Cloud Accounting – An Accounting trend gaining ground in 2020

Technology continues to be the biggest disrupter of the 21st century. It has transformed every industry under the sky. Technology has revamped the ways business owners deliver their services, making it more beneficial and convenient for them as well as their service consumers. Such has been the case with the accounting industry too. With the advent of novel technologies, accountants have no more piles of sheets to hustle with. The age-old, lengthy, and error-prone account keeping has been replaced with efficient and advanced technological tools that are gaining huge popularity in modern times. Cloud accounting is one such revolutionary concept.

What is the cloud?

The cloud can be seen as a virtual, all-time-available, and ultra-efficient storage system that helps you store and access information as well as other computing resources at will, using any device having a connection to the internet. It is one of the fastest-growing technologies in the contemporary world. Some of the various benefits that the cloud offers are:

• Cost-effectiveness – Pay only for what you use
• Scalability – Scale up or down quickly as per your requirements
• 24/7 access – Your entire business is just a few clicks away
• Efficient collaboration – You can easily share your information and resources with business partners and collaborators
• Improved data security – With the cloud hosts monitoring security, you have a minimized risk of data loss or leak, especially compared to a typical hardware storage system

The Hosting Tribunal says about 80 percent of all organizations are estimated to migrate to the cloud by 2025.

There are a number of cloud hosting service providers that offer industry-specific applications. There are also various types of cloud you can choose from. Primarily, they are of three types:

1. Private cloud
2. Public cloud
3. Hybrid cloud

They differ in terms of ownership of the cloud infrastructure. However, the functionalities they offer remain similar.

What is cloud accounting?

Cloud accounting is a modern way of accounting where all the resources, including accounting data and software, are available over the internet (the cloud).  It is an exciting tool gaining stronger momentum in recent times for its ability to eliminate the local computer and other hardware dependencies from accounting. With cloud-based accounting, accountants and business owners are no longer required to install and maintain typical accounting programs and software on their devices. Hosted cloud accounting applications can be accessed using a normal web browser on any internet-connected device, whenever and wherever required.

The benefits of cloud accounting

There are various advantages cloud accounting has over the age-old, typical accounting system. A few of them are the following:

• Cost-effective – No hardware IT infrastructure is required for storing the information as well as accounting software which helps business owners save a huge sum of money. Cloud accounting offers a pay-as-you-go service that further adds to its cost-effectiveness.

• Flexibility – Cloud accounting eliminates the on-site dependency from the system and provides on-demand, remote access to all the information and tools. Your ability to access all the important information and analysis on the go makes your system more flexible and efficient.

• Real-time updates – Cloud accounting software enables you to update accounts automatically, in real-time. The data is accurate and contains fewer errors compared to manual methods.

• Ease of scalability – You may require to scale up or down, depending upon your storage needs. Cloud accounting makes it extremely easier to meet the scaling demands as you just need to raise a request to the cloud service provider. Further, you don’t have to deal with the expensive, unnecessary, and outdated hardware after you scale up or down.

• Easy collaboration – Cloud accounting offers easy, on-demand access that helps you share the information and resources with third-parties, irrespective of their geographical position. This helps you collaborate with other businesses easily. You can share live information with them, having no need to send or receive files via email.

Issues with cloud accounting

While businesses do get amazing benefits because of cloud computing, there are factors that they must keep an eye on. Some of these concerns are:

• Security – Although the cloud is believed to be more secure compared to the traditional hardware infrastructure, it does face security threats in the form of cyber-attacks and account hijacking. It makes enterprises skeptical about adopting cloud-based applications.
• Lack of knowledge and skills – The advanced cloud accounting applications require appropriate skills that an orthodox accountant generally lacks. To ensure smooth functioning, an organization may have to replace the unskilled accountants with the skilled ones or organize training programs for them to acquire the necessary skills. It may prove expensive for the company.

The larger perspective

Even though cloud-based accounting has few concerns, they certainly don’t outweigh the benefits it brings to the fore. Security always remains a concern, whether you choose the cloud or not. Moreover, cloud service providers are dedicated enough to bring measures that counter the security threats. You, as a service consumer, can also adopt proactive steps to ensure the privacy and security of your data.

All things considered, cloud accounting is worth all the eulogies it is receiving, and with the agility and growth it provides, it is the way forward. It is future proof and offers benefits one could not even have imagined with the typical accounting system.