Over the years, the accounting industry has seen a major shift in its accounting processes, which previously primarily used local desktops.
Now, as per Accounting Today, 58 percent of major companies have shifted to the cloud. Another independent study conducted by Flexera revealed that over 94 percent of surveyed accountants had shifted to a cloud-based accounting tool.
The onset of COVID-19 last year further reinstated the need for cloud-based solutions that helped the workforce when working remotely.
For those of you who are new to the field and wondering about the perks of switching to cloud-based tools, here are the key benefits that businesses realize by making the switch.
Real-time access and updates
One of the best things about using cloud-based software is that it allows everyone within the business to access financial information in real-time. Additionally, the nature of such software allows for real-time updating of information as data is gathered.
For instance, let’s say you use an all in one accounting software that offers services like bookkeeping and expense tracking. The software will be able to reflect updated data to everyone who accesses it, every time a new transaction or expense is posted on the platform.
Having real-time access to the financial information of a business helps in:
- The management and decision-makers in tracking all key performance indicators at all times, thereby making informed financial decisions.
- Having flexibility in terms of data customization and reporting.
- Improving collaboration with the team, regardless of whether they work in-house or remotely.
- Minimizing errors by boosting accuracy via relying on AI to create and monitor every accounting transaction for the bookkeeping process.
IT Cost Reduction
Did you know, as per Forbes, the cost of labor can be reduced by a staggering 50 percent via the help of accounting software?
Many newbies make the mistake of considering the high cost of subscription of cloud-based accounting software to mean that the solutions are too expensive for a business. However, this erroneous assumption fails to take into account the reduction in in-house IT costs.
To manage accounting systems within the company, a business must heavily invest in its IT hardware, maintenance of the given system, the expense of having a server for the in-house software, along with the cost of security. Overall, the overheads tend to be exorbitant.
Compared to this, cloud-based accounting relies solely on the online server. Therefore, the company has to bear no IT cost. Additionally, you can access and work remotely, which further improves your company’s overall productivity, hence making your operations more profitable. For instance, Xero reports that businesses with cloud-based accounting have five times more clientele than those who don’t.
Businesses that use cloud-based accounting software have all of their financial records saved as well as backed up within the online system. While owing to data breaches, this may seem like a weakness, one must not forget that such software tends to feature a high level of encryption of data.
And while it is easier to surpass an in-house server’s security, the fact that all data on cloud services are encrypted and well-protected means that it is much harder for hackers to break through the security measures of such systems.
Additionally, cloud service providers are up to date about the prevalent vulnerabilities of the online world. This is why it is common for services to adopt the latest security measures and updates. This further helps in keeping your financial information protected from ever-evolving threats.
The fact that cloud-based solutions are only accessible to designated individuals within the team also allows for minimizing the risk of data leakage.
A move towards sustainability
Research by AIIM revealed that only 17 percent of businesses have gone paperless. Additionally, every employee, on average tends to use over 10,000 pieces of paper every year! Considering the rapid decline in forestation and vegetation, this is a very alarming statistic.
You might wonder, why are we discussing this when talking about cloud-based accounting? Well, this is because such solutions also pave way for more eco-friendly and sustainable business operations.
Traditionally, the accounting department has been highly paper-intensive. Whether it be bookkeeping, invoicing, or data entry, everything is generally printed out, approved, and processed in hard copy.
Now, with a cloud-based online accounting system, the extreme reliance on paperwork within the accounting department has reduced.
For instance, invoicing software can allow invoices to be electronically sent to clients. Its data can also be automatically added, reducing the need for scanning and printing receipts. Not only is this better for the environment, but it also helps in minimizing physical storage costs!
For any business to flourish, regardless of which sector it operates in, it is imperative for it to have a good relationship with the various parties involved. This includes clients, vendors, and distributors, etc.
Since these relationships are transactional in nature, the accounting and finance department is usually one of the key persons in this relationship, whereby they manage payment processing, invoice generation, and expense identification with respect to every partner.
Here, cloud accounting can be a life-saver. It can tell an organization what expenses are still to be paid off and what payments are still pending. By dealing with them all in a timely manner, you can ensure that your vendors and partners are satisfied with the financial relationship.
When the correct tools are chosen, businesses don’t even have to worry about sending notifications of invoices or reminders of pending payment to customers. The software does the job for you, further ensuring convenience.
All in all, there are various benefits a business can easily realize by a mere switch from traditional accounting solutions to cloud-based accounting tools. In today’s highly digitized world, the inability to make this move can result in a company being too behind its competitors in productivity and efficiency.
Keeping in mind the cost-benefit of such tools, there is no reason why your business should stall this decision. Conduct your research and select a quality accounting tool, based on your need. Make the move and benefit.