What is Cloud Accounting Software? How It Works?

Nav Chetan Prakash |Updated on: August 1, 2022

The term ‘CLOUD’ is of prime importance to businesses, especially in current times where data needs to be accessed anywhere at any time. With SMBs constituting to a major part in the economy, the need to implement cloud technology in their current systems has become quite necessary. So, let us understand what exactly is cloud accounting and how it exactly works?

What is cloud accounting?

Cloud accounting software is nothing but what businesses currently use to automate their business processes but is hosted on remote services. Basically, the data is sent to “the cloud”, where it is stored and then sent back to the user. In cloud computing, users are free to access their data and reports remotely, through the internet or other network, via a cloud-base application service provider.

As a business grows, its processes also become more complex. There are additional users who require access to business data at various levels, and so cloud accounting eliminates the need to buy multiple versions of the same software, ultimately cutting down extra expenses. A cloud accounting software, will help users streamline, simplify, and automate various financial operations from anywhere & collaborate effectively. This solution can revolutionise the way you manage your business and improve efficiency to a great deal by providing real-time data for quick decision making.

How does cloud accounting system work?

With business data becoming more complex and infinite, it is crucial for all stakeholders to get the right access to information at the right time. Traditional storage methods where reports and financial statements would only be kept in one single system, serve no purpose anymore. There are numerous risks which locally stored data would run under, like data loss, data leakage, data corruption, etc. It is also possible that when you were transporting your data in a pen drive/hard disk, the drive could become damaged or even completely lost during your travels.

These risks can be completely mitigated when the data is stored on a cloud-based accounting software. You get complete access to your financial records, irrespective of the time and place. Your business data is stored in a cloud server, which is securely hosted by an external source, through which access to various reports for defined stakeholders becomes more seamless.

Adoption of cloud accounting in your business will help you in implementing automated bookkeeping, automated cash collection and automated bank reconciliation, all of which radically cuts down on your team’s workload.

Want to find out how cloud accounting will benefit your business? Find out here!

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