Accounting is the study of finance which includes inspection of transactions, along with maintaining an order of the data provided which helps in analysing and presenting of various reports. It also includes recovering lost data, storing and sorting them out in a proper order.
Accounting is used in various aspects of day-to-day life and is essential for maintaining a systematic financial and management record in both personal and professional life.
Accounting is basically divided into two categories: financial and management accounting. While financial accounting deals with financial information, management accounting deals with the management issues in a company in order to maintain the financial stability of the organization.
As said earlier, accounting is used in various fields in a new and unique way. One such way is cloud accounting which is largely used in many professional fields. However, to some people cloud accounting may sound something which is out of the blues. Hence, below is a brief description of what cloud accounting is all about.
What is cloud accounting?
With the advent of technology everything seems to get modernized, from schools where classrooms are made to digital to scientific laboratories where new softwares are invented to make researches and discoveries much fruitful and efficient. If science can be applied in each and every aspect of life, then, why it should not be used in the field of commerce? This modern technology has also helped to improve each and every subject of commerce and management especially accounting. By creating cloud accounting softwares, accounting has been made much simpler and less time consuming to perform.
Cloud accounting is the process which uses particular online softwares that are mainly hosted on the cloud. These softwares are known as cloud accounting softwares. Quite similar to traditional accounting softwares, these softwares improve accounting in many ways. However, in order to understand these improvements, you should understand how cloud accounting softwares differs from traditional accounting softwares.
How cloud accounting softwares differ from the traditional ones?
Traditional accounting softwares are the softwares which stores the financial-accounting details in your hard drive. Even though this is quite similar to cloud accounting softwares, yet they have some major differences which are stated below:
- Storage:
While traditional softwares uses separate hard disks for storing all the accounting details, cloud accounting softwares uses the cloud storage system to store the same.
- Accessibility:
You can access to your accounting details from your cloud account, anywhere and anytime just with the help of an internet connection. However, it is not the same with traditional accounting softwares. You need to carry your hard disk in order to access all your accounting related data. Quite tedious, isn’t it?
- Expandability:
As said earlier cloud accounting softwares can be hosted from a great distance on the cloud which making it unbound in terms of distance. Thereby, many people can access the same data from different locations. In case of traditional accounting softwares, it is bound to distance and cannot be operated by two or more people at different locations at the same time.
- Cost:
Compared to traditional softwares which require a specific hard disk for maintaining data, cloud softwares are quite cost effective since they come in quite a minimal charge based upon your monthly or annual subscription fee.
How are cloud accounting softwares beneficial?
Apart from the above lines which partly describe the advantages of cloud accounting softwares, here are some more points which add up to the list.
- Security:
Cloud accounting softwares are far more secure compared to traditional accounting softwares, since one cannot get access to the accounting data is he/she does not have a valid username and password. Furthermore, they also provide with real-time security updates in order to keep each and every account free from natural disasters like the possibility of getting data erased, hacking, etc.
- Time-saving:
With the help of automation, a process which helps to generate invoices and reminders frequently, you can save much of your precious time. This process also helps to generate payslips and HMRC documents which it comes to business and human resource applications.
- Lesser risks:
Cloud accounting has reduced the risks of manual error and has made accounting easier and hassle-free.
- Improves relation with the accountant:
Businessman used to visit their respective accountants once in a year that too with a huge pile of papers, thereby making the accountant’s work much difficult. However, with these softwares an accountant can solve many problems anytime whenever their clients wish them to. This reduces the workload and saves time of the accountant, thereby maintaining a good relation with him/her.
- User-friendly:
These softwares are very easy to handle and if you know how to handle internet based softwares, then you also can handle this software for the betterment of your organization.
What disadvantages can you suffer while using cloud accounting softwares?
While there are several advantageous facilities that people enjoy while using a cloud accounting software, there are certain disadvantages present in the scenes as well. Some of the disadvantages are listed below:
- Downtime factor:
Since clouding accounting is not possible without an internet connection, there is a possibility of facing down timing, that is, problems related to the internet connection may make you suffer. If there is no internet connectivity, you will not get access to your data, if the connection is slow, updation of all the records will consume a greater time. This is one of the prime drawbacks of clouding accounting.
- Customer service:
Another drawback of this service is getting unsatisfactory customer service. An immediate response from the customer service team is not what customers usually get and it takes a considerable time to get a response from them.
- Restoration is slow process:
While backing up some files, cloud accounting softwares consume a vast amount of internet speed and data. Hence, one will suffer from slow internet speed while doing a backup of several files through cloud accounting softwares.
Now in order to understand the concept of cloud accounting softwares, you need to look into the categories of cloud accounting softwares in which they are divided into.
