Small business accounting involves everything from creating and sending invoices to tracking expenses and generating end-of-year reports. Manual data entry can take hours each week, which is one of the reasons why many businesses are saving time and money with cloud accounting software instead. You probably already use the cloud for online banking, so why not use it for accounting as well? We’ll cover some of the key benefits of cloud accounting below.
What is cloud accounting?
Cloud accounting software puts your business books online. These include the income statement, assets, liabilities, and expenses. Although these financial details are stored online, this doesn’t mean that just anyone can access them. Cloud accounting software is password-protected and encrypted, just as your online bank accounts would be. Only business owners and approved admins are granted access to the software.
In addition to storing financial records, there are benefits of cloud accounting to clients as well. Most software includes built-in tools for managing bills, quoting, and invoicing – all of which makes it easier to send accurate statements to your clients for streamlined payments.
Five cloud accounting benefits
Moving everyday accounting tasks to the cloud offers an array of benefits to businesses and customers alike. Convenience is one of the key benefits of cloud accounting to clients and employees alike. To maximise this, you should choose software with a central, user-friendly dashboard for easy access. Here are five additional cloud accounting benefits:
1. Anywhere access
Cloud accounting lets you access details from anywhere with a secure internet connection. This is ideal for remote teams who can log in from meetings and home offices. If you hire freelancers or external bookkeepers, they can also gain access to accounts at a distance for more flexible working.
2. Real-time data insights
With manual accounting, there’s a lag between transactions and recorded statements. Instead, cloud accounting benefits include real-time business updates. Many software programs connect automatically to your online bank account to keep track of expenses and payments automatically. This helps businesses take greater control of cash flow.
3. Better use of time
Manual data entry takes hours when you factor in chasing down paper receipts, matching financial records, and trawling through bank accounts to update your spreadsheets. Cloud-based accounting software does all of this automatically.
4. Better security
When you manually enter details into desktop software, you must remember to back up your accounts each day. Otherwise, you run the risk of losing all your valuable data. By contrast, cloud accounting software is automatically updated and stored remotely for greater security. Data is encrypted and stored in the cloud.
5. Easier tax compliance
Tax compliance is an important component of small business accounting, and cloud accounting software makes it easier. Stay on top of the HMRC Making Tax Digital requirements with a program designed to automatically calculate VAT and generate financial reports at a click.
Advantages of cloud accounting vs traditional software
How does cloud accounting stack up when compared to traditional software?
It offers real-time updates
You can better monitor your current financial position
Cloud accounting updates automatically to the latest software version
You can access your data anywhere with a connection
You can grant access to multiple stakeholders
Advantages of cloud accounting boil down to both convenience and security. You save a great deal of time when there’s no need to input each detail manually, and you don’t need to cart around a USB drive.
Is cloud accounting software right for you?
It’s clear that there are multiple benefits of cloud accounting for small businesses, so how can you choose the best software? Look for software that covers both your monthly budget and tax compliance needs. Some accounting software requires a base level of accounting knowledge, while others are beginner friendly.
You should also consider app integration. GoCardless integrates seamlessly with a multitude of cloud accounting programs, including Xero and other partners. This makes it easier to enable simple payment processing with a higher level of flexibility for clients and business alike.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.