular security audits. With the help of cloud accounting, businesses can ensure complete security of the financial information is protected against any cyber threats or unauthorised access.
- Data Backup and Disaster Recovery
Yet another data security measure provided by cloud accounting systems is security for loss of data, which can otherwise cause catastrophic consequences for businesses. Cloud accounting systems automatically back up the data to secured servers, ensuring that all the financial records are safe even in case of any hardware failure or natural disaster. Your IT team can focus on securing the endpoints and ensuring that employees have proper access rights to their roles. This reliability from cloud accounting provides peace of mind to businesses because of the minimal risk of data loss.
Scalability and Growth
- Scalable Solutions
With the growth of the business, the accounting needs also become more complex. Managing finances in spreadsheets becomes difficult, and in such circumstances, traditional accounting by using a desktop accounting system offers limited functionality. Cloud accounting systems provide scalability solutions that can easily adapt to the changing needs and requirements of the business. This includes adding more users, integrating new features, and expanding the storage capacity cloud accounting systems can easily accommodate all these requirements.
- Future-Proofing
Investing in the cloud accounting system ensures that business is ready for future technological advancement. Cloud service providers constantly update their software to incorporate new cloud features that are compliant with regulatory changes and provide high performance. Thus, the future-proofing aspect of cloud accounting ensures that the business is always accessing the latest tools and technologies without incurring any additional costs.
Role of Cloud Accounting in Outsourcing
- Accounting and Outsourcing
Accounting and outsourcing functions are common practices businesses have been adopting. It helps them optimise their processes and operations. Cloud accounting also helps in the seamless integration of the entire process enabling your outsourced accounting partner to access the financial data from any location. Thus, cloud-based accounting ensures that the services provide real-time updates and collaboration between the business and outsourced accounting service providers.
Streamlined Payroll Management
- Efficient Payroll Processing
Cloud accounting helps streamline the entire payroll process for those businesses that handle them in-house, with the help of automated calculations, adherence to necessary compliances and tax regulations, and direct deposits, thus simplifying the entire process. However, if the company has opted for payroll outsourcing, cloud accounting also provides seamless integration of the interface for outsourcing partners to access the necessary data and manage payroll efficiently.
- Compliance and Accuracy
Accurate payroll processing is necessary for any business to avoid legal compliances and gain employee satisfaction. Cloud accounting systems ensure that all payroll processing is seamless, with accurate calculations and compliance with the latest tax laws and regulations. Thus, it helps reduce the risk of potential legal issues.
Enhanced Decision Making
- Comprehensive Financial Reporting
Cloud accounting platforms also provide robust reporting and analysis capabilities wherein businesses can generate comprehensive financial reports and conduct analyses that help them make informed decisions and monitor financial performances. These tools can also generate financial statements such as balance sheets, income statements, cash flows, and much more, track KPIs, and provide valuable insights into the financial health of the business. These outputs can also be generated based on the unique needs of the organisation through customisation options for dashboards and workflows.
- Financial Forecasting and Budgeting
Advanced cloud accounting systems also provide additional tools that help in financial forecasting and budgeting. These tools analyse the historical data of the business with that of the current financial trends and develop accurate budgets and forecasts. This proactive approach from cloud accounting enables businesses to improve their financial planning and resource allocation.
Sustainability features
- Help Go Paperless
Cloud accounting process also eliminates a massive amount of paperwork processing associated with traditional accounting methods such as printing paper reports, invoices, receipts, cheques, etc. It also eliminates the physical storage of all these documents and switches to electronic documentation. Thus, cloud accounting is a lot more organised and cost-effective since it eliminates the cost involved in the physical storing of documents and reduces carbon footprint.
- Less Carbon Emission
Traditional accounting methods involved the use of local servers and conventional data hardware systems, which required electricity to manage and process data, power sources, cooling, and energy. This led to an increase in carbon emissions. Switching to cloud accounting software significantly reduces carbon emission levels due to the reduced consumption of electricity.
Conclusion
Cloud-based accounting software is a great way to store all your financial data in one place. Incorporating cloud accounting into modern business practices offers numerous benefits, from cost savings and enhanced security to improved efficiency and collaboration. For businesses considering accounting and outsourcing or payroll outsourcing, cloud accounting provides a flexible, reliable, and scalable solution that meets the demands of today’s dynamic business environment.
Partnering with Corient helps you with advanced cloud-based accounting technologies through outsourcing. Our wide range of services includes bookkeeping and accounting outsourcing, Tax, VAT, and payroll outsourcing. Let us handle the day-to-day financial tasks so you can focus on driving your business towards growth and success.
Stay proactive, and stay organised with cloud-based accounting! Contact us Today!
