What is Cloud Accounting Software & How Does it Work?

If you’re still spending hours transcribing data about sales and purchases from your bank account to a spreadsheet, you’re missing a trick: cloud accounting software. This form of technology is revolutionizing the way Canadian businesses operate. 

What is Cloud Accounting?

Before we dive into cloud accounting, let’s first cover off the cloud. Think about anytime you use a solution like Google Workspace or access your email online. In both these instances, you’re using the cloud.

Essentially, the cloud is a service that makes software and data available anytime, anywhere on any device. Rather than information being stored on your hard drive, it’s actually stored on the web. 

Now, with that in mind, let’s take a look at cloud accounting. With this form of accounting, you, your employees and your accountant can access accounting data from anywhere, on any device, as long as you have an internet connection. By contrast, with traditional accounting software, only a couple of onsite computers have the software installed. 

Cloud accounting software also provides functionality to automate the process of collecting financial data by linking directly to your bank account. This means your records are always up to date and more reliable than traditional accounting software, which usually requires you to enter data manually. 

How Cloud Accounting Software Works

There are numerous cloud accounting software solutions out there, tailored for businesses large and small. They typically work by asking the user to subscribe to the solution. They can then upload their books to the cloud environment. 

Once this is done, the user can invite other team members to collaborate on the account. All users will be able to access these accounts either via their web browser or a mobile app if this is an option. 

We recommend connecting your software of choice directly to your business bank account. That way, you can automate the process of entering transactions and purchases, which saves a lot of time. 

Benefits of Cloud Accounting

We love cloud accounting for a host of reasons, including:

  • Improved efficiency: Research shows that cloud-hosted accounting software can reduce operating expenses by up to 50%. This is because your employees don’t have to spend hours manually inputting data into spreadsheets. Moreover, because you don’t have to maintain your own software on-premises, you can reduce costs in this way too. 
  • Enhanced collaboration: Being able to access data anywhere and any time better facilitates collaboration. 
  • Better use of data: Leading cloud accounting solutions provide dashboards with valuable insights about spending patterns and cash flow, which you can use to make informed leadership decisions. 
  • The power of automation: Cloud accounting enables automated bookkeeping, automated cash collection and automated bank reconciliation, which frees up your team to focus on more high value tasks. 
  • Fantastic security: The cloud is one of the safest ways to store information. Just make sure you use multi-factor authentication for your cloud account, instead of single factor authentication. 
  • Makes taxes easier: Paying your taxes becomes seamless with a cloud accounting platform. Because everything is logged as you go, you can then easily export your data into your tax return.
  • Less maintenance: In the on-premises world, when a company expands, they need to think about reengineering their software licenses and incur new maintenance costs. They might also have to purchase new hardware, servers and so on. With the cloud, these expenses disappear!  

When should your company use Cloud Accounting Software?

The cloud accounting market is undeniably crowded and it can be a little overwhelming to pick a cloud accounting solution with so many out there. 

In the end, the software that you go for will depend on a range of factors: your company’s size, price point and accounting needs.

If you’re yet to use a cloud accounting software solution, we highly recommend it. Cloud accounting is a backend benefit that can have a really positive impact on your organization. It’s even been linked to increase revenue.

Moreover, as of 2020, 78% of small businesses depend on cloud-hosted accounting solutions. You’re missing out on a competitive advantage by sticking to traditional accounting solutions. 

If, of course, you’re already using cloud accounting, but don’t feel you’re reaping the full benefits, then we’re here to help. Our experts can help you unleash the potential of your cloud accounting software, so you’ll feel confident knowing your books are in order. 

We’ll help you find the best cloud accounting software for your business! 

So, what are you waiting for? Dynamix Solutions can help your Toronto and Calgary business make sense of the different cloud accounting software solutions, and find the right one for your needs. 

Contact us today to schedule a consultation! Call Toll Free: 1 (855) 405-1087.

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