Starting a small business is no small undertaking, and will likely result in a lot of mistakes made and lessons learned, even if you end up succeeding. Poor accounting is one of the major reasons young companies fail. This is why it’s imperative to set a solid accounting process before you get your operation off the ground, otherwise it could become too late to learn from your mistakes.
Today cloud-based enterprise resource planning (ERP) software is the obvious choice for a simple and approachable user interface, but a recent report by Capterra found that 61 percent of of the organizations surveyed used locally installed software instead.
So why should you make the switch to a cloud-based platform over a traditionally local piece of software? Below will detail why leveraging the cloud is a great idea for your business.
Cloud Accounting vs. Traditional
Before you can take a deeper look into why you should incorporate a cloud-based tool into your accounting infrastructure, it’s probably a good idea to have at least a baseline understanding of what it actually does. Cloud-based accounting is a software as a service (SaaS) solution to traditional accounting. Data from your device is sent into the cloud, where it is processed and returned to the user.
There are a few key distinctions between traditional on-site and cloud-based accounting procedures. For one, cloud accounting is more flexible in its accessibility capacity – you can access your financial information from anywhere with an internet connection, as opposed to only being able to access from a few select computers. Secondly, cloud accounting ERP software updates financial information automatically and provides real-time reporting; whereas, with the on-site world, you’re going to have to update all this information yourself.
Cloud-accounting processes come with the full force and flexibility of the greatest security measures the industry has available. The nature of the cloud offers an inherent extra step in the process of securing your data. For example, an organization’s laptop or work computer with critical financial data can be lost or stolen – leaving you vulnerable to theft or some other kind of compromise.
With cloud accounting, no financial evidence is stored in the physical space of your laptop or computer. Meaning that the act of theft upon a company computer does not indicate a breach of data, as your valued information is still secure in the cloud and encrypted with password protection.
Sharing data is also less worrisome, as you simply provide the appropriate individuals with their own unique access codes to reach the information. Traditionally, you would have to use a physical device (like a flash drive) to transfer data, which can also be lost or stolen.
With traditional methods, every time your firm or agency grows, you’re going to take on heftier licensing burdens as well as maintenance costs. You’ll also likely incur the capital cost of purchasing new hardware, such as servers, and their subsequent maintenance investment along with them. Companies using cloud technology require less server infrastructure to store data, and a dedicated IT staff is not needed to maintain or update it on a regular basis.
As with any investment, there are costs that will be accrued, but taking time to research cloud-based solutions is an investment in your business and in your future.