What is cloud accounting?
What is cloud accounting?
The move to the cloud has been the biggest software revolution in a generation – especially when it comes to finance and accounting. Cloud accounting – managing financial transactions and information using cloud-based software – is increasingly popular with both SMBs and accountants in the UK. Instead of storing data on local servers and networks, cloud information systems have enabled businesses to get more value from their numbers, taking advantage of numerous benefits.
Storing data on the cloud enables businesses to access and update their financial data from any device with an internet connection, eliminating the need for physical storage or desktop software. With cloud accounting, all the information a company needs to succeed is stored online and can be accessed by authorised users from anywhere, at any time, in line with the pace of modern business.
How cloud accounting works
Cloud accounting is provided on subscription basis, known as software-as-a-service (SaaS), meaning users pay a monthly fee to use the software, instead of purchasing, or repurchasing a single product. Cloud accounting software works by hosting a company's financial information on remote servers, rather than on a local computer or drive. Whereas once businesses on desktop systems were limited to access on certain machines and locations, cloud accounting offers real-time updates and seamless collaboration among team members.
In addition to easier access for users, cloud accounting is highly flexible, using APIs to share data securely between other solutions , such as payment platforms, expense management solutions and reporting tools. Cloud accounting has also been enhanced by the recent advent of Open Banking, helping businesses connect their ledgers with their bank accounts to improve reconciliation and cash flow management.
Is cloud accounting safe?
Among security experts, cloud-based accounting is generally considered to be very safe. In practice, it can actually be more secure than relying on local servers and desktop software. This is because cloud accounting providers invest heavily in security measures to protect their clients' financial information, including industry-grade data encryption, firewalls, and multi-factor authentication.
In addition, cloud accounting providers offer automatic data backups and contingency planning through the use of multiple data centres, ensuring that financial information is not lost in the event of a server malfunction or cyber attack. This removes the need for businesses to manually back up their financial data on a regular basis, providing extra peace of mind for owners and accountants.
What are the benefits of cloud accounting?
The growth in cloud accounting adoption has been driven by the increased efficiency, value and convenience it provides for businesses and accounts when it comes to financial management and processes. Benefits include:
- Real-time updates: With cloud accounting, all financial information is automatically updated in real-time, ensuring that everyone has access to the most current data.
- Security: Cloud accounting providers have dedicated security teams and protocols in place to protect their clients' financial information, conducting regular tests, implementing secure environments and backing up information.
- Integration functionality: Many cloud accounting software options can integrate with other business tools, such as project management software and payment gateways, allowing businesses to streamline their workflow and save time.
- Accessibility: Cloud accounting allows businesses to access their financial information from any device with an internet connection, giving them the flexibility to work from anywhere.
- Regular updates: Instead of buying new versions of desktop software, business owners subscribing to accounting software can enjoy new features and improvements on a regular basis.
What is the best cloud accounting software?
There are many cloud accounting software options available on the market, each with its own unique features and pricing. While leading solutions vary between regions, recent years have seen more standardisation in features and interfaces as providers compete for market share.
- Xero: Xero cloud accounting software offers invoicing, expenses management, and bank reconciliation and also has a range of integrations with other business apps offered through its Xero ecosystem.
- Intuit QuickBooks Online: QuickBooks Online is a US-based accounting software that offers invoicing, expenses management, and financial reporting, designed for small to medium-sized businesses.
- Sage: Sage is one of the leading UK online accounting platforms, offering expenses, payment and reporting functionality alongside integrations with other apps.
The UK also has a range of other popular cloud accounting platforms, including Freshbooks, Clearbooks and Kashflow, as well as free solutions such as Bokio and Wave.
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