In the last few years, countless startups and small-to-medium-sized enterprises (SMEs) transitioned to operate some of their main business functions digitally.
In the Philippines, 94% of businesses view cloud-based IT solutions as essential in mitigating the impact of the recent global health crisis. Additionally, this shift from on-premise accounting is often driven by cost savings, efficiency gains, and the desire to be more customer-centric.
When it comes to managing finance functions, cloud accounting is growing in demand as it allows businesses to access their accounting information at any time, anywhere.
Accounting software that runs in the cloud also makes it easy to manage financial transactions and documents because it automates everything from reconciling accounts to monitoring cash flow.
Despite the many benefits of cloud accounting, enterprises should be aware of cloud challenges before, during, and after the migration. If you want to learn more, this article is for you!
7 Common Cloud Accounting Challenges to Watch Out For
Like most tech upgrades in a business operation, cloud accounting can come with challenges. But they don’t have to be complicated! Read on to learn the common cloud accounting challenges your business needs to watch out for.
- Cybersecurity issues
The cloud is a great way to access accounting resources in your organization easily, but that convenience also makes your system a target for hackers.
A study showed that 57% of the small and medium-sized businesses (SMBs) in the Philippines experienced cyberattacks, with 73% losing customer information to bad actors. In the first quarter of 2021, the country reached 1.76 million cases of cyberattacks, and this number is only increasing by the day.
Protecting your company’s data and information is important. You must understand the basics of cloud security before migration starts and select the right provider who can safeguard your business’s data in the cloud.
- Internet connectivity
To use cloud accounting software, you must have stable internet to connect. While this may not pose a serious issue for most parts of the world, this is a dilemma for a country like the Philippines, where the average internet speed is only 2.8 Mbps.
Slow or no internet connection can impact your daily operations, making access to your company’s files more difficult, if not impossible. These delays in your accounting, bookkeeping, and other finance functions can affect your enterprise’s overall performance.
- Lack of expertise
In many cases, members of the accounting team in a small enterprise don’t have the expertise to manage their cloud accounting work. People familiar with on-premise solutions may find it hard to navigate through cloud accounting software, limiting their chances of maximizing the tool’s features.
Apart from providing ample training to your current staff, the easiest solution is to outsource accounting services from a professional to ensure you have your financial information handled accordingly and accurately.
- Software performance
When your business moves to a cloud solution for your accounting functions, you start to depend on it, which is why its performance should be top-notch. Investing in an inadequate infrastructure can negatively impact your operations and even put your business’s sensitive data at risk from cyberattacks.
Your software provider should provide fully functional software with immediate tech support to ensure that your day-to-day doesn’t get compromised. Additionally, they should be able to keep up with the ever-changing nature of tech and provide updates to the system from time to time.
- Cost management
Changing processes in your business operations can entail additional expenses. When switching to cloud accounting, it’s easy to underestimate how much you’ll need to save for it if you’re not careful.
To ensure that your company is getting the most out of your acquired cloud-based services, you must do in-depth research beforehand to know what accounting functions your company needs to automate and store in the cloud.
Computing for the overall cloud investment—from the hardware, software, management, and maintenance—can also help you estimate how much you need to budget.
Data transfer from one application to another can always be challenging. Migration to cloud accounting is no different. Aside from it being time-consuming, it can’t be easy because many companies have built their systems on top of established ones. You may have to manually change or create new processes that fit the new model.
Besides ensuring the solution fits your business’s demands and needs, keeping compliance in check for your cloud accounting functions is also a must to protect your company and customers at all times, especially from legal issues involving personal data.
Your company must follow regulations on what data is allowed to be moved and what should be kept in-house. These rules help maintain order in how information is utilized in your organization’s cloud.
Cloud Accounting Best Practices SMEs Should Keep in Mind
Now that you know the challenges to expect, you might be wondering what you can do to ensure a smooth ride when using cloud software. Below are some best practices to keep in mind for your cloud accounting work:
- Review your vendor’s cloud security policies
Cloud security policies are just one part of a larger picture of the factors you need to consider when choosing cloud software, but they’re an important element of your selection process.
Most cloud vendors operate on a shared responsibility model, meaning they’ll assume some responsibility for your cloud security. Ensure the security policies of your vendor can protect you and your customers by studying the policies in place.
It helps to know their protocol when dealing with suspected security breaches and recovery plans for when an attack occurs. Moreover, you can ask for your provider’s compliance requirements and level of support to check if your company will be well-covered in the security aspect of your cloud accounting function.
- Manage access to your business’s data
It’s best to ensure that only authorized users can access sensitive information in your organization. Because your data is stored on a server that your team members and hackers can review, consider setting up a passcode or multi-factor authentication to eliminate unwarranted entry into your network.
- Encrypt data
Encryption is the process of encoding data only authorized users can read, which is done by converting plaintext into ciphertext and back again. It’s one of the most useful methods to protect your data from prying eyes.
Your business’s finance functions can benefit from this, especially since accounting work deals with sensitive pieces of information you can’t afford to get unlawfully altered or leaked.
- Assign cloud work to a trained professional
Cloud computing is both a huge asset and a responsibility to businesses. If you’re not careful, your company could face serious consequences that tarnish your industry reputation.
When you assign cloud work to a team of accounting and finance experts, you can rest assured that the job will be completed correctly and on time. Consider partnering with professionals who’ve been trained and experienced in this area so you can worry less about your accounting responsibilities.
Come Prepared Before You Launch in the Cloud
Data shows that micro, small and medium-sized enterprises (MSMEs) make up 99.51% of Philippine businesses, making them the backbone of the country’s economy. Unfortunately, 73.1% had to shut down due to their inability to go digital in surviving the global pandemic.
When it comes to your accounting duties, shifting to cloud solutions can ultimately future-proof your company in today’s ever-changing business world.
There’s a long list of technologies available in the market, so make sure you pick a provider that offers the best deal and meets your business’s wants and needs. Additionally, don’t forget to consider what you must prepare for before, during, and after the shift to ensure smooth sailing for all your accounting and other finance functions.
If you’re looking for a professional to partner with, look no further than CloudCfo! CloudCfo is a cloud accounting firm for startups and small businesses in the Philippines that can assist you with all your accounting, bookkeeping, and other finance functions. Learn more about our services when you contact us today!