Cloud Accounting is a term that’s come into vogue in recent years. Software providers like Xero and FreeAgent have led the way in moving businesses away from the desktop and into the cloud, but what exactly is online accounting and why should you care?
Quite simply, Cloud Accounting is a term that’s used to describe accounting that’s done online. Like so many of the systems we use in business today, the move to hosting them online has been relentless.
In our business, we use apps such as Evernote, Dropbox, Trello, and Slack to run what we do. They’re all hosted online, meaning that we no longer need to install software on our desktop.
I’m old enough to remember when that wasn’t the case, and every bit of software we used had to be bought, physically shipped to us (later it would become possible to download a copy), then installed from a CD (or disk – really showing my age now!).
Software as a Service
Then in the mid-2000’s, a new model of software delivery became popular – Software as a Service, or SaaS as it is often called.
SaaS changed the market in many ways. Beforehand, businesses typically found themselves paying expensive licence fees for software – a product like Microsoft Office would cost in the region of £500; Sage accounting software would set you back upwards of £1000 and often significantly more (they’re still using that model in 2017!).
The SaaS model democratised software and made it affordable. Xero starts at £10/month; FreeAgent at £19/month. In each case users can pay monthly instead of having to shell out hundreds or thousands of pounds at one time (and then again the next year!).
Which brings us back to the term ‘Cloud Accounting’. Traditional accountants seem to like using this term – maybe it seems cool to them? Thing is, it’s just online accounting, using a SaaS application like the ones mentioned above.
What these ‘new’ providers have done that their older competitors haven’t, is build a platform that connects easily to other SaaS apps. Xero has over 500 apps in its’ App Marketplace, which gives the user a LOT of flexibility in how they use the product. That’s where the real value lies.
And of course your data now lives online, rather than on your desktop PC or server. Should we be worried about data security in that case? In a word, no. It’s safer on Xero or FreeAgent’s server than it would be on yours. End of.
Should you be using Online Accounting?
Are you mad? This is 2017 – of course you should! Not only is it without a shadow of doubt the best thing for your business, it also means that your accountant can add a LOT more value.
Why is that you ask? Because it’s all online, which means that he or she can also access it. In fact both Xero & FreeAgent (and most of the other online accounting providers) all have some pretty nifty management apps that accountants can use to monitor their clients accounts. This allows us to set all manner of alerts so that we can keep an eye on things for you and then intervene if we spot something that looks out of the ordinary.
So not only does online accounting make things easier for the user, it’s also revolutionising the way that accountants deliver services to their clients.
If you’re not already using an online platform, then you need to ask yourself why. Speak to your accountant – they know your business, so they’ll be able to recommend the best system for you and then help plan the transition to this brave new world.
You won’t regret it!