Why is cloud bookkeeping best for small businesses?
The cloud solution has decreased or eliminated duplicate, time-consuming work, which is the scourge of most enterprises, let’s face it. Generally, cloud accounting provides more access to real-time data, which improves involvement with financials and aids decision-making.
Because of the growing usage of cloud computing, the term “cloud” now has a whole distinct meaning. But what is cloud computing, exactly? Is it appropriate for small businesses?
Without getting too bogged down in jargon, cloud computing simply means that your data and the software programs you use are saved on remote servers on the internet rather than on your computer’s hard drive or server (s).
Many people used to be afraid of the concept of data not physically being in the same area as you. What about protection? What about the possibility of data loss? Isn’t it better to keep your data on a computer that you can see and touch on your premises?
That is, of course, outdated thinking nowadays.
Surprisingly, putting your data in a cloud app is more safe than storing it on your own computer or server on your premises.
The history of bookkeeping
Computerised bookkeeping hits the scene (1955)
Before computers, accounting existed for millennia. To record debits and credits, revenue and costs, bookkeepers used paper ledgers. In the 1800s, machines began to play a role, and in the twentieth century, the introduction of computers revolutionized accounting.
What better place to begin our look back at the history of cloud accounting than with the origins of computerized accounting?
That date isn’t a typo — the earliest known example of computerized bookkeeping occurred almost a century ago.
General Electric began processing payroll in 1955 by purchasing a cutting-edge UNIVAC computer.
With its ability to crunch thousands of digits per second, UNIVAC made GE’s bookkeeping more quicker and significantly lowered mistake rates.
Of course, computerized bookkeeping would take some time to catch on outside of large international corporations.
It would be a long time before recognized brands like QuickBooks and MYOB made an appearance.
Do you need help with your bookkeeping? Bookkept is a trusted accounting and bookkeeping company in Australia. We perform cheap and quick tax returns for individuals. You can give us a call on (03) 8568 3606 or email us on [email protected].
The first internet (1969)
We can’t talk about the history of online accounting without mentioning the internet’s inception!
The Advanced Research Projects Agency Network, or ARPANET, became the first working prototype of the Internet in the late 1960s. ARPANET, which was originally supported by the United States Department of Defense, employed packet switching to allow several computers to interact over a single network.
While online accounting services have been increasingly popular in recent years, the internet has a long history.
It wasn’t invented in the early 2000s, the 1990s, or even the 1980s; in fact, the earliest rudimentary versions of the internet date back to the days of rock and roll and hippies!
Joseph Licklider, an early computer scientist, received money from the US military in 1963.
What exactly is his top-secret mission? To build a linked network of computers that allows for real-time information exchange.
internet… interconnected network… interconnected network…
ARPANET was essentially the forerunner of the present internet.
Computers may now link directly to one another without a central hub or database and transfer information and files across long distances.
More crucially, for today’s topic, users were able to retrieve data saved on a different computer through the internet — the beginnings of cloud storage.
Cloud computing emerges (the 1990s)
The term ‘cloud’ for distributed computing was first used in 1993, but cloud computing as a concept didn’t really take off until the end of the decade, with the launch of Salesforce’s customer relationship management (CRM) tools in 1999, which allowed software providers to deliver a variety of applications over the internet.
Remotely storing information is one thing, but remotely running a computer program is quite another!
Despite much speculation about cloud computing’s possibilities, it wasn’t until 1999 that internet connections and infrastructure improved to the point where a computer program could be run over the internet.
Salesforce.com, which was founded in 1999, is the recipient of this honor.
Salesforce.com, unlike other CRM solutions at the time, Salesforce.com allowed salespeople to handle leads without downloading anything on their PCs, instead of using an internet browser.
Salesforce.com demonstrated that it could be done; now, it’s just a matter of time until someone decides to take it a step further and offer an online bookkeeping service.
Xero changes the bookkeeping landscape (2006)
We may credit our friends from across the Tasman for the cloud accounting invention.
Xero is the world’s first cloud bookkeeping software created in 2006.
Unlike other online accounting systems, Xero began as a specific cloud bookkeeping platform and was only later modified for the cloud.
Xero swiftly gained traction in New Zealand before expanding to Australia in 2008.
And almost immediately, the staff at Maximum Business Solutions began training with it, learning its numerous systems and subtleties so that we could deliver cloud bookkeeping to small and medium-sized businesses across Australia!
MYOB is an Australian bookkeeping platform that was launched in 1991 and initially specialized on desktop accounting software. You’ve probably used MYOB at least once if you’ve ever done your own bookkeeping or accounting.
With more and more applications migrating to the cloud, it was only a matter of time until MYOB followed suit.
MYOB immediately began offering online bookkeeping services for small businesses alongside its main desktop accounting software, spurred on by the fast expansion of Xero.
Are you acquainted with MYOB and how it functions? If that’s the case, MYOB Essentials might be just what you’re looking for.
