Accounts departments across the companies use a wide range of documentation, including invoices, profit and loss statements, balance sheets, tax reports, and so on.
Handling so much paperwork has caused a lot of problems. Businesses around the world are switching to smart, paperless, and environmentally friendly accounting technologies.
The adoption of cloud-based accounting has tremendously increased in the last decade. The global cloud accounting market size was $3.77 billion in 2021 and is estimated to reach $6.86 billion by the end of 2027.
So, let us understand what cloud accounting is and the benefits of cloud accounting software in 2024.
Before you choose an IT vendor, it is important to assess its reputation, financial performance, and long-term commitment to ensure a credible partnership and minimize potential future interruptions.
What is Cloud Accounting?
Cloud-based accounting, also known as cloud accounting, is the practice of utilizing accounting software that is hosted on remote servers and accessed through the Internet.
A Cloud-based accounting system allows organizations to conduct financial duties such as bookkeeping, accounts payable, accounts receivable, and general ledger functions through cloud-based accounting software.
Cloud accounting eliminates the need for desktop software installation and maintenance, offering benefits such as real-time updates, scalability, cost-efficiency, and advanced security measures.
Users can access the system from their desired location with an internet connection, increasing flexibility and accessibility.
15 Benefits of Cloud Accounting
With the introduction of accounting software, it has been observed that the productivity of every business has immensely increased with less cost and time.
Up to 58% of accountants have said that Cloud-based accounting software has increased their productivity gigantically.
Here are the top 15 benefits of cloud-based accounting software.
1. Accessibility
With cloud accounting, entrepreneurs and employees can access financial data from anywhere, anytime, using any device with an internet connection, including a laptop, tablet, or smartphone.
Accounting team members are constantly linked to the most recent financial data and real-time analytics. Because all data is kept in the same cloud-based system, it is easier to share electronic documents among employees who work from home.
2. Automation
A large number of accounting and banking operations are automated by cloud-based accounting solutions, reducing the need for manual work.
For example, the software can automatically incorporate bank and credit card transactions, generate recurring invoices, pay subscriptions, schedule reports, and submit transactions to relevant ledgers.
One of the significant benefit of cloud-based accounting software is its ability to back up the data automatically.
In case of hardware failure or data loss, organizations can rest assured that their data is securely backed up on the remote server.
3. Eco-Friendly Practice/Paper-Free
In the 21st century, using traditional accounting software, which involves physically storing archived paper documents, manually distributing paper reports to investors and lenders, or manual data entry, is completely wasteful and irrelevant.
Instead, organizations have found it more convenient and flexible to ask the cloud provider to email invoices electronically so they can be imported directly into the cloud accounting system.
Significantly, these save a lot of money, which was spent on printing and postage, and fast-track payment processing.
The average office generates 350 pounds of waste paper per employee every year, and 375 million printer cartridges are either burned or sent to landfills every year.
4. Data Security
You may be concerned about storing sensitive information on the cloud. However, cloud-based software provides strong security to secure data for firms in different ways.
Leading companies use multiple layers of security, such as strong encryption and access control, to ensure that only authorized users have access to your data.
Every credible accounting firm should be PCI-certified and provide adequate security against privacy breaches and data theft.
Why is PCI Compliance Important?
PCI (Payment Card Industry) compliance is crucial for accounting as it ensures the protection of sensitive cardholder data, reduces the risk of data breaches, and safeguards the reputation of businesses.
5. Real-Time Updates
One of the benefits of cloud-based accounting is the ability to view accounting transactions in real time as they occur.
Waiting until the end of the week or a month to detect irregularities in cash flow or finances will reduce your financial visibility.
Cloud accounting’s real-time transactions and reporting tools allow you to access financial assessments of your accounts whenever and wherever you want or need them, according to your convenience.
6. Organized Operations
Cloud-based accounting software includes a wide range of capabilities that serve as a single point of contact for all your accounting needs.
These platforms provide services such as cost reimbursement, invoice processing, FX transactions, and automatic approval procedures, which work together to help you organize and integrate your accounting operation onto a single-encompassing platform.
7. Reduced IT Dependency
Unlike traditional accounting methods, which require considerable IT infrastructure and maintenance, cloud accounting services assign the service provider responsibility for software updates and maintenance, reducing the company’s overall IT overhead.
