cloud accounting software is essential for a company. They are the root of every business activity. As manual accounting activities can be a higher risk and time-consuming, many companies use cloud based accounting software to automate their business processes. Cloud accounting, also known as online accounting software, is hosted on a remote server. Users send data to the cloud, and then it processes the data before returning it to the user.
Gartner predicts that global cloud services spending will exceed $482 billion in 2022, up from $313 billion in 2020. Computer systems replaced paper ledgers and essential bookkeeping tools from a long time ago. As accounting software grew, it took a significant leap forward with the advancement of cloud accounting software. These solutions gave businesses flexibility and reduced capital expenses while maximizing human resources simultaneously.
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What is Cloud Accounting?
Accounting is one of the key components of an ERP system. Cloud accounting is similar to traditional on-premises accounting software, but the accounting software is hosted on remote servers. Shortly, cloud accounting refers to performing basic accounting tasks using software that lies in the cloud, similar to the SaaS (Software as a Service) business model. Accounting staff can access this system via a cloud application service provider via the Internet or other networks.
With cloud accounting software, a company doesn’t need to set up individual desktops with software or built-in software in each hardware because everyone can access it with their own devices. Thus, users can manage accounts receivable, accounts payable, the general ledger, and more within the application. This means that cloud systems connect employees from all departments and areas to access the same information, resulting in a better understanding of the business’s financial state.
Difference Between Cloud Accounting and Traditional Accounting Software
Traditional or on-premises accounting software was only available on the accounting team computers’ hard drives or a server maintained by the company. In other words, anyone who wanted access to the software needed a computer with the right software installed or to be within close proximity of the server. Moreover, traditional systems store all information locally rather than on the cloud. As a result, it was vulnerable to loss or damage.
On the contrary, cloud accounting software allows accountants and other relevant parties to access the system through a web browser via any gadget, whether it is a laptop, tablet, or even a smartphone. All they need is to have the login credentials. Accounting software on cloud usually uses an as-a-service model, while traditional software uses server hardware. Early on-premises accounting software couldn’t match the flexibility of cloud software. For example, the company would be responsible for upgrading its software, which could be expensive and time-consuming. Meanwhile, the SaaS system allows the software provider to take care of all maintenance and upgrades. Companies only need to pay an annual fee.
Companies are fully responsible for backing up and securing their software and data on traditional accounting software. Backup takes a pretty long time and might lead to inefficiency in companies’ business practices, in effect companies choosing not too frequently back up their data. This way, companies are prone to data loss once a malware attack or natural event happens and affect their computers. Meanwhile, users who use cloud data centers share responsibility for backing up and securing the software with customers and end-users. The data is constantly updated and can be accessed anywhere through the internet.
Related article: Why is Cloud Accounting Software Important to Business?
Benefits of Cloud Accounting Software
The cloud based accounting software encloses many solutions to serve several accounting or bookkeeping functions. The main benefits of the software explain why it has become the choice for many finance business staff as a tool to do their daily jobs. How exactly does this benefit your business? Generally, some of the benefits include the following:
1. Access your accounts anywhere
Accounting software on cloud enables you to access your financial data anytime, anywhere. You can access your key business numbers from any location as long as there is the internet. In other words, employees don’t need to work from the central office-based computer. Some cloud software even provides you with the mobile app version, making it easier to access your numbers while you’re on the go.
2. Access a real-time information
You may achieve real-time reporting by keeping your bookkeeping and bank reconciliation up to current when your data lives in the cloud. Instead of scrolling through pages of information on traditional accounting methods only to get out-of-date reports, you can get a quick snapshot of the company’s current financial situation. This real-time picture is critical when you are making important decisions about your business’s financial future.
3. Access to the app ecosystem
You can add a range of third-party apps and tools to expand your core business system. These apps include cash flow forecasting, project management tools, online invoicing, and other practical solutions. The tools will help you save time while reducing resourcing costs at the same time. In addition, you can also identify problems in advance and minimize unnecessary admin that’s slowing your business processes down.
