Accounting In The Cloud - Web Based Access To Your Financial Management Information

Smith & Williamson writes: What is cloud accounting?

Cloud accounting is a hot topic in the accountancy world at present. Traditionally, a business would purchase accounting software as a 'product' and install this onto their computer systems.  With cloud accounting, you are purchasing the use of accounting software via an online service provider, therefore purchasing Software As A Service (SAAS). The accounting information is therefore accessed via the internet.

What are the benefits?

• No initial capital expenditure as paid by monthly fee.
• Accessed online and therefore the software is Mac or PC compatible.
• Unlimited data storage as the accounting information is not held on your internal network (i.e. you are not constrained to the storage memory on your computer as data is held in the cloud).
• Access anywhere provides convenience and enhanced business agility; you just need an internet connection.
• No upgrade fees are incurred as the service is continuous, which means you are always operating on the latest version of the software with access to the most up to date features.

Security

The most common concern with accounting in the cloud is security. You are effectively outsourcing the security of your accounting data. However, you should bear in mind:

• security levels are scaled when using a cloud accounting software provider. Instead of the basic level of protection you would normally purchase for your internal PC, an external provider would be providing security to a much higher level. They also have the cumulative effect of providing security to a higher number of end users
• cloud software providers must meet the requirements of ISO 27001, being the International Standard for Data Security. Their business reputation is at risk if they do not maintain the expected security standards automatic data back-ups are performed regularly by cloud software providers, something that may be forgotten when the responsibility is held by you internally.

Cloud accounting suppliers

• Sage One - software aimed at freelancers and individuals with basic functionality.
• Xero - software aimed at small businesses with basic functionality.
• Sage 50 accounts - hosted version of full software.
• Quickbooks online - three levels of software are available for different sizes of business.
• Bright Pearl - software particularly compatible for retail and wholesale businesses and also online retailers.
• Liquid Accounts - scaleable solution for growth businesses.

Cloud accounting top tips

• Try before you buy - most providers offer a 30 day trial of the software to enable you to test 'real data'.
• Look for free conversions - some providers will offer to convert data held on your traditional software and upload this into the cloud version.
• Purchase a service that meets your needs - there are a variety of service providers available, however, do not be tempted to purchase the most expensive versions if you won't be using all of the functionality.