5 Tips CFO Should Know Before Adopting Cloud Accounting
- Living in a highly globalized and digitalized world, companies and firms are starting to digitalize their work in order to be more competitive and efficient in the fast-paced business world. One of the crucial features of a firm is to have a clear and transparent accounting record. However, conventional manual accounting systems have been criticized for their low working flexibility and high manual working error. Cloud accounting enables companies with an always up-to-date online solution from any device and anywhere.
Speaking of digitalizing financial management, companies and firms begin to shift their accounting businesses online by adopting cloud accounting services to stay ahead of their competitors. But what do we exactly mean as the ‘cloud’, and why is it important to businesses today?
Cloud accounting refers to the delivery of accounting services through software that is accommodated on remote servers – the ‘cloud’. The accounting software aims to increase the bookkeeping efficiency, integrate your financial administration, and provide real-time reporting of your key numbers. Unlike traditional, desktop-based accounting software, cloud accounting allows employees and business owners to access the same entries with a high accuracy level. Compared to conventional manual accounting systems, cloud accounting enables an always up-to-date online solution from any device and anywhere.
Benefits of Cloud Accounting
Secure financial data storage
Cloud accounting software provides highly secure storage of financial data than traditional, desktop-based software. Similar to online banking services, cloud service providers use encryption to rewrite account information into a series of codes when sending and storing data. Also, as online financial data is password-protected, accountants and companies have to access the same system and retrieve entries with their exclusive passcodes instead of physical flash drives to avoid information breaches.
Cloud providers often offer security measures such as an off-site automatic backup server, multiple segregated networks, and numerous segregated networks. As data are not kept on-site, it mitigates the risks of any natural or human-induced disasters.
Cloud-based accounting allows automatic synchronization of financial data. Keeping your books and bank reconciliation up to date brings complete real-time information and analysis over the corporation’s present financial situation. Instead of going over clutters of past financial reports to check for past mistakes, online accounting saves time. With access to instant reports and financial data, corporations could make informed decisions regarding the business’s financial future with organized numbers, insights, and key data.
Simplify tax compliance and payments
Cloud accounting generates reports and reminders to keep firms docile with the Inland Revenue Department in Hong Kong. For instance, it could show how much firms have paid overtime for a specific tax. Tax payment transactions would also be recorded and exported into relevant tax return templates for digital submission. Shifting accounting workbooks online thus assists in compiling relevant papers and information to file a successful disbursement.
Improve accounting accuracy
In manual entry accounting, there are always reports on the transposed number or erroneous calculations. With cloud accounting software, corporations could leave such concern behind. All relevant financial information like inventory on hand and supplies on hand can be concentrated on one cloud-based file, reducing possible human accounting errors.
Furthermore, online bank feeds are displayed and reconciled on the firm’s cloud accounting file. This ensures nothing is missed or added to avoid confusion and false accrual journals.
Cost-effective based on your company size and needs
To many small and medium-sized companies, it might be impossible to have in-house accounting executives or an accounting department due to the high labor and maintenance costs. By adopting a cloud-based accounting solution, the subscription-based operation that depends on the required number of users and services per company enables firms to control their costs while obtaining precise and accurate accounting records suited to their needs.
The world is changing every day, and new technologies are developed continuously to impact the future of small and medium-sized businesses. Cloud accounting software helps companies minimize their operating cost and maximize their profit in the long term. If you have not heard about cloud-accounting, it is undoubtedly time for you to look into what the fantastic online solutions can offer.
Written by Claudia Tam , Latin Department, CW CPA