Is Cloud Accounting Right for your Business?

Article By Prasanna Thakur | | Accounting
Is Cloud Accounting Right for your Business? | Munro's Accountants and Advisors

Cloud Accounting has been around for quite a while now, but even so, the idea of taking our data to the Cloud can be little confusing and confronting for some. So what exactly is Cloud Accounting?

Cloud Accounting software is similar to traditional accounting software; except that the data and in most instances, the accounting software as well, are hosted on a remote server also known as “the Cloud”.  In Cloud Accounting, users access software applications remotely through the Internet. Using Cloud Accounting software frees the business from having to install and maintain software on individual desktop computers (unless if you are using a hybrid Cloud Accounting software program - but that’s another story). It also allows business owners/employees/advisors access to the same data and the same version of the software from anywhere and various productivity and efficiency tools integrated within the software allow users to access real-time reporting.

Enhancements to Cloud Accounting technology offer other benefits, including the following:

Automation of data entry

Using bank feeds on a daily basis, all your business bank account transactions are automatically imported into your accounting software (i.e. the date, amount and bank statement narration of the transaction is automatically downloaded/populated in your file). This, combined with the ability to automatically match the bank transactions to creditor payments and also sales/debtor receipts significantly reduces data entry time, and improves the reconciliation process.

Auto-coding rules to code regular payments or expenses automatically when the bank feeds are downloaded into the system, minimise data entry/coding errors.

Advances in some Cloud Accounting software allow the extraction of key information from an electronic copy of a purchase invoice/bill, such as the supplier’s details, its ABN and the amount payable including GST, thereby automating/streamlining the purchase entry and improving the reliability of the accounts payable ledger while updating the financial position of the business.

Faster Invoicing

Most businesses regularly deal with invoices and must prepare and send invoices efficiently and in a timely manner, as cash-flow is crucial. Cloud Accounting allows businesses to create and email invoices quickly and on-the-go (even when off-site).

Collaboration

Cloud Accounting allows multiple users (subject to certain restrictions) to work simultaneously from different locations and usefully, it allows you to invite your business advisors, such as accountants and bookkeepers to access your data file online.  This allows your professional advisor to make any necessary adjustments directly into your system without interrupting your own workflow

Enhanced Productivity and Reporting

Whilst Cloud Accounting software is complete in its own right and meets all your accounting and bookkeeping requirements, there are times when businesses need more.  That’s where the add-ons for cloud based accounting software come in.

Add-ons are additional software/tools that integrate seamlessly with Cloud-based accounting software to provide extra functionality.  For example, there are add-ons for budgeting and forecasting, marketing and promotion, job estimation and costing, customer relationship management and HR management, all of which serve to improve your productivity, reporting and management.

For the Australian market there are plenty of Cloud Accounting software programs offering numerous options, add-ons and so on and they come in a range of pricing options.  As a result, it’s getting harder and harder for businesses to decide if cloud accounting software would be the solution and if so, which one?

Well the answer is, it depends. Certainly, in our experience, cloud accounting often is the solution but it has to be said that sometimes you may just need a different process without necessarily having to move to the Cloud.  And of course, your existing processes may already be working well.

What is clear, however, is that the choice of software and add-ons is vast and with the varied needs of businesses it’s definitely not one size fits all.  It is therefore critical for business owners to discuss their requirements with their advisors as they are able to recommend the best possible solutions based on broad experience.

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