Using cloud software for managing finance and accounting (F&A) tasks is a very common practice among global organizations. Do you have any idea how many organizations use cloud systems in F&A? Well, more than eight companies out of ten use cloud solutions for managing their vital tasks like accounting.

Looking back to the mid-eighties when the first software for accounting was released. The software has revolutionized the accounting industry and changed the job role of accountants. With time, the system has matured and supported many new features, that were previously part of the manual accounting system.

Back in the present time, cloud technology is dominating in this area and it provides a lot more features. This technology offers flexibility in handling finance and accounting tasks and reduces expenses. Globally, the adoption rate of cloud technology in the accounting process is high because of its excellence. Nowadays, businesses prefer to outsource invoice processing via the cloud accounts maintenance process.

Let’s discuss how cloud technology is modernizing the accounting process through this blog. But, before we begin, let’s understand the thing that is known as cloud first.

1. Simple Explanation of Cloud

Have you ever used Internet Banking for any purpose? If yes, then you have used the cloud system of your bank when you access your account. Not only your bank, rather all banks use cloud systems for facilitating internet banking and core banking solutions. So what the cloud technology does here? Well, it makes the data accessible from any device at any time using the Internet. Similar to Internet Banking facilities, companies can access their financial data online from anywhere.

2. Role of Cloud in Accounting

Simple accounting tasks involve managing general accounts, keeping records of transactions, etc. A cloud system integrated with software can perform all these finance and accounting tasks with ease. The software that resides in the cloud-based accounting solutions can perform all essential financial tasks and manage all accounts.

Because of the cloud integration, the software will provide better access to users of the accounting system. Users can access the main accounting system via the software from anywhere. They just need an Internet connection to access the main database without relying on the local server. The cloud system offers flexibility in accounting operations and allows people to work together.

In recent times, businesses mostly outsource accounting data entry experts who are skilled in invoice processing. With cloud software for finance and accounting, they can accommodate these third-party service providers into the database. They can access the database from any location and make appropriate adjustments there. The majority of US-based organizations have adopted cloud accounting systems and more businesses will adopt this in the future.

3. How F&A Cloud System Works

When a company introduces cloud computing in the accounting process then it follows certain rules. First, the company will integrate its bank accounts into the cloud database. This enables the automatic posting of the ledger when a transaction takes place. Second, the company will provide its accountants, CFOs, and other finance and accounting staff with login credentials.

All the staff in the accounting department will use login credentials to access the database. They can access the database via the Internet using any device whether mobile phones, laptops, or desktops. The members can get access to the database through a web browser or an application. Accountants and the other staff members can work together on the database at the same time using their respective login IDs.

Real-time checking of the financial records is one of the most prominent benefits of a cloud F&A system. Updates made on the platform will immediately show in the dashboard in this database. Staff engaged in the same task can see the update and modify their work accordingly.

Besides handling the core accounting tasks, an organization has to maintain the Enterprise Resource Planning (ERP) system. This system integrates other systems of the organization including inventory management, Human Resources (HR), Budgeting and Planning, etc. Using a cloud database allows organizations to share information between departments and helps to manage the ERP system.

4. How F&A Cloud System Benefits Modern Businesses

Making the accounting system efficient and robust is the primary objective that drives businesses to adopt cloud-based accounting solutions. The technology significantly reduces the cost of maintaining accounting information and ensures data safety. In the coming years, the adoption of the cloud system in finance and accounting processes will become common.

Do you agree that cloud technology provides benefits to modern businesses or it is just a fad? Let’s find the answer to this question by exploring the benefits of the cloud system in the F&A process.

4.1. Real-time Update

Imagine a situation, where you are using software to manage all your accounting tasks. Along with this, an update was recently introduced regarding taxation update where you need to change the tax calculation. So how would the software calculate the tax as per the recent update? Well, this will not happen if the finance and accounting software is integrated into the cloud system.

Unlike traditional software, cloud technology quickly accommodates all updates and ensures their follow-up. Therefore, you can easily manage to calculate the tax as per the update quickly if you use cloud accounting technology. Businesses go through regular updates, especially in the accounting process. With the cloud based finance and accounting application, they can easily adjust to these updates without creating any unnecessary delay.

4.2. Highly Secure

The risk of security for financial data is very high and thus organizations looking for a safe space to keep their data. At the initial stage of cloud development, companies were concerned about the security of the data. Because once the finance and accounting data leave the eyesight they will gone forever. The controlling measures were not that much stronger in the cloud that’s why companies preferred software at that time.

