Getting ahead in a competitive environment means a small business must find ways to work smarter. In the quest for greater effectiveness and efficiency, making the move to (or starting with) cloud accounting can be a wise decision.
Technology is quickly changing the way we view business. Just as sites like Amazon have flipped the traditional brick-and-mortar retail on its head, sites like Upwork and Fiverr are giving traction to the new gig economy. Technology makes services convenient and customers accessible. Traditional business models often lack the mobility and innovation that online retailers and gig marketplaces provide.
The same is true for traditional accounting software. Small businesses install desktop software on one back room office computer. You must step away from the business you love to update the books. Often, the software is not up to date. Because it is tied to one computer, if the PC fails, or the laptop is lost or stolen, so too are your company’s books. Backing up the data securely can be a pain (which is why it is often not done at all). When it comes time to share financial records with your accountant, files are often sent using insecure methods.
Thankfully, the innovation of cloud accounting solves these problems and more. So, what is the cloud? In short, it is a means of storing information online, so it may be accessed securely from anywhere. You likely have been using the cloud for quite some time via your bank’s online banking or your Amazon Wish List. How can cloud accounting help your business?
1. Cloud accounting makes your business mobile
Want to see how your shop’s sales are doing while you are vacationing in Europe? You can do that. The cloud makes your real-time information accessible (securely) anytime, anywhere. You can invoice in Italy, or pay bills from Brussels. You can hire staff, bookkeepers, and more from other towns, states, or even countries!
When you leverage the mobility of the cloud, you are no longer tied down by your business, and your business is no longer tied down by your location. Cloud accounting software like Xero often includes mobile apps that let you operate from your phone, giving you flexibility, whether you are working from home on a sick day or seeking the 4-hour workweek.
2. Security is a top priority in the cloud
Cloud-based software is often more secure than one’s own computer. By security, I am not referring only to protection from hackers, although SaaS providers typically put far more access controls in place than any desktop software ever has. I also refer to concerns such as backups and business continuity, updates, and encryption. Cloud data is typically stored on servers in large secure data centers, with backups or redundancy at other remote data centers, meaning your data is safe, even if something happens to the main data center. You can learn more from Xero’s Intro to Cloud Security.
Cloud accounting software is also updated behind the scenes on a regular basis. This means you always have access to the most up-to-date and secure version of the software. This also means new features become available immediately; no more waiting for IT (or yourself) to “get around to it.”
3. Collaboration is easier than ever
Whether you are sharing financials with your tax accountant, or working with a freelance contractor, the cloud makes collaboration simple. Any information you need is at your fingertips when you need it, wherever you are. The same is true for your staff, accountants, or freelancers, even if they are in a different location than you. Geographic location is no longer an obstacle in business, thanks to the cloud. A small business in a rural town with few specialized resources can even have access to the best and brightest.
Also gone are the days of waiting your turn to edit a file or access certain modules or functions within your accounting software. Cloud-based programs and SaaS have mastered the art of simultaneous access, using tools such as Xero’s Single-Ledger Approach. Changes made by others are available to you in real-time. Have you ever edited a Google Docs spreadsheet at the same time as someone else? I know this sounds rather geeky (I own it), but it is exciting and eye-opening for those of us accustomed to getting Excel’s “this file is in use” message to see someone else moving and editing a spreadsheet in real-time before your eyes!
4. Customize the software to your business
Every business is different, and off-the-shelf desktop accounting software often requires a lot of workarounds to deal with this fact. Such workarounds often leave us wondering if we are spending more time “making it work” than what we gain from the process. In my years as an accountant, I have seen countless procedures like this: 1) export data to Excel from one program, 2) manipulate it for an hour, and 3) attempt to import the reorganized data to the accounting software. That is no longer the case with cloud-based software like Xero and its partner apps. Just a quick glance through the marketplace, and you can see countless ways you can make the accounting software fit the needs of your small business or start-up. Best part: it’s all integrated, so what you do in the partner app seamlessly transitions into the accounting software, often in real-time. No data manipulation required!
At Henggeler Bookkeeping & Consulting, we believe cloud-based accounting is the best option for most businesses, offering flexibility, customization, and utility needed in today’s mobile entrepreneurial environment. We are a Xero Partner and specialize in helping your small business maintain accurate and reliable books, find the most effective custom app package, and handle or automate as much of your business as possible, allowing you to be the entrepreneur and not the bookkeeper.