8. Improved Business Insights
Cloud-based accounting software benefits from going away from old and ineffective ways of working.
However, cloud technology also offers undiscovered possibilities to help you move further and achieve new business insights.
Cloud accounting software is designed and built to integrate with other cloud-based systems, reducing your workload throughout the organization and providing real-time reports on all aspects of your business.
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9. Improved Accuracy and Efficiency
A company can significantly increase the accuracy and efficiency of its accounting system by implementing the simplified procedures provided by a cloud-based accounting system.
Human beings can commit mistakes, and manual operations will always have errors, regardless of the efficiency of the staff.
Manual entries, whether they are double entries, data entered into the incorrect column, or just typing the wrong figure, are the direct doorway to false information.
Cloud-based accounting benefits from built-in options that ensure that there are no double entries. Invoices can be totally automated, allowing your employees to spend less time entering and validating the data.
10. Easy Integrations
Everyone realizes how difficult and time-consuming it is to handle multiple pieces of software for the same operation. Accounting software (e.g., Quickbooks, Xero) consists of data that cannot be lost.
Why should you when you can utilize a cloud accounting program that can link itself with your pre-existing systems?
Cloud accounting software easily integrates with a wide range of third-party apps, including payroll, CRM, and inventory management systems, to streamline business processes and eliminate data gaps.
11. Advisory Services
In the modern business climate, clients expect more than just accounting services from their CPAs and accounting firms. Unfortunately, many organizations fail to deliver such services because they either do accounting work manually or use inefficient software.
However, cloud-based accounting benefits you with automated, time-consuming procedures while emphasizing generating valuable insights from financial data. But how would this help in the long run?
Based on this information, you can serve as a counselor to the customers and guide them towards reducing company expenses and better tax management. This additional assistance can help you establish a reputation in the eyes of your clients and, eventually, attract new ones.
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12. 24/7 Customer Support
Like traditional accounting tools, cloud-based accounting systems can have issues like tracking, reporting, and other minor aspects.
Thankfully, there is no need to worry because most cloud-based accounting software provides 24/7 help to address your concerns. This way, you can ensure that your client experiences uninterrupted accounting services.
13. Simplified Expense Tracking
Accountants must track all business expenses, from the smallest to the largest, based on the size of the organization. Furthermore, the frequency might be daily, monthly, quarterly, or based on expenses.
So, how can you simplify this?
Cloud-based accounting solutions, for example, can link bank transactions to expenses and generate digital receipts in real-time.
14. Easy Tax Calculation
You can keep track of your income and expenses and categorize them based on your business operation to simplify tax calculation.
It makes the process of calculating and filing GST returns as simple and easy as possible.
15. Software Is Always Up-To-Date
You will always see the most recent version of the software because it resides in the cloud. The cloud service provider automatically updates the accounting application according to changes in tax legislation and accounting standards, as well as to provide new features.
You won’t have to worry about keeping your software up to date because you’ll always have access to the latest version when you log in.
Wrapping Up
The benefits listed above will help you become more familiar with cloud-based accounting software. A number of accounting firms and organizations realize that their customers want prompt and personalized service from their providers.
So, to win and retain such customers, you need to incorporate the latest accounting technologies into your process. With plenty of options on the market, clients will only choose the best one.
Thus, if you don’t start using cloud-based accounting right away, you might risk losing some existing and potential customers.
There are various benefits of cloud computing in accounting, such as the ability to streamline financial processes, enhance accuracy, minimize errors, and provide real-time data accessibility.
Yes, you can integrate cloud software with other business applications to streamline workflow and improve productivity.
Yes, you can access cloud accounting software from your mobile device. One of the benefits of cloud accounting is that users can access and manage their financial data remotely from their smartphones.
Cloud accounting solutions are totally secure as they include encryption for data storage and transfer, including automatic backups, full digital audit trails, access security, and more. Cloud accounting benefits from against cyber threats and is a fully secured platform.
Amaey Anand is a certified accountant with over 10 years of experience in the finance industry. He has worked with various organizations to streamline their petty cash management processes and reduce inefficiencies. He has also written several articles on financial management for leading publications such as Zensuggest and The Wall Street Journal.