What are the different categories of cloud accounting softwares?
Cloud accounting softwares are based upon two categories and they have certain features which make them different and unique in their own way. These are:
- Payroll and accounting, and
- Enterprise Resource Management (ERM)
What are these categories all about?
One question may arise in your mind, what are the different features of these two categories. Well there are certain features which make these two categories stand apart from each other. However, in order to understand what these two are all about. Thereby, below is a description of what are payroll and accounting and ERM.
Payroll and accounting are all about keeping a detailed record about all invoices related to all the transactions made by your organization that too in an order. Thus, it is directly related to financial accounting. Earlier, one had to maintain all the bills and invoices manually, but with the help of payroll and accounting softwares, your computer will automatically generate invoices which will help to avoid the risks of manual errors.
Enterprise Resource Management is the process of managing the system as well as the back office functions of an organization. Hence, it is related to management accounting. It includes product planning, manufacturing, sales and marketing and development of the company. These softwares tend to make these above stated processes much easier.
What are the features provided by Payroll and Accounting?
There are certain features of payroll and accounting softwares have certain features which makes organizing financial documents much easier. Some of the features of these softwares are stated below:
- Generating files:
These softwares help in generating files such as official leaves, pay slips, invoices, salary related documents, etc. This makes maintaining bills and other official documents much easier compared to manual maintenance of the same.
- Tracking incomes of the employees:
Another interesting feature of these softwares is that they keeping an orderly track of the total amount invested on the employees of an organization.
- Direct deposition of money:
Since these softwares are online they provide certain online facilities like depositing money directly to the respective accounts. This saves time, save from the risks of lost cheques and frauds. However, you also do not have to roam around the corridors of the bank for deposition as well.
- Accuracy:
These softwares provide a high level of accuracy regarding all financial calculations and interpretation. They make each and every document ready for presentation through the process of automation.
- Automatic update of ledgers:
By importing the current payrolls, these applications automatically update the ledgers for payrolls. This adds to the advantages of preventing miscalculations and several manual errors, saving time and also gives you the peace of mind.
- Mobile version:
Surprisingly, these softwares can also be operated on your mobile since many of these softwares have mobile versions of their own, which gives an advantage of portability.
What are the features of enterprise resource management (ERM) softwares?
Due to the several advantageous features of ERM softwares, management of administrative functions have become quicker, also making these softwares very popular and useable. The important features of enterprise resource management softwares are:
- Increases efficiency:
One of the prime features of these softwares is to reduce time consumptions and make processes easier. By providing multi-tasking, multi-platform, multi- mode manufacturing facilities it makes sure that all the management related issues of a company is solved in no time.
- Provides a bridge of information:
With the help of these softwares, you can easily pass on information to other companies, answering their queries, thereby gradually filling up the gaps of information for other companies.
- Shares the same database:
One of the prime advantages of these softwares is that they share a common database with each and every department of the company. This makes sharing of information easier and less puzzling.
- Develops the organization’s image:
Increase in customer service and core activities these softwares helps in maintaining a good corporate image of the brand.
- Helps in making management good to better:
Since ERP softwares increases efficiency and reduce the chances of manual error, it can be said that it is a tool which can be used for better managerial performance.
- Detailed content:
With the help of these softwares one is able to create detailed content and info graphics supporting the content for a better presentation and satisfactory results.
How to select the right cloud accounting software for your organization?
There are several cloud accounting softwares available on the internet but in order to select the right application you should do a thorough research on the application that you need to choose by making a checklist of the following points:
- Automation:
Check whether the software you are opting for support or have the option of automation, since these softwares are unique for their feature of automation which helps to keep all the data updated.
- Data analytics:
In order to get a panoramic view of your data and statistics, you should make sure that your software has the facility of providing you with an organized way of dealing and managing the data.
- Multi sharing options:
The prime advantage of using a cloud accounting software is to get a common database for your organization’s departments. Henceforth, you should make sure that your software is not a centralized and has the ability to share its data with multiple people.
Accounting helps to make the corporate world colourful and not a monochromatic film. The above lines mostly say about the importance accounting. Without accounting an organization will probably fall. Just like a saviour who works extremely hard to save the fallen, accounting also is a very difficult task which helps to create a healthy financial and managerial scenario for an organization.
About the author:
Florence Bluee is working with a reputed accountancy firm in Chicago and has been serving as a manager for the firm for the last three years. She holds a Master’s Degree in Business Administration with a specialization in marketing. Apart from her demanding professional life, she is also associated with Accounting Myhomeworkhelp.com and having been helping students with their homework in all the subjects which falls under commerce. This is how she shares knowledge both in her personal and in professional her life.