What is cloud accounting?

What is Could Accounting? We All Count

What is cloud accounting?

Firstly, if you’re still wondering what the ‘cloud’ is, you’re not alone. I get asked the question … a lot. The cloud, in simple terms, is the internet. If you are using the cloud, then you are using the internet to access software and files, rather than installing them on your computer.

Cloud accounting is the same. Whereas once you would have needed to purchase the software, install it onto your computer, and save back-up files onto a hard drive, now it can all happen in the cloud. Some software providers, such as MYOB and Reckon, offer both so that the program is installed on your computer and the data file hosted in the cloud. Both providers also have a dedicated cloud solution with no programs installed on your computer. Xero, who We All Count recently became a platinum partner to, is an accounting solution solely hosted in the cloud. You don’t need to install anything, you don’t need to save anything, you just need a device connected to the internet and you can access Xero. This has been a huge win for business owners who need to be on the go and not stuck in an office.

In our office, we are almost 100% in the cloud. We use Box for all of our document storage; Workflow to manage our practice, and Xero to manage our accounts. Before moving our office to the cloud we had a server which would fill up with data and quickly become outdated and slow. This meant we had to purchase a new server every few years, often at an extensive cost. Similarly, when using traditional accounting software, often the program file got bigger, you needed more storage to run it and you needed to install a new version of the software every 12 months. Sometimes a new computer was needed to be able to run that upgrade. The software cost a lot of money, and if you wanted it to be kept up to date, you would have to pay for that each year too.

Cloud accounting has overcome all of these issues. All you need now is a device connected to the internet. it doesn’t even need to be a computer. Now you can use a laptop, tablet and even your mobile phone to do your books in the cloud, usually straight from the web browser. Updates happen automatically (eg. New ATO tax tables) and fixed monthly access fees usually total less per year than traditional software.

Before cloud accounting, one of our biggest gripes as accountants was if we needed to see a client’s data, or troubleshoot a problem, the data needed to be backed up and sent to our office. Often the data was corrupted in the process and it needed to be sent again, meaning clients were left waiting. Cloud software allows the accountant to see exactly what you (the client) are looking at in real time. We can log in to your account simultaneously, and if I make a change to your file, you can see the update instantly – it is seamless.

These cloud solutions can connect directly to your bank to offer daily feeds of data, importing the previous day’s transactions directly into your cloud solution. This means data is reconciled on a daily basis, saving you time. As data is stored in the cloud, it allows other software providers to securely access this data as well. Xero, for example, has more than 300 partners you can use to make running your business easier, such as:

  • automatic recording of receipts and invoices through Receipt Bank;
  • inventory management which connects directly with Xero through programs such as Unleashed and Cin7;
  • point of sale systems such as Vend;
  • payment services through PayPal or eWay.

The benefits of cloud-based systems are vast and we are only just scratching the surface. If you want to find out how cloud accounting can improve your work flow, we can help. We were proud to be made platinum partners of Xero recently, and we were also recently named in the top 50 Cloud Accountants in Australia by Hubdoc. So if you don’t have your head in the cloud, now is the time.

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

Shaun Circle

Shaun Williams
Partner – Murray Bridge