The accounting industry is rapidly evolving, and the 2020 pandemic has only accelerated that change. Shortages in accountants and increasing workplace demands for remote options are forcing organizations to take a closer look at their software and technology platforms and are strongly suggesting a push to cloud accounting platforms. When confronting any kind of change, there are generally more questions than answers, and Organizations are often left with a lot of uncertainty. To better understand if making this kind of change is right for you, let’s consider some of the common benefits and pitfalls that are frequently encountered.
Pros of Cloud Accounting:
The benefits of converting to cloud accounting are wide-ranging, but these five are commonly identified by Organizations that make the change to a cloud accounting platform.
- Recoverability – The traditional model of hosting accounting software on an internal server requires manual back-up. If this step is forgotten or delayed, it leaves your accounting records at risk of being lost. Cloud accounting platforms are constantly backed-up and stored in a vast virtual network that minimizes risks like natural disasters shutting down systems. In other words, if your system crashes, your data is still protected by the cloud, and you’ll be able to pick up where you left off.
- Accessibility to Data – The pandemic forced many organizations to implement the ability to work from home. If you were not already in the cloud, this meant establishing a remote access capability to internal servers to access the accounting software. Cloud accounting platforms are accessible anywhere with an internet connection – and some platforms have built out mobile-friendly applications allowing users to access their data from just about anywhere.
- Automation and Software Updates – Internally hosted software is limited to its functionality until a newer version is purchased and installed. Most cloud software packages are automatically updated which means you get access to new software developments instantaneously. This is a big benefit as more and more software developers are building and improving automation features that eliminate the ability for human error to occur.
- Growth and Integration – The development of new technologies is rapidly changing how cloud accounting can work. Software developers are reinvesting in their own technology and are building in integrations with other software platforms, allowing Organizations to pay bills, manage inventory, and enhance financial reporting capabilities. A platform that was maybe once built for a smaller organization, is now able to scale with the growth of any organization.
- Accessible Training – Cloud accounting software platforms have come a long way in building out training tutorials and pop-up recommendations that make training new employees much easier. In addition, the internet is full of quick user tips and tricks and answers to questions that are easily found through a quick Google or YouTube search.
Cons of Cloud Accounting:
While the benefits sound great and maybe already have you sold, there are some pitfalls that should not be ignored.
- Cyber Security – In a cloud-based system, your data is no longer controlled by you. A quick read of headlines will often reveal a cyber attack on an organization that resulted in a large data breach. The threat here is real. However, many cloud-based software companies have very good security encryption. In the event that they are hacked, the data obtained is often not of use to the hackers due to encryption technology.
- Training and Learning Curves – Software conversion is no small task. While many of the cloud-based systems do the same tasks as desktop software, the functionality of how and where those tasks get done differs. Like any change, there is a learning curve that will require an investment of time. This learning curve will be different for everyone, and as noted in the benefits, there are ample resources available to shorten the learning curve.
- Downtime – While not frequent, cloud-based systems can sometimes encounter periods of downtime, which will prevent you from being able to access your system. Most software providers have built out teams to frequently monitor this kind of activity and in most cases the system is back up and running before you even know it was down.
- Online Connection – Cloud-based systems depend on the ability to access a network, making an internet connection a must. While telecommunications providers are working fast to improve broadband access across the globe, there are still remote areas where access to the Internet is not available. If you find yourself in one of these areas, then cloud-based accounting software might not be right for you just yet.
- Customization – Some businesses have a need for customized software to meet their accounting needs. Cloud-based accounting software is doing a lot to meet those needs with add-on modules and integration with other systems, but they have yet to meet full customization needs for all industries. If your organization requires special customization, you might not be a good fit for cloud-based accounting software.
There are a lot of benefits to cloud-based accounting software, and the journey to the cloud is no small task. If you’re still wondering if making this conversion is the right move to make, consider reaching out to one of our experts at Olsen Thielen. We are eager to bring you up to speed on the capabilities that exist within the cloud and can help you plan a smooth and successful transition.