Cloud Accounting for Your Business
Have you ever saved a document on your computer and wish you had access to it on your phone? Or maybe you experienced your computer crashing and everything you ever saved on it went to cyber garbage.
Both are unfortunate scenarios to be stuck in. Which is why tools like DropBox and Google Drive exist. These companies have discovered a way to store all your important documents on the internet.
But what about your accounting information?
That’s important too, right?
You don’t want to be in a situation where all of your business’ financial data disappears due to computer hardware issues. You also want convenient access to your information from any device. The solution is cloud accounting.
The Old Way
The old school way of storing accounting information involves installing software on a local drive.
This may involve a download from the subscriber’s website or the use of a CD-ROM (most modern computers don’t even have a CD-ROM slot anymore!). With this method, the software and all of its content is saved on the device itself. A user only has access to this content if he or she has access to the device.
This creates 4 major problems in your accounting:
- Your access is limited. You have things to do and decisions to make. Your day should not be slowed down because you left your computer at the office or decided to work from home one day and everything you need is on your work desktop. Your accounting information should be accessible from anywhere and adjust for how you do things.
- Your accountant’s access is limited and anyone else’s for that matter. If you install a local accounting software on your computer, then your accountant has to work from your computer. And if you have an outsourced accountant, that simply wouldn’t work. On the flip side, if your accountant has a local drive software, then you wouldn’t have access either! Not only that but even if you have an in-house bookkeeper, their access is limited to the computer the software is installed on. Don’t you want your team to be able to work from anywhere? Or make updates or changes anytime?
- Hardware crashes will erase all of your accounting information. Devices depreciate. They lose value and function. In the untimely circumstance that your old or lemon of a computer decides to crash, poof goes all of your information, including your accounting. This could mean months or years of data down the drain. Your customers, employees, and vendor transactions..all gone. All because you put the trust in all of your company’s transactions in the hands of a device? Would you want to fly on an airplane with only engine? Or do you have some level of peace knowing that all airplanes have 2 engines, in case 1 fails?The life of your accounting should not be up to the life of the 1 computer its stored on.
- Changes are not saved unless you manually save them. If you or your accountant are making updates to your books, the changes are not saved unless “File > Save” is clicked. In today’s hustle and bustle, it’s easy to forget that last step. It’s even easier if you changed 1 thing and saved and quickly went back to change something else. After its all said and done, you may have believed you saved everything but in actuality, only saved a portion of work. And being the human that you are, this mistake is bound to happen. This creates double work, misunderstandings between team members and incorrect information.
Effects of the Problems
The effect of all 4 of these issues is inconvenience and inefficiencies. Both of which cost you and your business time and money. Time is lost when your computer suddenly breaks down and you have to find a way of recovering all your information or enter everything again. Money is lost when you have to pay your accountant to enter all of this information again.
The Solution
The tools you use in your business should accomplish 2 goals:
- Make your life easier and;
- Seamlessly integrate with your business.
Cloud accounting accomplishes both and here’s how.
What Is Cloud Accounting?
Cloud accounting software is similar to local install accounting software except that the cloud accounting software is hosted on a remote server, accessible via the internet. Information is processed in the cloud and returned to any user who has access.
Have you ever heard of “the cloud”? It has nothing to do with the white, feathery things in the sky. Instead, the cloud refers to tools and software that are hosted on the internet. Using cloud software has little to do with the device you use to access information and everything to do with if that device has internet access. If your device can connect to the internet, you have access. Period.
The Benefits
Using cloud accounting software allows you or your accountant to make updates to your books on a work computer and then pick it back up on a home laptop. Completely eliminating the need to always have your work laptop with you at all times.
Using cloud accounting also reduces the risk of data loss. No longer would you have to constantly save a file when changes are made. Cloud accounting saves all changes automatically and in real time.
Cloud accounting is cost effective. It is usually more affordable than traditional accounting software. It also does not require ongoing maintenance and system upgrades.
Because cloud accounting software runs on an internet connection, it has the capability of integrating with other cloud-based tools. Tools such as receipt readers and time trackers. Tools like these will boost your company’s productivity and efficiency.
