Business accounting plays an essential role in determining the performance and success of a business. In addition, streamlined accounting operations can help manage cash flow and make the right financial decisions. This is why small companies invest in the right tools and resources to manage their accounting processes.
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Accounting management was done manually in the past, with every minute detail and task written on paper. However, the traditional accounting systems did not last long with the technological revolution and have lost their value to advanced accounting software. As a result, various accounting software is available to simplify accounting management for small businesses.
While you might have heard people using different accounting applications for businesses, not everyone knows about cloud accounting. Here, we will help you understand the concept of cloud accounting in detail.
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What is Cloud Accounting?
Cloud accounting refers to installing or hosting your preferred accounting software on a cloud server. Traditionally, this software requires on-premise installation after purchasing its license. But with cloud accounting, the software is hosted on dedicated servers managed and maintained by the chosen cloud solution provider.
One of the striking characteristics of cloud-hosted accounting software is that its software does not change at all. Whether accounts payable, accounts receivable, or ledgers, you can use all the software features from any compatible Internet-connected device. Here, the accounting software does not need local set-up installation and allows users to perform various tasks remotely.
Why Do Small Businesses Switch to Cloud Accounting?
Per statistics, the global accounting software market, which was valued at US$ 11,071 million in 2018, is expected to reach US$ 20,408 million by 2026. On the other hand, the global cloud computing market is projected to grow towards the mark of US$947 billion by 2026.
As you can see here, the numbers also showcase the growing reliance of small businesses using accounting software on cloud technology. Over the years, most SMBs have been turning towards cloud-based accounting software to achieve higher productivity and profitability. If you want to know what makes cloud accounting suitable for your business, read the following detailed reasons:
Remote software accessibility
In a traditional local-hosted environment, users need to stay within the office premise to use the accounting software installed in a computer system. Therefore, it limits software access, mainly when the users are away from the office. Cloud accounting addresses this need significantly by allowing you to work on accounting tasks remotely.
Considering the global pandemic situation, hosting accounting software on the cloud has helped many SMBs stay in business. As a result, they could not only manage the accounting operations while working from home but have also sustained their business for the foreseeable future.
Top-rated data security
Like most small business owners, you would only think of installing antivirus software on your computer to save data and protect the system. But in the case of unfortunate incidents like cyber-attacks, the chances are that you lose business-related data because of security flaws in the system. A cloud service provider like Verito Inc. can act as a savior in hard times.
By having your accounting software hosted on their servers, you can rest assured that the data will be safe and protected under uneven circumstances. In addition, they deploy multiple security measures, including firewalls, two-factor authentication, and intrusion detection systems, to name a few, to ensure 360-degree protection.
Cost savings
If you have invested money in setting up a local IT infrastructure for your SMB, you might have a good idea of the amount needed to scale it further. The bigger your team and the more clients you handle, the more storage space you need to keep the data. Besides this, there are overhead costs associated with hiring maintenance personnel.
Cloud accounting can help you save a considerable amount as the hosting plans are available per user/per month basis. You can select the plan that best suits your business needs without worrying about local IT setup or maintenance. You can choose from cloud solutions for solo practitioners, small teams, and large teams.
Centralized team collaboration
Cloud accounting is meant for you if you want to get rid of the to-and-fro sharing of the same accounting data files over emails. Consider this example to understand how it works –
You want the team members to work on different aspects of the same accounting file for a client. The traditional method involves passing the same file from one team member to another, each revising until the task is completed. However, with cloud accounting, all your team members can work on the same file simultaneously. Therefore, you do not need to send the data file to different team members individually.
The bottom line
As detailed above, the cloud-based approach to the accounting needs of an SMB can considerably reduce operational costs and challenges. Remote accessibility, cost savings, and data backup are vital benefits that make small businesses switch to cloud accounting. You can do that too by joining hands with a trusted cloud solution provider.