Introduction
One aspect of today's workplace is the pervasive use of information and communication technology in all facets of administration. Both the accounting process and the outdated traditional accounting system have changed due to information communication technology. Companies need to continuously improve their accounting systems to comply with worldwide accounting standards. Cloud accounting, or electronic computing, is a byproduct of information and communication technology. The use of cloud accounting is promoted as a solution for problems including accounting errors, delays, and data validations.
What is cloud-based accounting software?
Cloud-based accounting software is a system that uses accounting software hosted on a safe remote server. It allows SMEs to store and access accounting systems, reports, and financial documents from the company computers in the office and remotely (as long as there is an internet connection). Staff and the organisation’s accountants can access and manage accounts payable and receivable, the general ledger, and can have access to real time financial data.
In essence, these solutions have changed the way that businesses work with their accountant, as they facilitate a more strategic advisory relationship, because both parties have access to accurate and timely data and so can plan more strategically.
Benefits of digital accounting
Cloud accounting software provides deep insights into your organisation’s financial situation, regardless of size or budget constraints.
Cloud based accounting solutions can be tailored to the specific needs of each business.
Cloud-based accounting systems are scalable, adapting to the evolving needs of growing businesses, including new suppliers, employees, and multiple currencies.
These systems can save your organisation time and provide instant access to data and documents from any location.
They increase efficiencies as there’s no need to re-key data, because it’s automatically saved, shared, and updated across systems ensuring that working and collaborating are easier.
They provide better data security, as using a cloud-based system is safer than sending documents back and forth over email or keeping physical copies. Data can be encrypted and stored securely, in line with compliance and GDPR requirements.
Cloud based software can be transformative for businesses, in order to better understand their cashflow and provide a real time overview of financial accounts, supporting better decision making and improved operational efficiencies.
Finance Cloud market size is projected to grow from US$ 135.6 billion in 2023 to US$ 268.1 billion by 2028 at a Compound Annual Growth rate (CAGR) of 14.6%.
Why cloud-based accounting software?
The accounting industry like any other business enterprise also has its peculiar challenges to deal with. Conventional methods of storing huge volumes of financial data or maintaining reports can be cumbersome. Some of the other experiences and challenges that necessitate the need to transition to the cloud include the following:
Accountants are required to work around the clock to provide a crucial financial data or report but may not be able to access accounting data outside office settings due to the traditional accounting software they have been using.
A conventional accounting software usually takes a longer time to set up and require frequent maintenance after installation as well as an upgrade at additional costs. While budgets of some businesses can support increasing operational expenses, others find it difficult to onboard advanced IT infrastructure for maintenance. This is bound to impact accounting processes negatively.
Accounting professionals are ethically bound to maintain confidentiality. However, any form of security vulnerabilities or loss of financial data can expose them to risks. Again, an outdated accounting software cannot counter cybersecurity risks when they occur. Moreover, traditional accounting software makes it difficult to recover data once lost.
Old-fashioned accounting technology or software are prone to disruptions in business continuity. Disruptions can result from technical malfunctions, system errors or serious events like thunder and earthquake. These uncertainties if they arise can disrupt business activities for many hours or even days to resume operations. The downtime invariably impacts on efficiency and productivity since businesses are unable to meet work schedules in the normal office work setting or physical space. In effect, prolonged discontinuity can lead to substantial financial losses.
Cloud based accounting software replaces the traditional accounting processes by providing real-time access to centralised financial data. There is a dashboard and built-in analytics tool to convert a complex data into easily understandable charts and key performance indicators (KPIs).
Cloud based computing is a secure way to access and store data on multiple remote servers. Indeed, Security threat exist in both the desktop and cloud environments as hacker take advantage of any vulnerability in a system to attack. However, the large networks which maintain cloud-based accounting software systems are built with high security firewalls, data breach detection, encryption software and are continually monitored for intrusions and unauthorized access. Reliable financial/accounting cloud providers are data-security conscious and therefore protect their servers against cyber-attacks.
Cloud technology empowers 24-hour access to the cloud from anywhere while using any internet-enabled device thereby eliminating the need to work from one central office-based computer all the time. What is, however, required is an authorized access to the hosted environment. Data and other documents are safe even if a user loses a computer or forgets to back them up.
Traditional Accounting vs. Cloud Accounting:
Security Issues of Cloud Computing
Companies offering Cloud services
Several companies are offering Cloud Accounting services across the globe. Some of the companies providing Cloud Accounting services across the world such as Sage, SAP, Xero etc which offers a range of programmes tailored to various corporate needs.
There are numerous other softwares which facilitate Cloud Accounting such as ZohoBooks, ProfitBooks, ZipBooks, Reach, etc. All the major providers of Cloud Accounting services provide basic and core accounting services of double-entry, generation of reports instantaneously along with additional services such as Document Management, Multiple currency support, estimation of taxes, payroll facility and training sessions for employees, bank connectivity, etc.
Conclusion
Cloud computing in accounting operations cannot succeed just by adopting a new technological application. It requires a mindset shift of how to run your business on the cloud and to leverage on the capabilities at hand to upscale operations. This means that a business will need to adapt to a new ethos of managing financial data in the cloud.
A robust cloud accounting software solution is indeed revolutionizing the accounting processes and enabling organizations to gain analytical insights into financial data to make informed data driven decisions so necessary for business growth.
It can be said that accountants in India are open to adopting newer technology which streamlines their work and enhances their productivity which is also profitable to the organisation. However, there are certain limitations of cloud accounting which become more prevalent in India’s case, e.g. issues such as reliable internet connectivity, automation, regulatory requirements, etc. The challenge can be overcome by working with experts who are aware of both technology as well as regulations and the local environment. Along with it, regular training, strategic planning and investment in infrastructure also play a vital role.
For further information, please reach out to Vijay Kabra on LinkedIn. Contact number: 9004387304.
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