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Cloud accounting refers to internet transactions. The practice does not require you to install software or own a server on your computer. A business that offers accounting services in the cloud includes remote servers and applications. They grant you access to them online for a fee to manage and keep your financial records.

It is similar to conventional, on-site or self-install accounting software, except only the accounting software is hosted on remote servers, similar to the business model of SaaS (Software as a Service). Data is sent to the “cloud,” where they are processed and returned to the user. It’s a new way to access your web browser accounting program, without actually downloading it.

Cloud accounting has encouraged bookkeepers and business owners to operate together on the same program regardless of where they are located. Bookkeepers and chartered accountants will no longer have to go through the difficulty of importing data files from clients into their systems.

What is the problem that SMEs business owners usually face with accounting?

Traditional accounting monitors the success of companies based on long defined principles and processes. Although accounting practices should be a close feature of the company they are assessing, they can fail to adapt quickly to the changing market climate.

Problems with traditional accounting methods include an unreliable and inadequate assessment of the companies’ performances. In the new digitised and modern world we live today, traditional accounting practices need to be adjusted to suit changing business characteristics.

For businesses that offer a narrow range of products or services and do not require custom designs, traditional accounting practices remain useful. Traditional accounting practices focus on cost reporting and the use of fixed assets to reflect the many essential characteristics of conventional businesses, like incremental labour and machine use.

So, what are their differences? Cloud Accounting vs. Traditional Accounting?

Before accounting software moved to remote cloud hosting, it was commonly hosting them on a desktop computer hard drive. Traditional accounting software comes with the initial costs of infrastructure as well as on-site software and hardware maintenance costs.

In comparison, cloud computing offers a software service without high upfront costs or fees for licensing. This cost difference is largely due to the fact that the software is stored, updated and maintained in a central location in the cloud. With greater control over the software, SaaS companies have more control over their software, cut back on maintenance costs and cut back on software pirating.

The SaaS software model (Cloud) is comparable to the on-premise model (Traditional), except that it provides the cloud-related versatility and collaboration. Financial business can use cloud accounting to retrieve data in real-time, and mobile collaboration. It serves as the company’s efficient management device to ensure records are correct, safe, and conveniently accessible from anywhere in the world.

Cloud AccountingTraditional Accounting
As data and accounting software are
kept offsite in the cloud, you don’t need specialized hardware. Some cloud accounting packages are free but you pay a monthly subscription for those who come at a price. You will get access to the latest version of the software with no additional costs for updates.
To run accounting software, you must own the hardware, which is usually expensive. Only someone with IT expertise would have to secure the hardware, install and manage it due to the frequent changes or updates of the software features.
Anyone, anywhere with login details and internet connection, can use the software to access the data it contains, which ensures that financial management can be performed at home, when traveling or while out on work.You can access the software and data only if you are on a computer where it’s installed.
Any user of your company’s software
will see the data in real time. There is no need to manually move files and as many people can simultaneously access the data, which makes collaboration easier.
Data must be modified on each device, so modified files have to be transferred from one device to another via email or transfer device, or downloaded from your own internal server. Only one person can access real-time data at a time.
You still have access to all of your data because it’s kept safe in the cloud on various servers at different locations.All of your data may be lost if the devices on which it is held are lost, stolen or damaged. 

How does the cloud help you to overcome the accounting problem?

Taking the accounting from the desktop to the cloud has been a major leap forward in financial reporting, eliminating from the equation much of the disadvantages and expense consequences of conventional accounting. Below are three key features or benefits of how cloud accounting can help you overcome accounting problems:

1. Security

When it comes to accounting cloud software, security is important, as financial information is strictly private and needs privacy. Make sure that the program that you use provides good encryption, anti-malware and firewalls. Furthermore, obvious measures such as obsessive authentication should be placed in place to discourage unauthorized users from logging in.

2. Reliability

Make sure your data is backed up by your devices so that you can access your data at any time. This ensures that misplaced data is easily retrieved, and peace of mind that your information is secure and supported.

3. Clarity

The role of the software is to have the ability to efficiently evaluate your numbers, to generate sound conclusions and informed estimates. Your software should be user friendly and navigable and easy to understand. You will be able to access the data with ease to analyze, evaluate and compare with other statistics.

Why is Cloud Accounting important to your business?

You can simply use cloud-based software which allows small business owners to stay connected to their data and accountants through any of your digital devices. The online accounting software can be integrated with an entire add-on ecosystem on the computer. It ensures it is flexible, cost-efficient and user-friendliness.

You don’t need to install and run software on a personal computer in the cloud. Instead, you pay by monthly subscription for the software.

For a small business owner, you might be worried about your data being handled by a cloud service provider but the cloud is one of the safest ways to store information. For example, if you are using cloud services, and your laptop is stolen, no one will be able to access your data unless they have an online account password. This is where data lives on your hard drive rather than yours.

In case of a natural disaster or explosion, as there is no downtime. Working in the cloud ensures all of your knowledge is processed safely and conveniently off-site. When you have access to any machine or mobile device which is connected to the Internet, you will be backed up and running.

Below are other benefits your business can get:

  • Clear overview of your current financial position
  • Multi-user access makes it easy to collaborate online with other team members
  • Automatic updates
  • Everything is running online so there’s nothing to add as everything is automatically backed up
  • Up-front business costs are minimized – software upgrade, installation, system management costs and server errors are no longer issues as everything is managed by your cloud service provider.

What are you concern about Cloud Accounting can help you besides accounting on-the-go

Although the cloud offers many advantages, many IT companies are mindful of the risks associated with cloud computing. Below are some of the common concerns you can possibly get from cloud accounting:

1. Unauthorized access to business and customer data

Cyber-criminals may target small business networks because they are easier to break, and because of the allure of larger payouts, they also go after bigger businesses. Cloud platforms collect miles of small business info. The small businesses feel that they are moving security threats towards a larger entity that is capable of protecting their data.

2. Security risk at the vendor

When a cloud service provider offers a critical service for your company and stores critical data, such as customer payment data and mailing lists, you place your corporate life in the hands of the vendor.

3. Legal risks and compliance

Many data protection regulations are intended to safeguard a specific form of data. HIPAA allows health care providers for example to protect patient data. PCI DSS requires anyone who accepts credit cards to protect cardholder data.

If a business outsources the data processing or storage it requires to secure, then it relies on a cloud service provider to maintain compliance. If the company does not have sufficient security safeguards, then it will be liable to disclose the company’s data when there is a data breach at the cloud service.

4. Possible lack of control

The vendor is in charge when you use a cloud service. You have no guarantee that the features that you use today will be offered at the same price tomorrow. The vendor might double the price, and you may be forced to pay if your customers rely on that service.

Why should you use Biztory?

Did your business go over budget hiring an accountant for your business? Don’t worry, you can save more cost by trying out Biztory, a cloud accounting software specifically made for business owners to navigate the software without any hassle.

Any problems that you might have faced while doing bookkeeping before can be solved easily. You don’t have to go through the trouble of sending your invoices, statements, and receipts to your accountant for all your transactions.

Unlike other cloud accounting software, Biztory helps generate an invoice and you get to avoid going through the process of bookkeeping, which is difficult to manage if you are not an experienced accountant. Its user-friendly interface will make every process easy for you.