Intuit created and markets QuickBooks, an accounting software program. QuickBooks products were first released in 1983 and are aimed mostly at small and medium-sized businesses. They include on-premises accounting programs as well as cloud-based versions that take company payments, manage and pay bills, and handle payroll.
Since its inception in 2002, QuickBooks has grown to become one of the world’s largest accounting and bookkeeping programs, and it has evolved with technology, eventually moving to the cloud.
Advantages of Cloud Bookkeeping
Cloud computing has transformed our daily lives in recent years. We upload family photographs on Facebook, utilize online banking to pay our bills, and check our email on the go with our smartphones.
So, if we use the cloud in our personal lives, why aren’t we doing the same in our professional life?
Cloud-based accounting software today has all of the capability and dependability of a traditional desktop accounting system, plus a slew of new features that only internet technology can provide.
Here are some reasons to carefully consider moving to cloud accounting if your company is searching for a more effective approach to handle its financial operations.
The accounting sector has seen a considerable increase in efficiency because to cloud bookkeeping. This is because cloud bookkeeping, at its heart, automates laborious activities so you can focus on what matters.
Computer hard drives are similar to automobile engines. It’s not a matter of if they’ll ever break down, but when they will. That’s why we all backup our data every day, right? And don’t we all take our backups off-site every day? And we all perform weekly backup restoration tests to confirm the backups are performing properly?
No? Really? Possibility of tragedy!
Despite this, the majority of small firms fail to do so.
Another advantage of cloud computing is the elimination of data backups. Instead, your data is automatically backed up by cloud app providers, and they store it in several places across the world. This implies that even if one of their buildings were to be destroyed by a devastating earthquake, your data would be safe since it is housed in several places throughout the globe.
But, even if technology advances to the point where computer hard drives never fail, they will ultimately fill up. This is because they’ve ran out of room.
And this is a big drawback of the traditional method of keeping data locally rather than on the cloud: You must migrate data to new hard drives or servers and reinstall numerous software and databases (or hire IT services to do so). It’s both an expenditure and a hassle.
With cloud computing, you can say goodbye to inconvenient situations.
More Client Support in Less Time
Automation and cloud bookkeeping go hand in hand. Automation is the process of having software perform manual jobs for us. The cloud makes this possible on a previously unimaginable scale.
In cloud accounting solutions, for example, transactions can be produced without the need for manual data entry. Inputting data used to require a significant amount of manual labour. Bookkeepers and accountants used to spend a significant amount of time manually entering transaction data from paper bank statements.
These improvements in productivity are not restricted to the accounting software that you make use of. There is a robust ecosystem of add-ons available for several of the most popular accounting programmes. These add-ons are seamlessly included into their programme as an integral part of it. Because of this, everything from the workflow of documents to the forecasting of cash flow can potentially be automated with the correct software.
Cloud accounting makes it possible for advisors to serve more clients through the use of automation in a shorter amount of time. Because of this, they are also free to focus on doing a job that offers a higher salary.
By recording all deposits and withdrawals in real time, you will be able to cut down on the amount of time spent on record-keeping by a number of hours.
This will free up more time for you to concentrate on your other responsibilities for the organisation.
Real-time Financial Reporting
For many business owners, the ability to manage cash flow effectively is the holy grail of financial success.
Many people who start their own businesses lack current financial expertise. As a direct consequence of this, they are forced to go about their everyday activities in the dark. Access to mission-essential financial information in real time is a vital factor in determining whether or not a business will be successful.
This is addressed by cloud bookkeeping. It re-establishes the control of business owners. It gives them real-time, auto-updated information on their company’s financial condition.
They don’t have to wait for the most recent version of their QuickBooks file to examine their revenue and spending. Instead, 24 hours a day, 7 days a week, business owners can now monitor where their money is going and coming from.
Collaboration Made Easy
Cloud computing makes it possible for business owners and the advisors who work with them to access data whenever it is required. Because of this, working together is a breeze regardless of whether you are travelling, at home, or at the office.
In the current system, which does not utilise cloud computing, advisors spend up to 35 percent of their time looking for papers and responses from customers.
Cloud advisors and company owners may use Hubdoc to centralize essential financial documents automatically. This streamlines cooperation while reducing the friction of audit-proofing a company’s records. Documents are safe and secure on the cloud, and they can be accessed from anywhere. This ensures that accountants and bookkeepers have access to the records they require at all times. It also allows them to manage their time better.
Take control of your financial data by collaborating with your team, financial adviser, and bookkeeper in Melbourne in real-time.
Because cloud accounting is web-based, you’ll be able to work together on your books without driving to your bookkeeper’s office or scheduling a meeting.
Cloud Software is Always Improving
One of the main reasons for moving to the cloud, according to 42% of experts, is to improve network performance. Performance is more important when your firm grows. At fact, 76 percent of CEOs questioned in firms with more than 1,000 workers said they’re using the cloud to speed up IT service delivery.
One of the most impressive features of cloud software is how simple it is for providers to roll out updates. This is in contrast to desktop software, in which you are restricted to using only the version that you have purchased. And in cases where upgrades are not accessible until a more recent version is purchased. Instead, upgrades to the software running in the cloud are performed automatically and at no additional cost to the user.