Related article: 4 Key Benefits of Using an Accounting App
4. Live bank feeds
Numerous accounting software on cloud offers live feeds to your bank accounts, enabling you to directly link your banking to accounting. Instead of manually entering each line from your bank statement or uploading the file from your online banking interface, a live feed brings your bank data immediately into your accounts. This expedites bank reconciliation and provides a more precise picture of your bank balance.
5. Always working with the latest software version
When logging in to your accounting software on cloud, you’re always using the newest version of the software as the provider will constantly keep it up to date. Therefore, you don’t need to do time-consuming and costly updates. You just sign in and start working. In addition, you’re not responsible for applying security fixes as your software provider will handle that automatically.
6. Secure sharing of data
You can easily grant access to your accounts when you’re working with all the staff involved, such as accountants, banks, or other advisers. Say goodbye to passing down USB sticks or sending emails back and forth as your consultants have secure access to all your financial information in real time. This method is quicker, and safer, and gives your consultants the data to support and advise you going forward.
7. Connected online payment
You can connect your cloud accounting software and invoices system to payment apps. This allows customers to pay you automatically, resulting in speeding up payment times and reducing the burden of admin work that you or your staff have to carry.
Reasons to Use Cloud Accounting Software
Moving accounting from the desktop to the cloud has been a vast forward in financial management, with many of the costs of traditional accounting being cut off from the equation. Cloud based accounting software enables better business practices that will help your company thrive. Here are a few significant reasons to use cloud software.
1. Cheaper to operate and own
Generally, cloud accounting software is a cheaper option than the on-premises alternative. There’s no need to buy hardware, nor to worry about bills adding up from upgrades and maintenance, as your vendor will take care of all that. To add up, the company does not have to purchase VPN software or any other app that allows employees to work away from the office as the cloud software has allowed that.
2. More predictable costs
Using accounting software on cloud, much easier to know how much the company will likely spend on the accounting solution annually since it doesn’t have to worry about upgrades and maintenance costs. With the SaaS delivery, everything is already set into a single price with clear additional users or functionality costs. This leads to your company being able to keep your IT budget from cutting into other business areas.
3. Best-in-class infrastructure
Leading cloud vendors support large numbers of businesses and organizations, which requires them to have the best-in-class infrastructure. They engineer their data centers in a way that delivers incomparable performance, security, and scale. Accordingly, most businesses cannot match the vendor’s capabilities in any of these areas on their own due to the limitation of capital and expertise. But these businesses can obtain the rewards of this infrastructure by buying and adopting accounting software on cloud from such a top provider.
4. Take advantage of the latest technology
Users of accounting software on cloud can benefit from more modern and new technologies that can bring extra business benefits if system upgrades are performed regularly. A small or medium business, for example, is unlikely to invest in machine learning or robotic process automation (RPA) on its own to improve the efficiency of its financial processes. However, an upgrade may provide such a feature, and the company could profit without spending any additional money.
5. Enhanced business continuity
Your accounting system’s data is both extensive and vital, and losing it might be disastrous. Because your data is stored on a remote server and backed up to data centers in different places, cloud software provides a security blanket. So, even if one of your data centers is destroyed by a flood or tornado, your firm may continue to run normally. On-premises systems hosted on an in-house server don’t share this benefit; it’s there from the start with the cloud.
6. Unify your business
Accounting software on cloud can serve as the foundation for conducting your company on the cloud. There are cloud solutions accessible for each and every part of operations. Connecting these solutions, for example, allows you to track clients as they advance from offer to paying client and then post the transaction to the general ledger automatically. Employees may access information and make necessary modifications from anywhere once all systems are in the cloud.
Related article: Why Singaporean Businesses Need Online Accounting
Is Cloud Accounting Safe?
