The Global Financial Crisis has made a large impact on businesses and they are looking at ways to reduce operational costs and overhead so that they can devote their time to other areas, such as production and marketing. You can see this trend in the increasing use of serviced and virtual offices, and the use of remote service providers to handle business tasks. These practices are also known as cloud computing or software as a service (SaaS).
In cloud computing, all business data operations, for example —sales, expenses, payroll, point of sale, banking data, client database, spreadsheets, office applications, email, file storage, project management and workflow —are sent and processed through the internet and stored at the provider’s data servers. This frees businesses from having to maintain and update expensive onsite hardware and software and enables them to devote their time and resources elsewhere. Google Docs is an example of a free (but limited) cloud computing service.
Accounting is not exempt from this trend of moving online. Nowadays, several companies offer cloud accounting systems. In these systems, accounting operations are done online, via Web Browsers or Smartphones. When evaluating a suitable online accounting solution, you should take note of these things:
● Is the system user friendly and fast to use?
● Does it have all the features you require?
● Is the price of the solution worth the features it offers?
Pros & Cons
There are many benefits of adopting an Online Accounting System for your business:
● Lower costs and flexible pricing.
● Reduced IT and maintenance cost.
● Accounting Services are available from anywhere that an Internet connection or Smartphone signal can be accessed.
● Accounting data is stored and backed up at remote, central server. This allows the business to safely recover from interruptions and disasters.
● Data is more secure and less prone to security breaches.
As an added bonus, many Online Accounting Systems have a feature which allows Managers and their Accountants to work collaboratively, which means that they can view and work on the same data in real-time, leading to huge time-savings. Accountants may also be able to telecommute or work from home, which can also lead to these savings.
Data privacy is the greatest source of concern against online accounting. In most cases, accounting data is stored in servers that are located in a country distant from the client. This poses a privacy risk if the government of the place where the server is located can demand access to this data, if it is dictated that country’s laws, for example in the US Patriot Act.
If data privacy is a major concern for a business, a cloud accounting system provider that hosts the data on servers in their own country may be a better option, although there is still the risk of the provider expanding to other countries.
Cloud Accounting Providers in Australia and New Zealand
In Australia and New Zealand, the leading cloud accounting providers are MYOB, Saasu and Xero. They have thousands of customers, from small to large businesses, and professional accountants who offer online accounting services through the cloud accounting system of their choice.
For a comparison between MYOB, Saasu and Xero see this table from Bates Cosgrave Chartered Accountants and this one from Sassu.
All possible functionality is not shown in these tables, for example additional functionality from add-ons. Consult your accountant to formulate a checklist of the functionality you require. If you are using the services of a professional accounting firm, they may already be capable of doing your accounts in the cloud. Red 2 Black Business Management, for example, offers online accounting packages like Redi Online for small businesses that are based on the previously mentioned online accounting vendors.
Online accounting is still a new concept in Cloud Computing, its features and services are expected to improve. It won’t be long before a majority of businesses move their accounting to the cloud.
If you are interested to try out a Cloud Accounting solution, talk to an Accountant today to start a free trial, and experience the benefits of Accounting in the Cloud.