But now the situation has improved, and cloud computing is more secure than offline data storage. The system ensures proper measures to keep crucial financial data safe from misuse and theft. Besides safety measures, the system offers strong backup facilities to restore past data. Even if the hardware crashes the data will be kept intact inside the cloud storage.

Most companies nowadays outsource their invoice processing and financial data entry tasks. Therefore, before sharing the credentials they need to ensure the background of the outsourced service providers. On the other hand, they must keep updating the login credentials after a while for better safety and security of the financial data.

4.3 Better Utilization of Resources

In the current phase of technology, all businesses have to deal with technology to manage their task better. Be it switching to the cloud or adopting the latest software, businesses keep in mind the current demand. Using the cloud system ensures proper utilization of technical resources for the organization.

The term “technical resource” appeared a few years before and it does not include only application-creating skills. Besides creating new applications, maintaining support functions including server maintenance, backup management, etc are important technical resources. Moving the finance and accounting tasks to the cloud requires proper utilization of technical resources.

The cloud system is better and more robust in terms of accuracy and management of the data. Through cloud-based accounting solutions, organizations can automate F&A tasks and ensure the safety of the data. Multiple users can use the same database from different devices and work collaboratively, which will increase the efficiency of technical resources.

4.4. Cost-Efficient technology

When you buy finance and accounting software you are paying the cost of the entire functions offered by the software. You cannot get only 20% or let’s say 50% features of the software. Therefore, for a small business, it is quite difficult to make investments in software, which they can’t utilize properly. On the other hand, businesses get the opportunity to pay for what they are getting through outsourcing.

Choosing the cloud system for F&A functions is the best way for an organization to save costs at present. With the gradual growth, they can add features that they want in their system without making a one-time investment. The cloud system offers all the services with a minimal subscription fee and provides the service on demand.

4.5. Automation in F&A Tasks

Organizations can bring automation to finance and accounting tasks with the utilization of the cloud system. They can successfully automate the manual data entry tasks as per the subscribed cloud system. The cloud based finance and accounting application facilitates automation in multiple tasks, including the alert management system.

The process of managing the accounting tasks always remained paper intensive. Organizations used to keep papers for every voucher, bill, and any other records. However, with the automation offered by cloud accounting, organizations can convert all papers into editable images. Nowadays, business organizations outsource their all data entry and conversion needs and make the F&A functions robust.

4.6. Customized Facilities

Previously, the cloud technology was not enough developed to adjust customized facilities. Only a standard method was implemented in cloud computing in the growing stage of this system. Businesses barely have anything other than accept the cloud system with its rigid features. But that has become history now as modern cloud solutions provide more new features.

Cloud technology is now accommodating customized features and offering new things. The system no longer remains static as it now constantly evolving into a choice-driven application. Businesses can efficiently perform their F&A tasks without spending much on pre-loaded software but from cloud-based accounting applications.

4.7. Facilitates Easy Compliance

The functions of finance and accounting follow sharp rules and regulations in compliance. Every business organization has to produce proper financial papers, tax papers, etc on time before the government. Cloud technology helps here in managing the compliance process by simplifying its tasks. This technology has helped organizations by reducing the error percentage in the compliance process.

Businesses have now crossed the national boundary and become global with their wide presence over the internet. However, they have to pay taxes in the domestic as well as in the country where it is operating. The finance and accounting software helps companies manage financial compliance remotely for different business locations.

5. Determining the Right Time for Cloud-based Accounting Solutions

Opting for a cloud system for maintaining the accounting records no longer remains an option rather it becomes necessary. We, for small companies or companies that started the journey initially, marinating a cloud system will be difficult.

Every business has to maintain the finance and accounting records to measure their growth and profitability rate. The process of maintaining the accounting system should be sound and effective, otherwise it will bear fruits. At the initial stage, companies often maintain all financial data in the spreadsheet through the manual process. This technique is more or less very effective at least for the beginning of a business at present.

However, the approach of keeping crucial financial records in an open-source platform would be risky. Therefore, integration of the cloud system in the F&A tasks will eliminate all risk factors and ensure the proper safety of the data. Businesses outsource financial data entry experts to manage their data using the cloud system.

The simple parameter to determine whether your organization needs any support is the size of the operation. If you are a big company then you must have a dedicated cloud system for managing all your financial operations.

6. Future Insights into cloud based finance and accounting application

In the coming few years, Artificial Intelligence (AI) will take over the major accounting tasks. The adoption rate of automation in finance and accounting processes is currently high, which indicates the future of this system. In the future, AI will enable cloud systems will make informed decisions on behalf of organizations.

Besides that, more companies will outsource invoice processing and financial data entry tasks in the future. The demand for outsourcing tasks will increase in the future as most companies will prefer manual data verification.

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