The race to keep up with evolving technology has caused many industries to step up their productivity. The world of accounting is no exception, where current innovations have led to the rise of cloud-based accounting software, or ‘cloud accounting’.
Cloud accounting has gained popularity in recent years not only for its ease of use, but also for its reliability in safeguarding data without being dependent on local onsite hardware for storage and backup needs.
This guide aims to introduce the basics of cloud accounting and its advantages, showing why many small and medium-sized businesses are choosing to switch over from traditional accounting systems.
The ‘Cloud’ refers to servers accessed over the internet, together with the software and databases that run on those servers. Cloud servers are located in data centres all over the world, including Singapore. Cloud accounting refers then to accounting software and data accessed through the cloud from anywhere in the world with the aid of credentials. This is one of the main benefits of cloud accounting as your information can be accessed on multiple devices anywhere in the world where there is a stable internet connection, using a simple web browser.
In contrast, traditional accounting software is installed on a personal computer or an office network that one can only log in locally. Although remote desktop or VPN access does allow users to access the software from a different location, the process is ultimately not as smooth as compared to cloud accounting.
Unlike traditional systems, cloud accounting allows users to access and monitor records online, which solves the problems of data loss due to software corruption or backup issues. This also increases the security of any sensitive data stored on the cloud, enabling businesses to safeguard their own, as well as customers’ data.
The use of cloud accounting has also provided businesses with more flexibility. Small businesses, in particular, can benefit from the highly accessible nature of cloud accounting software.
Information stored on the cloud is updated in real-time without the need for additional installation processes. This means that users can access important information and data at any time and in any situation, benefiting business owners when they need to access information on the go for important decision making.
Maintaining an audit trail in accounting is also important for any business, big or small. Cloud accounting allows businesses to maintain an audit trail and keep track of their financial transactions.
Through cloud accounting, the audit process can also be simplified which helps make financial reporting easier in the long run. Proper audit trails built into the systems also make it clear when and where errors occur in the accounts, allowing businesses to narrow down and prevent any future such errors, ultimately allowing for smoother operations.
Transferring your business’s accounts to cloud accounting need not be a disruptive process that requires a lot of effort. Here at Thong & Lim, we have a team of highly trained and experienced Chartered Accountants and professionals. We provide a full range of consultancy services that includes guiding you through the steps needed to switch over to cloud accounting.
Xero is one such widely used cloud accounting software that businesses can trust. As Xero Certified Partners, Thong & Lim offers expert advice and specific solutions tailored to your cloud accounting needs.
To learn more about what Xero and cloud accounting can do for your business, get in touch with our professional consultants at +65 6224 1076.
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