Many people may question how secure their financial data is on a cloud-based system. To answer this question, cloud based accounting software uses encryption that rewrites your information into a secured and unbreakable code to store your data. This is the same security type to make online banking safe. So, you don’t need to worry about the safety of accounting software on cloud! For instance, the software offers the following security dimension:
- Secure premises
- Regular security audits
- Security staff
- Automatic backup server
- Multiple restricted networks
- High-level digital security software with inbound and outbound encryption
- Multiple built-in user authentication methods
- Anti-malware staff
- Customer service and technical support
- Automatic updates
Cost of Cloud Accounting
Because it offloads considerable expenses to the provider, cloud accounting software is frequently less expensive than on-premises solutions. Your company doesn’t need to buy new hardware or hire more IT professionals to monitor and manage the system. SaaS solutions charge an annual license fee for their service. This fee usually has a starting price as a base, plus several users and products to use. You can tailor this to meet your company’s needs.
Thanks to SaaS’s flexible pricing model, customers may pay only for what they need when they need it. As an organization grows and evolves, it is simple to add users or modules. On the other hand, hybrid cloud solutions may still have licenses typical of traditional systems. Customers pay a hefty one-time fee for licensing and hosting fees to the cloud provider based on the computer power the business requires. Both hybrid and SaaS systems may incur a one-time implementation price that varies depending on the complexity of the system and your particular needs.
Best Cloud Accounting Software of 2023
1. HashMicro
HashMicro’s cloud accounting software is regarded as the top option in Singapore, and it automates a range of accounting tasks such as creating financial reports, cash flows, adjusting journals, and also invoices. The accounting software is also customizable based on your company’s requirements, streamlines the accounting management process, provides accurate real-time financial data, and helps to increase profitability.
2. FreshBooks
FreshBooks is an accounting software on cloud solution suitable for freelancers and small businesses, which offers features such as invoicing, expense management, time-tracking, and accounting functionalities. It is a highly recommended option for small businesses due to its affordability, ease of use, and comprehensive range of features.
3. Zoho Books
Zoho Books accounting software on cloud provides a strong set of capabilities for monitoring billable hours, generating professional invoices, reconciling bank accounts, inventory management, also generating financial reports. Additionally, Zoho offers more than 40 integrative platforms that can manage every aspect of your business, in addition to the features provided by Zoho Books.
4. Xero
Xero is a type of cloud based accounting software in Singapore that has the ability to automate various accounting tasks for your company. Among the notable features offered by Xero is the ability to pay bills, process expense claims, establish bank connections, manage contacts, and also track projects.
5. Sage
Sage offers an accounting solution that caters to the needs of small and medium-sized businesses in Singapore. New business owners who are just starting out may find the simplicity and fundamental features to be a straightforward beginning point for their financial activities. Sage provides two separate features for accounting and employee payroll, allowing for a more targeted approach.
Cloud Accounting FAQs
What is cloud accounting software?
Cloud accounting software is a type of accounting software that is hosted on remote servers and accessed through the Internet. As long as there is an internet connection users can access their accounting data
Is cloud accounting software secure?
Yes. The software uses encryption that rewrites your information into a secured and unbreakable code to store your data. Data stored in the cloud is usually less prone to hardware failures compared to data stored on a hard drive, meaning that it is less likely to be lost due to these issues.
How much does cloud accounting software cost?
The cost of accounting software on cloud is determined by the features provided and the intricacies of your business. Additionally, if you only require basic features, there may be free options available to you.
What companies should use cloud accounting software?
Accounting software is utilized by companies of various sizes, industries, and locations, with many opting to use it from the beginning. Considering that finances play a crucial role in all aspects of an organization, it offers advantages to everyone involved.
Conclusion
Cloud accounting software gives your business more room to grow as they integrate and automate your basic accounting activities, making it more secure and easy to access. This accounting system is no longer just the future, but it’s actually something that businesses need to adopt now to avoid falling behind and losing to their competitors. The benefits of using accounting software on cloud are pretty much the same as other cloud software. Still, it is more vital as financials act as a base and foundation of every business activity.
If you are still not sure how to adapt to cloud accounting software, just remember that running a company without accurate and real-time financial information is similar to driving a car without a fuel indicator. To put it simply, accounting software is a critical investment for businesses today. HashMicro provides cloud accounting software that integrates and automates your business processes in real-time if you want to grow your business and step up your game. Get your free demo by clicking this button.
