What is cloud accounting?
Posted on 18th Mar 2022
Have you ever wondered what IS cloud accounting?
In essence, cloud accounting is accounting in the 21st Century….
To have a successful business, you have to know your numbers.
This means you need to know not only what profit you’ve made this week, this month, this year, you also need to know next week, next month, next year.
So not the numbers from six months ago, AND you need it in a simple way.
You can access it from anywhere. Any place. Any time.
That’s what cloud accounting is all about.
Cloud accounting is where your software is not held on your desktop. It’s held in the cloud or better still, effectively on a server somewhere else so that it’s safe, secure, and protected from cyber attacks. Which is much easier for a bigger organisation than for you as an individual, so you can access your data from anywhere on any device, whether it’s a laptop, a phone, or a tablet, or even your desktop.
So, why has cloud accounting become so popular?
Well, a number of reasons really…
We’re much more connected these days.
We’ve got mobile phones, which we didn’t have a number of years ago. We’ve got laptops, tablets, etc, we’re always on the move and we want everything at our fingertips instantly, so cloud accounting gives us that because it’s not in one place.
We can log on remotely, access our data. You as the business owner, might not do your own bookkeeping, you might have a bookkeeper who is or can be remote to you.
They can process the bookkeeping records, produce the information and then send you the reports, OR you can just log on and go and access, look at it, view it, and download, run the reports yourself.
One thing business owners love is that you can effectively cut down on your bookkeeping time by using a cloud accounting software, like Xero or QuickBooks.
Therefore, your bookkeeper can either cost you less now OR do more for you in the same time.
You can also link your bank and credit card accounts so there are automated bank feeds which can be daily. So no more typing in bank statements. It’s done automatically and synced straight through into Xero for example.
Now with cloud accounting it can be fast and simple to set up and customise your invoices. Within Xero, once the invoices are produced you can email them directly to your clients from Xero AND you can set up repeating invoices to be sent to your customers automatically IF you invoice them the same amount each month.
There is lots of flexibility and you can have custom developed templates within Xero so that it does a lot of the work for you. As I’ve already said, it’s available at anytime, anywhere when you’re online, as long as you’ve got an internet connection and there are different apps for your phones and tablets.
There’s real time collaboration with your accountant as it’s online. This means you can look at the same screen wherever you are, so if you’ve got a query, you can pick up the phone to your accountant and ask them in real time about it!
It is very safe and secure because it’s not on your hard drive. It’s automatically backed up and it’s safe from loss, fast fire, cybercrime, etc. There are none of the old desktop issues you used to have if you or your accountant were on different versions.
There are so many different reports available within Xero or any other cloud Accounting software for that matter. When viewing reports on screen it is so quick and easy to click through to the original transactions.
So for example, you can run a Profit & Loss Report and you can then drill down. So if you saw a particular figure, let’s say you got a report showing a 12 month picture, you could drill down on a particular month.
Another example is, if you didn’t understand why your marketing costs was so high you could drill into it and eventually get back to the base documentation, if you’ve saved it in the software.
Then there’s some really great support on line especially for Xero. There are lots of articles and videos at no additional cost. Also Xero provides some great technical support as well if you still have problems after accessing all the help text on line.
There’s no installation or maintenance costs because it’s all internet based. You don’t need to install anything, it is automatically there. You get the very latest versions and updates the minute you log online. There’s no need to download new versions.
Additions and Processing
There are also a multitude of additional “add-on apps” in the Xero eco system – so whether you need a stock system add on or a payment processing app for shopify there are lots of choices which make integrating a doddle
You can even link in apps that enable you to photograph receipts and send in expenses directly into an app, then with the benefit of bank rules you can effectively cut down the time it takes to process these expenses.
Expenses apps like Dext , Autoentry or Hubdoc – which is currently free with Xero make this so easy. It also means the base documentation is straight in Xero meaning you don’t have to keep the receipts separately as long as you have the software. So no more bits of paper everywhere and no more typing in lease agreements can save you a lot of time when comparing to standard accounting software and you can make decisions based on up to date, financial information.
If you’d like some more information on Xero and Quickbooks then click here…
Here at Krystal Clear Accounting we are here to support. If you’d like some help when it comes to accounting software and choosing the best one for your business then drop us an email at email@example.com or give us a call on 0161 410 0020.