We’re all fairly familiar with ways in which we store different types of media online, and the idea is pretty much the same with cloud-based bookkeeping. When you upload a picture to your social media account, that image is stored on that particular company’s server. Those videos you watch on your favorite video site (think YouTube) are stored online on your video host’s server. Even music and movies that we download and listen to or watch are stored on the servers we download them from. Storing media on servers allows us access to it anytime from almost any device as long as we have a connection to the Internet. In recent years, the word “cloud” has become a more popular word alternative for “online”, hence all of this information is now stored “in the cloud”.
The terms “cloud bookkeeping” and “cloud accounting” may still be new to some. The general bookkeeping and accounting procedures are basically the same, with the major difference being that the bookkeeping and accounting software is hosted on remote servers (in the cloud) instead of on your own computers or servers. This allows the users of the software to access their applications remotely via the Internet. The business no longer has to purchase, install and maintain software on one or more desktop computers.
Using cloud-based bookkeeping and accounting software also results in having access to real-time, up-to-date financial information about your business. And since multiple users (employees, other office branches, etc.) can access the same information at the same time if allowed by the company, this provides better opportunities for collaboration within the business.
Cost-savings are also another reason many businesses are making the switch to cloud-based bookkeeping and accounting solutions. With desktop software, you initially have to purchase the software, a license agreement for however many users you need, and some type of support or maintenance program for when you run into problems you can’t fix on your own. And as your business grows, you will need to make additional purchases of licences and perhaps even a server to host your software to multiple users. When your purchased software becomes obsolete and unsupported, you again have to pay to upgrade the software to a more current version to continue use and support.
Cloud-based solutions are generally a subscription service. You don’t need to have expensive servers to host your software, and you don’t need to pay license fees to use the software. Your subscription service covers multiple users, maintenance, and backups. Another major advantage of cloud-based bookkeeping solutions is that you don’t have to pay for the software upgrades. The updates occur automatically, with nothing for you to download or install.