Despite the hot and sunny summer in Las Vegas, my forecast for the future of accounting is very cloudy. “The Cloud” is a broad term encompassing many service models, but as it relates to accounting software, it generally means that the application runs online (usually through a web browser) and the data is stored online. By using the cloud, a user does not need to install a particular accounting software program on his or her local workstation.
Some of the benefits of using cloud accounting software include:
- Accessibility. Business owners and their CPAs can access accounting data anywhere with the Internet. Generally, cloud accounting programs work across multiple operating systems and platforms, so it’s not a problem if one employee has a PC and another has a Mac. Many accounting software vendors have also released mobile apps enabling a business to manage its accounting from a tablet or smartphone.
- Centralized Data. With desktop software, data files are often exchanged and it can be difficult to keep track of the most current data file. In the cloud, all users access real-time data, leading to a more collaborative relationship between business owners and accountants.
- Reduced Costs. Instead of an up-front software purchase common with desktop products, most cloud accounting software vendors have a free trial period and then charge monthly subscription fees. Typically, upgrades are automatic and there is no software installation or maintenance.
- Time Savings. Today’s cloud accounting software can import bank feeds and automate the classification of transactions, which changes a bookkeeper’s role from data entry to managing the imported data and reporting. You may also want to consider other features such as online invoicing, which may be more cost effective and help you to collect your receivables faster than sending paper invoices.
There are some disadvantages of accounting in the cloud, such as the reliance on an Internet connection. You’ll also want to consider issues related to data ownership and security.