Why Firms Should Adopt Cloud Accounting Solutions
By Nick Au
Cloud accounting solutions are part of the vast, growing cloud services marketplace. Although the technology may still be unfamiliar to many people, businesses of all sizes are beginning to appreciate the advantages that it offers over traditional accounting solutions.
However, while many businesses are looking to adopt these new technologies, they are unsure of the specific advantages and functions of such software.
Cloud accounting solutions utilize cloud technology, which allows users to access accounting platforms on remote servers through the Internet. Instead of building their own cloud infrastructure, companies may choose to deploy cloud services from vendors under the software-as-a-service (SaaS) model.
Conversely, traditional accounting solutions require a company to maintain a dedicated hard drive or server to house their accounting software and all their financial data.
With cloud solutions taking center stage of late, it is important for companies to explore the difference between cloud accounting solutions and traditional accounting solutions, and why they should consider making the transition.
Simply put, cloud accounting solutions provide their users with a degree of flexibility and functionality that traditional accounting solutions cannot provide.
1. Ability to Automate
For instance, they maintain bank feeds that automatically import transactions from a company’s bank or financial institution directly onto the platform, an otherwise tedious and resource-intensive process when performed manually.
By automating accounting and bookkeeping processes, companies are able to increase efficiency, and free up time and resources for their staff to focus on more revenue-generating activities.
Since cloud accounting solutions are hosted and accessed through the Internet, users can work anytime, from anywhere, and through any device.
This increased flexibility means that businesses can circumvent many of the business costs that are associated with brick-and-mortar workspaces. This is especially important now, when business as usual has been disrupted so thoroughly by Covid-19. It is likely to continue being relevant in the ‘new normal,’ as some businesses may permanently switch over to a remote working or hybrid working model.
3. Better Financial Management
Being able to access a company’s financial information anytime and anywhere simply isn’t enough – a cloud accounting system must be comprehensive and provide its users with a one-stop solution to address all their finance needs.
The best cloud accounting systems all have strong reporting tools that can generate reports, key metrics, and other financial snapshots to provide updated information on the company’s health.
Further, users can customize their platform of choice to sync with and relay information from all the third-party apps they may use.
By consolidating all the financial information of a company from multiple sources, business owners will be better able to manage their accounts payable, accounts receivable, and reduce their chances of incurring bad debt.
In addition, when a company has to manage its annual audit and tax obligations, having a transparent and efficient accounts system can greatly assist auditors or tax representatives with their jobs.
4. Cost Effective
SaaS cloud accounting solutions offer businesses cost-saving opportunities that traditional accounting methods cannot match.
Traditional accounting software usually has a high implementation fee and annual maintenance fee. With SaaS cloud accounting solutions, users simply need to pay a monthly subscription fee to enjoy the wide range of benefits such as unlimited storage and unlimited user access.
Moreover, to maintain a traditional accounting system, businesses must invest in IT infrastructure and continuously fund its maintenance. With SaaS cloud accounting solutions, all costs associated with IT infrastructure and maintenance lies with the service provider.
In addition, by improving speed and efficiency through automation, companies will subsequently be saving more money and deploy their staff where they will be most productive.
5. Pricing Models
Cloud-based infrastructure is efficient and responsive to demand. A key feature of these types of platforms is that users can pick and choose which features they want to use. As such, users only pay for what they need.
Through their ability to adjust features based on its users’ needs, cloud platforms allow companies to improve their customers’ experiences, enjoy lower costs (as they no longer need to invest in server space), and automate menial tasks.
The bottom line, at the end of the day, is that despite concerns over security issues and data migration, cloud is a simple and cost-effective way for SMEs and corporates alike to handle their accounting.
About the Author
Nick works in the Business Development team at the FastLane Group, a Hong Kong-based accounting and advisory firm which has a special focus on helping SMEs. Nick graduated from Syracuse University in the United States with honors and received his Bachelor’s degree in International Relations. Nick joined the FastLane Group in 2019 having previously worked at KPMG as an Assistant Manager in their Mergers and Acquisitions and Deal Advisory team.