As a new business owner, you need a specific focus to stay on top of everything. From serving customers and managing the team to growing the business, there’s a pressure that comes with the job. Moreover, you also need to keep up to date with your major operations, including your finances.
While settling finances is important, it can take up much of your time. But no matter how tedious it can be, no business can skip accounting work. As such, you must look for ways to ensure that you’re improving your profits and managing your cash flow accordingly.
Working on a cloud is one of the emerging trends in accounting today. Apart from letting users report from anywhere, it can help improve the accounting function of your business by increasing its efficiency.
Want to learn about the key benefits of cloud accounting for your SME? Keep on reading!
What is Cloud Accounting?
Gartner predicts that 51% of IT spending in application software, infrastructure software, business process services, and system infrastructure markets will shift from traditional solutions to the public cloud in 2025. In the accounting sector, this includes solutions for cloud accounting.
Cloud accounting software is comparable to traditional on-premises or self-install accounting software, except it’s hosted on distant servers, similar to the software as a service (SaaS) business model. Data is transported to “the cloud,” which processes and returns it to the user.
All program functions are handled off-site rather than on the user’s desktop. Users access software programs remotely through the internet or another network via a cloud application service provider in cloud computing.
Cloud accounting software unburdens the company of installing and maintaining software on individual desktop computers. It also enables staff in different departments, remote or branch offices, to access the same data in real time.
Key Benefits of Cloud Accounting for SMEs
Cloud accounting tools transform how firms manage their financial data and audit preparations. When considering cloud accounting solutions in your procedures, you might want to check out these key cloud accounting benefits.
- Real-time access to data
Cloud-based accounting software is available 24/7. It allows access to up-to-date financial information from any location using any browser-enabled device, helping you make decisions on the go with current data at your fingertips.
- Reduced overhead cost
According to a poll, more than 60% of IT executives claimed that cutting expenses was their top priority. On-premise accounting solutions need a server to hold its data and hire an IT specialist to manage it, resulting in more costs. Cloud accounting delivers a cost- and time-effective alternative because its procedures are carried out from the cloud, reducing the need to maintain an IT infrastructure.
- More secure data sharing
Top cloud solutions have more stringent security standards than most on-premises software. Since data isn’t kept on the device, no one can steal hard drives or other hardware containing private information. Additionally, there’s no need to transfer data via unsecured channels like emails or flash drives via cloud accounting.
- Improved collaboration among employees
When SMEs conduct their accounting in the cloud, time and distance no longer serve as constraints, making real-time collaboration possible. Team member visibility in the software fosters a better sense of synergy and enables them to operate as a cohesive whole.
- Streamlined and simplified financial processes
Due to improved accuracy and built-in controls, your personnel will spend significantly less time entering and verifying data. Cloud technology can help your staff avoid errors in their accounting tasks, such as online filing. It can also streamline your financial reporting process, increasing the efficiency of your overall accounting function.
For startups and SMEs, transactions can be automatically posted to the accounting system when bank accounts are connected, so there’s no need for laborious data entry or imports. Cloud software can also automate account reconciliations by comparing bank statements and invoices to ledgers and can even automatically pay suppliers and send invoices to clients.
Common Challenges of Migrating to Cloud Accounting
While there are numerous pros to shifting to the cloud for business accounting functions, you can also expect challenges from it upon migration.
Organizations employing a huge change in their finance operations should have concrete plans before, during, and after their cloud accounting migration. It includes training staff for this transition, studying resources, and identifying all possible problems they’ll face to prepare for it upon launch.
When you migrate to the cloud, you should get business processes ready to work with the new architecture. It entails looking at the bigger picture and adopting new strategies for allocating funding, personnel, resources, and the like.
Your current apps may not always be compatible with the cloud environment. When performing a lift-and-shift migration, find and fix any issues relating to communication between on-premises systems and cloud services before deploying it in your operations.
Network interruption is one of the biggest dangers when transferring significant volumes of data to the cloud. These could result in irreversible data loss if not adequately backed up, so ensure that you make a backup environment that can house and execute apps until the migration is finished.
Understanding the Future of Cloud Accounting
- Artificial intelligence
Accounting software can use artificial intelligence (AI), particularly machine learning, to examine a lot of data and compare it with entries to indicate anything that doesn’t fit the pattern, denoting an error.
AI can assess larger industry trends and performance, enabling SMEs to provide more accurate financial estimates. It can also anticipate client, vendor, or company issues, which allows leaders to prepare for many possibilities and lessen the effects of disruptive events.
