The term “cloud computing” went mainstream in 2006 when former Google CEO Eric Schmidt used the phrase at an industry conference. Fast forward to today when Amazon Web Services, Google Cloud Platform, Microsoft Azure, and other cloud providers are well-known by nearly all tech-savvy business owners around the world.
For any business, the cloud goes beyond things like email and file sharing. Cloud accounting services are ideal for both product and service businesses. Here is a crash course in some of the most useful benefits of online accounting.
5 Reasons Cloud Accounting Software is Better than Desktop
With popular cloud accounting and bookkeeping services like QuickBooks Online and Xero, you can access bookkeeping details and reports anywhere in the world with an internet connection. You can even get into your books using mobile apps to add invoices, review who owes you money, and check your balance sheet and P&L with that little computer in your pocket.
These services have near 100% uptime and allow you to easily access your reports anywhere, any time, and on any device. Multi-user access gives employees and other collaborators access with different controls for security needs.
You can also share with your accountant so they always have the ability to tap into your records if needed. That helps a lot when tax season comes around or if you ever make a mistake entering a record on your own.
Always backed up
Have you ever spent hours working on a Word Document or Excel Spreadsheet just to lose the entire thing when your computer crashed? Have you ever lost precious photos to a damaged hard drive or busted smartphone? You can prevent this kind of loss when you take your books online.
Most cloud-based applications, including bookkeeping software, update your files live while you’re using them. Even if your internet connection is interrupted or your computer takes a swim in your morning coffee, your data is safe and secure in a data center with redundant backups.
If you use a desktop accounting app, it’s vital that you create backups locally on an external hard drive as well as a secure cloud somewhere offsite from your business. That multi-layer approach is necessary for any business data that sits on a desktop or laptop computer.
If your perception is that the internet and computers are less secure than paper, it’s time to turn around that attitude. Technologies like SSL and secured VPN internet connections make online bookkeeping more secure than other alternatives.
Paper is a liability for many reasons. If it is physically lost or falls into the wrong hands, it’s the equivalent of a data breach. Paper can also be damaged in a fire or flood and can degrade over time. If your mail is delivered to an unlocked mailbox, it may be stolen even in the best of neighborhoods.
VPN is a security tool you can install on your computer to enhance its online security. A VPN, or virtual private network, creates an encrypted, virtual tunnel between your computer and a secure server that does your web browsing for you as an intermediary. This makes connecting to any website safer, particularly in public places like coffee shops and hotels.
SSL, or secure socket layer, is indicated in your web browser by the letters “https,” and probably a lock icon, in the address bar. This is another form of encryption that secures what you send into a website. It is still vulnerable to some types of attacks on public wifi, but when paired with a VPN is almost impenetrable.
Make sure you always use strong, unique passwords on every website and stick with safe browsing practices to keep hackers and cybercriminals at bay. If you do that, you can use most modern cloud bookkeeping solutions without fear of bad guys getting into your data.
Because they can connect to your bank accounts, most online bookkeeping companies employ the same level of security you get when logging in to online banking, investment, and lending accounts.
Add-ons and integrations
Certain industries have more specific needs around payments, tax reporting, employee expense tracking, customer billing, credit card processing, 1099 reporting, time tracking, CRMs, receipts, mileage, project-level reporting, and other tasks. If you choose a major cloud bookkeeping provider, you’ll be able to easily add these features.
Popular finance products from companies like Stripe, American Express, and ADP, among others, can integrate directly with cloud bookkeeping systems. They might also work with 3rd party tools for invoice and payment management. In either case, you should be able to connect to your bank account to automatically download new transactions. Create automated rules to send income and expenses to the books in the future to save time every month going forward.
While you may be able to use your accounting tools in place of a CRM, integrating with a fully-featured CRM like Salesforce or Insightly can put your sales and revenue generation on steroids.
Management reporting on demand
Arguably the most important feature of any bookkeeping system is informing management decisions that shape the direction of the business. With good data and reports, you know where to focus your time and energy to get the biggest return on your time and money.
You don’t need an MBA to make the right financial decisions to grow your business. If you have limited resources and need to know what’s working and what isn’t, updated management reports may hold the answers you need.
For example, if you’re interested in invoice factoring, you’ll need quick access to A/R detail.
Businesses should update their records monthly at a minimum. This routine guarantees you can access your updated balance sheet, income statement, cash flows, A/R and A/P summaries, and product-level profitability with just a few clicks on a mouse or taps on a phone.
No business can afford sub-par bookkeeping
Large companies employ legions of financial analysts and accountants to pick through the details and squeeze out every possible dollar of revenue, cut every excess penny of expenses, and maximize total profits. While you may not have a full-time finance team, you can use many of the same tools for a modest monthly fee.
If you don’t have good information about your business performance, you are running it blindly! Getting your books in the cloud ensures you have the information you need when you need it while keeping your financial records both nimble and secure. That combination leads to great results for any business.