We all hate it when our computers become sluggish and bogged down with documents. Then came the cloud, an online storage system with all of our dreams squeezed inside of it. Those dreams were also shared by accountants and businesses worldwide, and when they received their first taste of cloud accounting, it quickly swept across the industry and financial sectors.
But where did this technology begin? Who is responsible for its design and incredible success? Let’s dive into the past, explore the present, and contemplate the future by investigating the technology we know as cloud accounting.
What Is Cloud Accounting?
To understand cloud accounting, we must first discuss cloud computing. Cloud computing offers online programs and services, permitting businesses to access, update, and share information through the internet.
There are three basic types
- Infrastructure as a Service (IaaS): IaaS lets companies use their own servers, where they can manage almost all the information and systems needed for their company.
- Software as a Service (SaaS): SaaS offers subscription-based services to consumers through the internet.
- Platform as a Service (PaaS): PaaS allows individuals and businesses to build their own apps through a provided framework.
Cloud accounting is categorized under SaaS; businesses pay parties to provide online accounting software to them. Like other cloud-based programs, cloud accounting is handled entirely through the internet. Rather than having a software program on a desktop or laptop, accountants and employees enjoy online software that records their data and maintains itself.
The software is hosted by remote servers, meaning employees can access it anywhere. Features vary according to who uses it, but many programs offer services like expense tracking and can even team up with other programs, like payroll apps, to make accounting easier.
The Starting Line
Cloud accounting’s origin story begins with the age of the internet. Before the internet’s proliferation throughout society, software programs supported only basic operations and were limited to desktop computers. Once Larry Ellison and Marc Benioff invented the concept of the cloud, it was only a matter of time before accountants identified its use.
The early 2000s saw SaaS take the lead, and more complex programs dominated the market. During this time, automated programs saved time and increased efficiency. But then the 2008 financial-economic crisis hit America. The role of accountants, once reserved for bookkeeping in back offices, was pushed to the limelight. Transparency, real-time information, and collaboration became necessary in light of security issues, customer relationships, and future business management.
Although sources conflict with one another, it seems apparent either NetSuite or Xero launched the campaign for cloud accounting that took root internationally. Within a decade, it was used by companies and individuals worldwide.
Cloud-based technology today is used by the majority of businesses.
Cloud Accounting Today
Although moving the program online may seem like a small change, coupled with the automation seen in the 2000s, the transformation has rocked the accounting world.
Thirty percent of decision-makers in small businesses use Quickbooks’ online accounting software today, and thousands of others utilize software apps from different companies.
Now, Artificial Intelligence (AI) updates multiple programs with real-time information, meaning tracking expenses, and employee hours is easier than ever.
Why So Many Companies Are Turning to the Cloud
Regardless of size, cloud accounting offers numerous benefits to corporations that increase efficiency, revenue, and organization.
1. Real-Time Information
Because of advancements in AI and the ability to connect multiple programs, data updates almost instantly. The availability of real-time information allows users throughout the organization to access, update, and coordinate seamlessly.
Rather than relying on multiple platforms, businesses and teams can manage their entire business through one program. And they don’t have to be in a dedicated room (or even the same country) to do it. This transparency eliminates confusion and costly mistakes throughout an organization.
2. Cost
Cloud accounting opens new doors for businesses that were once limited to hiring accountants on-site. Now, many small companies conduct accountancy themselves without the aid of a professional. The user-friendly software programs available make managing your books more effortless than ever.
For corporations that require expertise, a single accountant can now do the work that several were once necessary to manage. Artificial intelligence lets accountants utilize their time for more important tasks rather than spending hours manually entering data. Further, this form of accounting has very few overhead expenses.
3. Maintenance
Cloud-based SaaS software is maintained through the company offering it, meaning maintenance costs and associated issues are nonexistent for businesses. Instead, all employees use the same software program, and no time is wasted installing or maintaining software on desktop computers.
4. Security
Almost all cloud accounting programs offer backup software and data recovery in case of emergencies, letting most entrepreneurs breathe easier. While many business owners rightfully worry about security when considering the move to cloud accounting, experts argue the transition enhances safekeeping. Sensitive data isn’t recorded on a laptop or business computer that may be infiltrated. Instead, it is stored online by corporations with paid security staff. This offers a level of security typically not seen with on-site accounting.
Future Prospects
Automation has taken several leaps forward. Now, AI tools analyze a company’s audits and learn financial policies, providing useful instruments for future success. But the continual advancement has many accountants worried. Rachel Grimes of Business Insider writes, “Indeed, a 2013 Oxford University study listed accountants and auditors as among the most threatened by computers, and a 2016 McKinsey report predicted that 86% of the work done by bookkeepers, accountants, and auditing clerks, had the technical potential to be automated.”
Luckily, this new era of accounting is an opportunity for accountants rather than a setback. The human element is still required to comprehend what patterns mean and to discuss options for moving forward. Similar to new advancements in medicine, this switch only means future accountants will have the ability to take front-row seats and more tools to help them along.
Take a Rest in the Cloud
Cloud accounting offers prospects once out of reach for small businesses and individuals. We now can enjoy the expertise and accuracy required for corporate success, and the indications of the future only point to further progression.
Soon, hours of staring at a computer screen could turn into minutes of working with an app that does almost everything for us.