Feedback from customers is actively sought by a number of cloud software companies. They factor in customer comments like this into their overall product plan. After the programme has been updated, the results will become apparent to customers.
Experience better cash flow with cloud bookkeeping
Live inflow and outflow monitoring
Keeping track of your inflows is one of the most difficult aspects of cash flow management.
Assume you’ve recently harvested a big crop. This is wonderful news, but it can make it difficult to distinguish between clients who pay up front and those who pay on credit.
Not to mention that the extra labour will take time away from your bookkeeping, making it much more difficult to keep track of your income inflows!
Are you having trouble sorting through all of your invoices?
Are you tired of pursuing down folks who have paid on credit with phone calls and emails?
Cloud accounting solutions link with a broad range of systems and accounts, including your bank account, in addition to logging transactions.
The end result? Live information on your cash inflows and outflows in real-time.
You’ll be able to view every dollar that enters your account as well as every single cost, providing you with real-time insight into your entire cash flow.
Your cloud bookkeeping software may produce on-demand cash flow reports and present your spending in real time using this information. As a result, you’ll be able to make expenditure adjustments and respond to cash flow challenges before they become serious problems.
Many business owners are forced to speed through their bookkeeping in order to prevent becoming overwhelmed by the quantity of work they have on their hands.
In certain circumstances, business owners may just lack mathematical skills.
When bookkeeping is done manually, there will always be some level of human error.
This can lead to erroneous cash flow alerts or even worse, unreported cash flow problems:
- Debts that are incorrectly recorded as received
- Typographical and other mistakes
- Expenses that are ignored or excluded
Because cloud accounting solutions automatically receive and process data from your accounts and applications, they can almost eliminate human mistakes.
This results in more precise cash flow statistics and a healthier company.
Automated debt tracking
One of the most serious challenges to a healthy financial flow? Debt problems.
Let’s say a debtor fails to pay on time. That’s money you’re not getting, which directly influences your cash flow.
Assume a debt has slipped between the cracks. For example, you may easily forget about a customer who hasn’t paid, severely harming your cash flow (and, therefore, your cash flow).
One of the most difficult duties a business owner can undertake is debt collection. Nobody wants to be known as a creditor who is too demanding.
With automatic updates and reminders, cloud bookkeeping makes debt collection easier. This might assist boost your cash flow by reminding debtors to pay.
Furthermore, it will guarantee that your accounts receivable are not overlooked or reported improperly as cash received.
Secured data backup
Are you concerned that your financial data and records may be lost?
When exchanging data, cloud apps employ encrypted connections. This implies that the data is encrypted both before and after it is transferred from your device to the distant server. This implies that a third party cannot intercept and read it. So, certainly, cloud accounting is secure in our perspective.
Traditional bookkeeping can result in the loss of all important information (such as cash flow) due to a fried computer or a wet file cabinet.
When most of us consider backing up our data, we frequently put it off because something “more important” has come up. Manual data backup is inconvenient.
All of your data is stored off-site on a secure server with extensive security protections, numerous backups, and redundant systems with cloud bookkeeping.
Your data is backed up and safe as a result of all of this. Furthermore, you’ll never have to worry about performing a manual backup again!
Backup is automated thanks to the cloud and the extensive connectivity between bookkeeping software and add-ons. It happens as part of your process in the best-case scenario.
Your own IT security is almost certainly weaker than that of a cloud app provider. Even if you don’t use any cloud-based apps, you’re susceptible if you utilize the internet and email. Because you have Internet connectivity, hackers can gain access to the data on your computer or local network. It’s similar to a door. Unfortunately, they also frequently know how to pick the lock.
Reputable cloud app providers, on the other hand, employ strong security measures, including SSL certificates that allow up to 256-bit SSL (Secure Sockets Layer) encryption. This is the same degree of security that internet banks employ.
Let’s be honest: This bank-grade security mechanism is probably significantly more secure than your personal computer and IT security standards.
Another benefit of storing your applications and data “in the cloud” is that your data is protected if your computer, server, smartphone, tablet, or other device is lost or stolen because it is not on the device. It’s all on the cloud, protected by encrypted passwords.
Your data, after all, is significantly more precious than your gear. Hardware is easily replaced. Data, however, is not.
The same “you can rest since your data is on the cloud” principle applies to natural calamities like floods and fires. For example, a company that uses cloud-based computing might have its offices burn down overnight and continue “business as usual” from a different location as long as it had internet connectivity. (At least from the customer’s standpoint, financial, accounting, human resources/personnel, and other business data.) It does not relate to a company’s physical or operational elements.)
There isn’t a single business owner or corporation that wouldn’t profit from a meticulous bookkeeper. When you hire a bookkeeper online, you can choose from a far larger pool of candidates and be confident that you will get the finest person for the job at the greatest price. In addition, you’ll have more relevant, highly skilled experts to choose from since you’ll be selecting from a broader pool.