Cloud computing is all the rage these days but for most of us it still remains a fancy technology jargon that we are afraid to use and even more afraid to step in. In reality, however, it is perhaps one of those inventions of our times that have made running businesses so much more comfortable, and have had impacts on almost all segments of the business. In this article we will talk about the impact of cloud computing on the accounting side of businesses, and why you should adapt to the cloud for your accounting needs if you still haven’t. But first a quick lesson on the “cloud” itself.
Personal and Business Finance Don’t Mix
When we say they don’t mix, we don’t mean that “you cannot” take our money from your business for your personal expenses. We are saying “you shouldn’t”. It might appear very convenient to just use one bank account or one credit card for all your daily expenditures, but this one convenience holds the possibility of an utter disaster for your business finances. In layman’s terms, you shouldn’t be spending your revenues rather you should only be spending your profits. However, if you won’t keep the transactions separate, you might not even realize that you spent your precious business finances on a very expensive and not so delicious lunch.
What exactly is “The Cloud”?
The cloud is a metaphor for the internet-based computing, but for a business it may be understood as a platform with a server and storage space delivered to you by a third party. It is an on-demand service which allows you to keep all your business data safe and secure. Cloud computing has gained a lot of appeal among businesses that work with a lot with data. Accounting operations of businesses are especially getting benefitted from it.
Businesses employ computing services not just because it is quicker and more efficient but also because it is cheaper. There are several ways to utilize the power of cloud computing, including purchasing the capabilities or simply renting them from a provider. One of the departments where cloud accounting is especially significant and lucrative is accounting and finance operations. Now let’s see how you can do it too, but first let’s understand how cloud accounting software works.
How cloud accounting works?
At the basics of it, cloud based accounting works like any other cloud based software in such that your work files are normally stored on a hard drive as well as online. Since information is stored in a readily accessible way, you can use an external service to perform your accounting operations on any computer that has internet. With the advent of more and better services such as mobile phones and tablets, you can carry on running your operations from anywhere in the world as long as you can connect to the internet.
The Benefits of Cloud Accounting
One thing you gain from cloud accounting that is not available with traditional, on-site accounting is the flexibility you gain from access to your data from everywhere without having to carry heavy equipment and documents with you. Secondly, you don’t have to worry about the storage space or the loss of any data. Then there is the obvious yet critical concern of the security of your accounting documents which is also protected several times over with technical capabilities as opposed to manual traditional accounting practices.
In addition to these benefits, you also get to use the software of your choice and depending on the needs of your business. This means that you have a wide variety of options available, where some aim to improve efficiency of your business, some directly reduce the managerial costs, while some allow you more control over your business operations and ensure smoother day to day accounting practices.
How cloud accounting has changed ways of doing business?
While making a choice on adding cloud accounting to your mix of operations, even if you are a small business for now, it will behoove you to remember what employment and operational needs you might have in the future. For starters, the jobs that your bankers or traditional accountants used to perform are now all automated and much more efficiently performed through software.
Then the invoice generation, which previously required hundreds of man hours, loads of paper work, and then the requirements of creating back up are also all stored on hard drives and over clouds saving you not only in terms of your employee costs and overhead expenses but also providing you with instant information on your finger tips allowing faster business decisions.
Finally, payroll management is a lot quicker and reliable with cloud accounting. In traditional accounting methods, your employees have had to wait longer periods and also suffered with confusions in payment amounts, deductions, as well as had to deal with grievances from colleagues within an organization. All this might not be routine, but the simple possibility of such confusions can cause dissatisfaction amongst employees, reduce their motivation, and may also lead to higher turnover.
In other words, the advantages you stand to gain from cloud accounting reach far behind the ease and speed of accounting alone. You not only have more spare time and money to be spent on other, more revenue generation segments of the business, but you also have more accurate financial information of your business, have more flexibility in making accounting decisions, and also have higher efficiency and productivity across all departments.