By Shaz Nawaz, Director, AA-Accountants
Cloud-accounting has certainly seen a substantial increase in demand. Many small firms of accountants in the UK have embraced the cloud in a big way. This has helped many small businesses improve their book-keeping and accounting function.
In a nutshell
Cloud-accounting is book-keeping software in the ether. The beauty about this is that you don’t have to download anything on your computer. You don’t need to back-up data. You don’t pay for annual subscription and thousands in training and updates. In fact, all you pay is a small monthly fee for the privilege of using the software.
Let’s explore some of the advantages and disadvantages of using cloud-accounting to see if it will work for you:
The benefits to a business
The huge benefit is that you can access your financial numbers anywhere in the world – all you need is a computer and an internet connection. What this means is that you have information at your fingertips whenever you need it – you’re not bound by accessing the data on pre-downloaded machines.
The software is pretty simple to use. It has basic functions so that any non-accountant can use it with ease. In fact, with live feeds – all you need to do is have online baking and you can upload your bank transactions in seconds. This saves all that time of entering each transaction separately.
As the data is stored in the cloud you need not worry about having a server or a backup system. The data is secured safely (as safe as it could be on a cloud!) and you have 24 hour access to it – as long as you have an internet connection. And, of course, the software providers systems aren’t down! Both of these are safe bets as internet access is available in most places. And the software providers have a robust hosting process.
Management information is key to good decision-making. However, in the past most small-business owners have generally had to rely on their accountant for this. With cloud-accounting, this information is available as soon as you’ve entered the transaction on the systems. This means you’ll have timely management numbers, you’ll make better decisions based on facts, your bank manager will be happier as you’ll be working from real numbers and not guesstimates, you’ll be able to better and quicker measure targets against actual numbers, and some. And some more! The list goes on.
As a note of caution, I would strongly suggest that you discuss your management information with your accountant. My reason for this is that accountants are trained to interpret numbers and they’ll be able to share detailed analyses, answer your queries, hold you accountable and challenge you on your performance. All this, in my view, is priceless if it helps you drive your business forward.
The flexible pricing options alongside competitive rates make the cloud a real sensible solution. You can pay on a monthly basis (pay as you go) without any upfront cost. There are no added-costs for the updates as these happen automatically.
What are the drawback and disadvantages?
There aren’t many really. Obviously your data will be accessible to the software provider. If this is a concern to you then stay away from cloud-accounting. Personally, I don’t see it as a big issue. The software provider is there to offer a solution. They won’t be interested in your numbers – I’m sure they’ve got other business to carry on with.
The platform could be down. This is an associated risk with anything on the internet. Google could be down. Online banking could be down. Your own website could be down. This doesn’t happen often and it is usually fixed pretty swiftly.
Loss of control could be an issue. Having your data stored on an unknown server can be a challenge. The data is out of your hands and this can be uncomfortable for some people.
As the data is backed-up by the software provider, you cannot do the same. This may cause a problem if you decide to move to a new provider. Although it is possible to export data to a new software provider, you’ll need to check this before you make the move!
The software may not do exactly what you need it to do. The provider will only be able to offer what they have as a standard accounting package. This may not work for you due to your business needs being different in comparison to a ‘standard’ business. Make sure the provider offers what you need before you sign-up.
A poor internet connection can cause frustration. You may need to improve the speed of your connection. This will come at a cost and you’ll need to take this into consideration when moving to the cloud.
Just like everything else in life the cloud has advantages and disadvantages. You need to make sure that the benefits outweigh the concerns and the costs. Overall I feel cloud-accounting is a good solution with lots of benefits. Lots of businesses are experiencing the benefits of cloud-accounting. I can see more and more businesses moving towards the cloud due to the flexibility and the advantages.