Last Updated on May 20, 2021 by MoneyVisual
Every modern accounting business aims to keep unnecessary expenses at a minimum, but we all are aware of miscellaneous expenses that show up regularly. Even when the finances are managed smoothly, there is always a need to save more to gather extra investment capital for business growth.
While the internet is filled with money-saving tips for accounting businesses, cloud-based accounting has been an effective yet overlooked strategy to save more. It is one of the most cost-effective methods available in the market, making it popular among accounting businesses to make the switch.
Let’s First Understand What Cloud Accounting is All About –
Think about internet banking – your account details are not saved in your device. Every time you access your account details, you’re accessing the cloud. Similarly, your accounting data is stored on the cloud; your hard drive isn’t needed. Cloud-based accounting makes it possible to access all the details anytime, anywhere.
Issues with Traditional Accounting Software –
- The data isn’t up to date.
- The software can be accessed from one system only.
- There’s a need to back-up the data, which can be expensive.
- You need to update the software regularly, which comes at extra cost.
- Only one person can access the data at a time. If you want multi-user access, you have to pay extra.
- The data roam around through emails and other sharing methods. Any mismanagement can lead to financial loss.
Clearly, traditional accounting has its cons and costs a lot of money. Opting for cloud-based accounting makes a lot more sense – you can call it efficiency or do more with less.
Below are the Top 5 Ways by which Cloud Accounting can Save You Money.
It is a fact that manual processes are tedious and consume a lot of time and money. For instance, you might find it frustrating to make the same entry in multiple systems or paste data from one spreadsheet to another. In such cases, the chances of a mistake (and mistakes are costly) are also high; one wrong keyboard tap and the outcome is changed.
And, you cannot bring back the time your accountants spend in completing such monotonous tasks; they could have spent their time in completing other productive tasks that help your firm grow.
Cloud accounting offers endless automation – simplifies complex accounting tasks, does things quicker, makes it possible to lift the heavy load, and reduces the time spent on completing mundane tasks. When you host your data and applications on the cloud, it can be used to streamline manual business processes, answer decision making questions, and free your employees for other productive and money-making tasks.
When you set up your own server, there are multiple costs associated with it. You need an office space where you can buy and set up a processor, data storage, RAM, and hire engineers to run and support the system. Currently, the average lifespan of a server is around three years, but as technology is progressing and faster processors are being made, this life-span is sure to decrease.
Companies will also optimize their applications according to the latest hardware, meaning that extra costs are associated with your aging server. Plus, there are maintenance costs associated with any server.
For small and growing businesses, purchasing IT infrastructure can be a problematic and expensive task. The most significant advantage of cloud accounting is the reduction of hardware costs. You do not need to purchase any in-house IT equipment; your hosting provider will take care of all your needs.
The maintenance and repair costs are also passed to your hosting provider. Along with these, cloud accounting saves storage and power expenses as well.
Manual offline accounting is mundane, boring, slow, and less productive. Tasks like bookkeeping (which can be done quickly) take longer than they should, making employees less productive. For instance, if an employee spends an hour on less productive tasks, it means that 260 hours or 10 working days in a year could have been utilized on more productive tasks.
On the other hand, cloud accounting has proven to be extremely helpful for increasing workforce productivity. For instance, if your employees travel a lot, they can access their accounting data through their smartphones or complete their tasks while sitting at the airport using their laptops.
It makes them extra productive during the times when most workers are not productive at all. The deployment of the cloud solution also takes considerably lesser time than local installation, and you get instant and automatic updates.
4. Paperless Accounting
With the rising carbon emissions, reducing the carbon footprint has been a concern for companies and accounting firms worldwide. Reducing paper usage and moving to a nonpolluting process is the need of the hour.
Printing paper is also an expensive task if you consider all the associated costs- stationery, tagging, and arranging. The cumulative waste adds up to the money that could have been saved or utilized for other processes.
There will always be paperwork involved, but businesses can reduce it to a minimum level and reduce their carbon footprint with cloud accounting. With paperless accounting, firms can reduce the amount of printer ink and paper they consume (leading significant savings).
All your business data is hosted on a remote cloud server, eliminating the need to print files. It will also save you the space needed for storing the documents; you can use this space to place a new coffee machine to keep your employees happy.
Time is money in the modern business environment, and no one could better understand it than accountants. When you wish to update your local accounting software, it requires you to purchase the new version (you have to pay for it again), and if your hardware infrastructure doesn’t support it, you need to invest in new infrastructure as well. All these expenses are quite a lot for accounting firms.
Cloud accounting enables businesses to update their accounting solution instantly, and the hosting provider ensures that the updates are delivered automatically.
Cloud accounting is one of the most significant benefits of cloud technology – you can use it in multiple ways to save money. Benefits like paperless accounting make it a pocket-friendly technology but also contribute to a greener environment. Firms can also save more by not investing in skilled IT staff, hardware, storage, stationery, etc. – a win-win for everyone.