The Pitfalls
People who are resistant to cloud accounting software have similar concerns. Mostly having to do with data security and privacy.
Data security and privacy is a major concern especially when you are talking about information as sensitive as your company’s finances.
Your accounting records not only include sensitive information regarding your business transactions but they also include your employees’, customers’, and vendors’ too.
Cyber Attacks
Security risk exists due to the increased ability for hijackers to steal you or your team’s login credentials to remotely access you information. By doing this, hijackers can change and manipulate information within your account.
Malware
Malicious software or “malware” is software that is intended to damage computers and computer systems. In the cloud form, attackers inject malicious software in the cloud and you view it as if it is part of the accounting software. Attackers would be able to view, change and steal data.
Inside Threats
Because cloud accounting is accessible anywhere and on any device, team members who have authorized access can steal or misuse accounting information. This is not a readily apparent threat, but it does exist. Or a team member may not even realize they are compromising company data by simply leaving their laptop open at a coffee shop.
Effects of Cyber Threats
Because of these threats, individuals and companies’ information are vulnerable. People’s identities can be stolen. Information like names, social securities numbers, birth dates, addresses, and bank account numbers are all at risk for theft. Companies can lose their financial data and bank account numbers.
Hackers aren’t going anywhere any time soon. With the growing popularity of cloud accounting software and tools, hackers have even more fuel behind stealing sensitive information. The best way to fight against cyber attacks is first by understanding the risks and having a back up plan.
Cyber Threats Solutions
Research the Security Practices of the Cloud Accounting Software You Go With
Your cloud accounting is only as safe as your service provider’s firewall. Make sure to do your research on the security of any cloud accounting software you are considering. Do they have 24/7 surveillance of their servers? What happens in case of fires or power outages? What is their protocol in case of security breaches? These are some of the questions you need to ask.
Limit User Access
Everyone in your organization does not need access to your accounting records. Control who can access certain information. Usually, cloud accounting software offer different levels of permissions. Only grant those with a direct need access to your books. This is usually yourself, bookkeeper or CPA. And maybe your bookkeeper does not need as much access as your CPA.
Really think through everyone’s role and their need to your records. By allowing less people access, your likelihood of a data breach is decreased.
Encourage each user to have strong passwords and to change them often. Implement rules and procedures when handling company sensitive information such as using privacy screens and always logging out when finished.
Utilizing a Local Drive
If the thought of losing your data to an internet hacker is too much for you to wrap your head around, consider backing up your data to your local drive. This way you still have the convenience of cloud accounting but also the peace of mind that your data is backed up on your local device. To mitigate against hardware crashes, instead of storing your back up on your local drive try a USB drive. Be mindful if you lose this tiny device, all the information on it gets lost too.
Other Pitfalls
No Internet Connection
Another pitfall of cloud accounting software is you must have an internet connection to access your data. Which makes sense. The cloud is located on the internet. If your internet goes out for any reason, you would not be able to look at your financials.
Service Provider Disappears
The service provider could be here today and gone tomorrow. This is an inherent risk for all internet based companies. It’s important to always have a plan B.
Bottom Line
The advantages of cloud accounting outweigh the disadvantages. After all, your data can still be stolen by storing your information on a local drive. Hackers have found ways to create viruses and hack computers and other devices.
With most cloud accounting software, you have the protection of some of the industry’s leading firewalls. Not all software have the same level of protection, but considering some of them have millions of users, it’s a safe bet to assume that data security is at their forefront.
More and more companies are moving to the cloud. It creates a more cohesive and collaborative team environment.
The trend applies to accounting too. Some accountants only work with cloud based accounting and for good reason. Everyone desires convenience. With cloud accounting, you give your accountant more flexibility to work more efficiently which ultimately delivers a better service to you.
Consider what utilizing a cloud accounting software can do for you. If you are still resistant, think about the evolution of technology. People are always resistant at first, but once they try a new tool and see how it can make their lives easier, they typically ask themselves, “why didn’t I try this sooner?”