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Separating myths from facts is the first step in realising the full potential of cloud accounting for your firm

24th Apr 2024
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Caseware financial reporting and audit solutions.

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In the fast-evolving landscape of audit and accounting, cloud technology has been as transformative as the shift from a slide rule to a calculator. Cloud accounting has redefined how we deal with data, manage processes and conduct analysis. Yet, some lingering misconceptions about cloud accounting still prevent firms from fully embracing its benefits.

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For practices to harness the advantages of cloud accounting, they must first understand the concept, discern the disparities between cloud and on-premise accounting, and appreciate the myriad benefits that cloud accounting brings. 

Let’s dispel the key myths that may be holding your firm back from embracing this revolutionary platform.

What is cloud accounting?

Cloud accounting is a modality of accounting software that operates on remote servers on the internet rather than local servers or PCs. It holds financial data and processes transactions online, providing significant benefits such as time savings, cost-effectiveness and real-time financial insights. 

Cloud accounting software is accessible from any device with an internet connection, bridging the gap between in-house and remote teams. This capability means you can work as efficiently from home or on a business trip as you would from the office.

The rise of cloud accounting began as a logical extension of Software as a Service (SaaS) technology, and it has now become a cornerstone in the digital transformation of the accounting profession. As per a McAfee report, 87 percent of companies experience business acceleration due to their utilisation of cloud services. Moreover, according to CPA Practice Advisor, 63 percent of accounting firms opt for an external cloud provider to host their applications. 

Such trends are clear indicators of a global shift toward cloud adoption. However, as often is the case with innovation, myths and misconceptions accompany the implementation. 

Understanding the differences between cloud accounting and on-premise accounting

Before diving into the myths surrounding cloud accounting, let’s differentiate between cloud accounting and on-premise solutions. The debate on whether cloud accounting or on-premise solutions are better is long-standing. Each has its advantages and disadvantages, but it’s essential to understand the intricacies of both to make an informed decision.

Cloud accounting software

Cloud accounting software provides a range of robust yet user-friendly tools. These software programs are available from any location with internet access, fostering unmatched flexibility and real-time teamwork. 

The dashboards typically offer an intuitive interface, giving a holistic insight into a company’s financial well-being. Additionally, the cloud allows for automatic updates and backups, ensuring data is always secure and up-to-date.

Traditional on-premise accounting software

In contrast, on-premise accounting software is installed locally on a company’s computers and network. It operates in isolation, disconnected from the advantages of cloud tools, such as automatic updates and immediate data syncing. 

On-premise systems often require manual updates and backups, which can lead to a lag in financial reporting and analysis. Furthermore, on-premise software requires a dedicated IT team for maintenance and troubleshooting.

5 myths about cloud accounting

Let’s explore some of cloud accounting’s most significant benefits while dispelling common cloud myths along the way.

Security

Myth #1: The cloud isn’t secure

The questions on everyone’s mind when considering a transition to the cloud are: “How safe is cloud storage?” and “How secure is cloud computing compared to traditional systems?” Cloud security myths stand out as some of the most widespread.

But the real question finance professionals should be asking is: “Is the cloud more secure than on-premise solutions?” Because the reality is that most cloud-based systems come with top-notch security features. Data encryption, firewalls and multi-factor authentication are just the beginning. Cloud services often boast dedicated security teams that monitor systems around the clock. 

Immediate data synching

Myth #2: On-premise systems are faster

One of the common cloud myths is that on-premise software is faster than cloud accounting. In reality, real-time data synching makes cloud platforms much faster than their on-premise counterparts.

With on-premise systems, you must manually sync data across multiple devices, leading to delays and errors. Cloud accounting guarantees that all parties can access the most up-to-date information, at any time.

Flexibility

Myth #3: Cloud accounting lacks flexibility

Many finance professionals believe the cloud cannot adapt to their unique business needs. However, this is far from true. Cloud systems offer exceptional scalability, serving businesses of any size and accommodating varying data volumes and unique business requirements. 

This adaptability empowers organizations to evolve and flourish without the constraints imposed by conventional software.

Cost Efficiency

Myth #4: Cloud platforms are too expensive

On the surface, cloud accounting may seem more expensive than traditional software. However, the cost savings associated with cloud accounting become apparent when factoring in the costs of hardware, IT support and maintenance for on-premise solutions. 

Cloud accounting often offers flexible pricing models, allowing businesses to pay for only what they use. This approach is especially beneficial for smaller firms with fluctuating accounting needs. 

Seamless transition

Myth #5: Migrating to the cloud is too complicated

Many believe that transitioning to cloud accounting is a complex and disruptive process. However, migrating your accounting processes to the cloud does not have to be complicated.

With the help of experienced professionals, it can be a seamless and painless move. Most reputable cloud service providers offer comprehensive training and support during onboarding and ensure a smooth cloud accounting implementation.

Should your accounting firm use cloud-based software?

Transitioning to cloud-based accounting software can revolutionise your firm’s operations. It can move you towards modernisation and efficiency, streamlining your financial processes and real-time data management. 

Your organisation, however, must address its specific needs and goals to navigate this transition successfully. Consider factors such as the scalability of the software, required integrations, associated costs, security measures in place, user-friendliness and potential for customisation to ensure a seamless transition that aligns perfectly with your business objectives. 

Work smarter and faster with cloud accounting

Separating cloud myths from facts is the first step in realizing the full potential of cloud accounting for your firm. The cloud offers many benefits that can revolutionise your practice by streamlining operations, enhancing security and fostering a more flexible work environment. Embracing cloud accounting is not just about keeping up with the latest trends — it’s about taking a proactive step toward better client service and long-term success. For accounting firms looking to elevate their practice through the power of cloud technology, Caseware Cloud provides industry-leading capabilities. 

Request a demo today to see how Caseware Cloud can benefit your business.