To describe “Cloud Accounting” we should first answer, what is the cloud? The cloud refers to the sharing and digitization of information over the Internet to create remote access. Email is the most common form of this – you can access your email account from anywhere as long as you are connected.
So what is Cloud Accounting? Well, not unlike email, it is an online service you access remotely. All of your data is stored online and accessible from anywhere, at anytime, and on any connected device. For business owners, being connected to your data 24/7 can provide peace of mind. Simply login to your account and voila, it’s right there.
With the growing popularity of cloud-based accounting services and software, we at TD Accounting Services thought it best to share some of the advantages and disadvantages we see with this innovation.
Backup and Data Security
Maintaining the security and viability of information is critical in all businesses. In accounting, this endeavor has traditionally been a costly affair. With the cloud, however, you will not need to invest in such security measures. Most mainstream cloud-based software and programming is equipped with state-of-the-art encryption to ensure data is securely stored. Typical security measures such as data backup, disaster recovery, and password protection are services offered by Software as a Service (SaaS) providers.
Ease of Access
Cloud accounting provides unparalleled access to your business’s financial records. Simply by uploading your information to the cloud you have the ability to access it from anywhere – on the road, at a meeting, or even at home. For many, this can mean the end of long nights at the office trying to catch up on work.
Real-time Financial Information
With the digitization of your financial records come added automated perks. Real-time financial information is one of these perks. Cloud accounting software can provide real-time details into your current financial standing through intuitive and customizable dashboards. And in the financial world, current information can quickly lead to currency.
Certain applications, operating systems, and cloud-based software programs will have restrictions and limits on what you are able to do. This means you may not be able to perform specific tasks as you would offline. However, limitations are not consistent across the board. If you are interested in cloud-based accounting, be sure to thoroughly research to ensure your tasks are covered under the platform.
No or Less Control
It goes without saying, once you upload your information online it can be stored anywhere in the world. We should clarify here: the cloud only exists through physical structures known as servers, and these servers house and share all the information on the cloud. So depending on which provider you choose your information could be physically stored halfway around the world. This means local authorities could review your information and you could be at the mercy of their jurisdictions should they decide to impose them.
If you are a small business owner, you will find desktop accounting packages that you can buy in “big box stores” to be cheaper than cloud accounting. Depending on your unique business needs, you may not need remote access or real-time financial reporting. So do your due diligence and find out what you need before signing up for a comprehensive cloud solution you will rarely use. If you would like to know more about cloud-based accounting please reach out and contact us here.
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Until the next time,