Although traditional accounting software has tremendous advantages over manual paper ledgers, they are nowhere near cloud accounting solutions in terms of the benefits offered. We highlight some of the major advantages of cloud accounting systems further here:

Accessibility: Traditional accounting systems can only be accessed from one location or desktop. Cloud accounting facilitates the use of mobile devices such as laptops, tablets, and smartphones, as data is accessible through the internet. These systems can provide on-hand, real-time analysis of business performance, which enables entrepreneurs to make well-informed and timely decisions.

Automation: Cloud accounting tools automate the accounting processes within the firm or the company’s finance and accounting department. Linking the company’s bank accounts to the system automatically records all transactions in the digital ledgers. Automatic bank reconciliations, payable and receivable reconciliations, and ledger postings, among others, result in immense time savings. Some accounting applications allow automatic payments to suppliers on predefined dates, as well as dispatching invoices to regular customers.

Accuracy: Manual inputting of data lends itself to human error and thus, data entered can be erroneous, especially as data is rarely organized after the input process or stage. Despite the accounting system and technologies employed, there is little to no room for accounting errors. The use of advanced technology such as artificial intelligence and machine learning (explained later on) further reduces the possibilities of error in cloud accounting systems, by limiting or reducing the requirements for humans to transpose data from paper to digital records or from one system/application to another.

Cost Reduction: Businesses that employ cloud software no longer require IT staff to manage the accounting system, as this is all outsourced and managed by the accounting and bookkeeping software service provider. Contrary to in-house systems, the upgradation and maintenance of software are done by the service provider with no additional cost incurred by the business. This allows the business to use the latest prevailing technologies in its internal processes, without the overhead and expertise to attain that on its own. This also allows the firm to only pay for those services that they require, while also minimizing the costs of servers and IT professionals. These cost savings can then be utilized in other business areas.

Control: Businesses now have more control over the information that can be accessed by employees. Limited access to the financials of the business can prevent the leakage of confidential information.

Collaboration: All data can only be viewed by authorized users in every major cloud-based accounting system. This increases goal collaboration as different department heads can view data related to their roles in real-time, allowing for an increase in teamwork, collaboration, and coordination.

Data Protection: Traditional accounting software requires data to be stored on hard drives that are free from viruses. A major drawback of physical storage is the occurrence of natural disasters, fires, and theft which may result in an irrecoverable loss of vital historical data. Cloud accounting and bookkeeping service providers offer the most extensive and up-to-date security protocols, with regular backups. Also, data is stored in multiple locations to prevent any loss of data. Sensitive information can now be accessed through the cloud, without having to send it to the concerned people through emails or other virus-prone or security-breach-prone channels.

Implementation: Businesses no longer require expensive infrastructure and competent staff to ensure that the software is running smoothly. By outsourcing accounting and bookkeeping services, startups can begin their accounting process from the very first day.

Scalability: As businesses continue to flourish, the procurement of additional hardware such as servers and therefore office space, is not required, as service space can simply be increased on the cloud. Businesses often only pay for the services and storage space they require.