Cloud Accounting: Benefits and Challenges

Being in the technological – driven world all business owners and corporates needs to be up-to-date and monitor the latest accounting trends and use them in the business to improve their productivity and performance. Today everything is in the cloud be it your personal data or professional documents, everything is stored in cloud. If anything can be stored in cloud, then why not accounting data? About 67% of the accountants in big four accounting firm agrees that the cloud-based accounting software will make their roles easier according to (Sage, 2018) and will be useful to minimize manual tasks and reduce costs for the company. The cloud is becoming the most important place for accounting departments and hotter than ever.

The cloud accounting is the practice of using an accounting software which can be accessed through the internet. Traditionally, all the accounting data was stored in just one computer system, because of cloud based accounting software with internet connection anyone can use the accounting data from any place in the world as the accounting data is stored in the cloud. Cloud accounting will free the business to install and use the data in one particular computer system and allows all the functional department users in other departments to access the required data.

When we compare cloud accounting with on-premise traditional accounting, cloud accounting is more flexible and automatically updates all financial data, which in turn assists in real-time financial reporting. Cloud accounting also helpful in overcoming the manual errors of traditional accounting system. In traditional accounting system firm has to incur huge capital on purchase of hardware. But cloud accounting requires less investment and maintenance cost and provides the easy backup facility with automation. In cloud accounting the data stored is more secured as the data in the cloud is encrypted and protected. Cloud service providers regularly back up data in multiple servers.

Many companies are already familiar with automation and are comfortable using it because it is easy to record transactions, prepare general ledger, automatically eliminates the manual errors and convenient to manage the data with internet connection which leads to better customer services and satisfaction.

Even the banks with automation use cloud-based accounting systems which will be beneficial to reconcile the accounts, matching and preparing statements more quickly. Through cloud accounting the data can be accessed on mobile devices like smartphones and tablets. Now accountants need not be work on certain computer or in specific location to complete the assigned tasks. With the adoption of cloud accounting organizations can lower its upfront cost, even employees agree with it. Its increased collaboration is another key advantage of cloud accounting. Financial accounting is the root of all the companies and they need a way to monitor and gauge their financial health at any time during the year. With sound financial practices like using cloud accounting system companies can take advantage of the latest technology.

Ramya H P,
Assistant Professor,
DSCE-MBA

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