A Statista survey indicates that 44% of IT personnel saw visibility and transparency as a serious threat to cloud security, which is why blockchain is a great integration to cloud accounting.
Blockchain is a distributed digital database that meticulously records asset transfers and movements. This system makes it impossible to change a transaction once it has been posted, lessening the possibility of fraud. With blockchain records, the work involved in storing and validating financial records may be eliminated or significantly reduced.
- App integration
Almost all types of software are now available in the cloud, including those intended to be integrated with accounting software and auxiliary programs for inventory and order management, payroll, and customer relationship management.
Even though setting up these linkages isn’t as difficult as it formerly was, there’s still space to make them more frictionless. More applications will be created so that consumers can access its capabilities within the accounting solution, saving users from manually transferring data around, switching platforms to do different operations, or accessing financial information.
- Work model changes
Some claim that using technology will reduce the need for labor and eliminate occupations. However, automation has always been a working model for innovation and transformation, especially in accounting.
With the cloud, employees can get work done anywhere since data is more easily accessible. Additionally, accounting professionals with greater knowledge of today’s advancements now make the top choices for feature testing, solution suggestions, and innovation recommendations.
- Customer experience improvements
Today, cloud-based services can significantly boost your business possibilities and help you provide better customer service. Thanks to the cloud, unified communication in the accounting sector help keep track of all client interactions on a single platform. Business owners may now work seamlessly, providing top-notch assistance to their clients at all times.
Cloud Accounting Software Perfect for SMEs
The market is full of cloud accounting software options, with a few enabling you to produce invoices, keep track of incoming and outgoing payments, locate and pursue past-due receivables, and run reports to examine your SME’s financial situation and other factors.
Below are some of the top choices for accounting software.
Sales, bills and expenses, inventory, payroll, and every other significant financial component you might anticipate from a double-entry small business accounting solution are all supported by Xero. It includes special reports, cutting-edge analytics, and project tracking features.
Additionally, it effectively utilizes AI to streamline your operations and enhance connectivity with relevant financial websites. It’s one of the greatest small business accounting software accessible right now, with its great usability, features, integration possibilities, and advisor network.
This program is a large desktop accounting program for small businesses. Sage is a fully-customizable accounting tool that does more than many small businesses require, which can explain why it costs a bit more.
The program links with Microsoft 365 and has built-in web connections that allow for some remote work. It’s a hybrid, drive-based software where you can share information with productivity applications via the cloud.
Intuit’s QuickBooks integrates outstanding user functionality with highly efficient accounting services. This software is best suited for small firms with a technological budget, as it’s feature-rich with various versions and add-on apps your team can explore.
QuickBooks allows a more demanding user to navigate its sophisticated accounting capabilities while still being simple enough for a novice bookkeeper to master. It can appeal to a wide range of business kinds because it’s adaptable and user-friendly.
Odoo has open-source business management tools for small and mid-sized organizations. It offers intuitively integrated accounting software that’s helpful for bank synchronization, bills and expenses management, and invoices. It also allows for easy reconciliation that enables you to create clear, dynamic statements for your business.
NetSuite is a great platform for global organizations with numerous staff, as the program has superior capability when you need to file with international tax authorities digitally. Its advantages increase when you work with an international group of enterprises.
With this cloud accounting software, you can do more accounting and get a complete view of your financial performance. It lets you transform your general ledger, optimize accounts receivables, automate accounts payables, and streamline tax management.
Another accounting solution a small firm should look into is FreshBooks because it’s simple enough for new bookkeepers to use and includes all the features that a larger company would want, such as payroll.
FreshBooks is highly suggested for sole proprietors and businesses with small staffing. Enterprises can use it to handle simple financial tasks, including sending invoices, keeping track of financial accounts, accepting payments, and tracking revenue and expenses. More complex businesses can add advanced tools like projects and proposals, travel and time monitoring, and reports.
Automate Your Accounting
While only an emerging trend, cloud accounting is becoming a staple in every business, proving its benefit to a more streamlined and secure accounting process. As one of the most important aspects of running a company, it’s only important to learn about accounting and how you can utilize and maximize technology to revamp the team’s processes.
Finding the right provider can greatly help minimize the negative outcomes of integrating a cloud accounting solution into your business. There are a lot of professionals you can outsource who offer excellent cloud accounting services to help your SME get started on going digital.
CloudCfo is a cloud accounting company that provides a wide range of online accounting, bookkeeping, and tax services for startups and SMEs in the Philippines. We work with many SaaS tools and online systems, cloud technology included, to build and scale your finance function so you can grow your business!
If you need that extra hand in the accounting department, contact CloudCfo to learn more!