Traditionally, small and growing businesses have used multiple systems and manual keying in of data to deliver basic financial information, using resources that could be better utilized elsewhere. Client-server-based software systems have failed to deliver the cost advantages of enterprise resource planning systems needed by small businesses due to heavy reliance on local resources for back-up and restore during power outages, high costs associated with upgrades, and security issues related to malware and spyware. There was also the fixed 9 am-5 pm log-on access through the locally installed accounting or finance software based within the workplace. A move from direct updating of systems to cloud-based online accounting solutions would free up these resources and effectively deal with multiple systems issues.
Technology is constantly and rapidly changing. Within the last two decades alone, technology innovations have significantly helped to level the playing field for small and growing businesses. In particular, heavy reliance is now possible on increased speed, mobility, and secure access to cloud-based software and resources at reasonable prices. Cloud accounting applications can now handle many operational finance-related tasks much more efficiently and faster than traditional systems. For example, as we demonstrate in this paper, various financial reports can now be generated faster.
Definition of online accounting and bookkeeping services
Cloud computing, by reducing IT overheads, is making small businesses more competitive. Companies are spending less maintaining applications and are instead investing their resources into projects to help them grow and compete more effectively. Furthermore, server crashes, loss of data, or costly downtime are a thing of the past. Clouds are self-healing and packed with recovery solutions, which is especially valuable as 70% of small firms have experienced cyber-attacks. With the peace of mind that this gives to cloud-based firms, businesses seem to save money due to not having to replace servers or resolve software-related issues. Cloud computing is an innovative area for bookkeeping and accounting services and the new business models that are being employed. During the process of incorporating the cloud service, there are issues and potential pitfalls which could impact on how such businesses operate. However, more importantly, cloud computing will be the platform of tomorrow. This research aims to highlight just what is available for the business owner and what can be done once the provider is engaged.
Cloud computing refers to resources and services that are available over the internet and that individuals can access on demand, rather than maintaining infrastructures on personal computers. Also referred to as software as a service (SaaS), cloud accounting can manage numerous bookkeeping functions, including accounts in numerous locations. Operating online, the user can access the application from different computers at different locations. Furthermore, all updates and information processing are done centrally, giving access to real-time information and ensuring the application is working with the most current software. This all happens without the user updating their PC or device.
Importance of efficiency in accounting and bookkeeping
By the time the payment was finally fully disbursed, the accounting process would actually end. The amount of time required depends on the size of the company and the number of senior officials. The process could expand further. For this to happen, small and medium-sized companies continue to use traditional or manual processes such as tracking and using spreadsheets to solve customer support problems when faced with errors, maintaining and subscribing technical sophistication such as maintaining and subscribing individual hardware and software, relying more on more employees to handle customer invoices and make payments, and using more storage to store payment details and other financial reports. For transmitter data operators, small and medium-sized organizations (SMBs) are at greater risk of becoming data theft where there is more cash flow and less stringent control.
How efficient is accounting and bookkeeping? The short answer is, not very. Consider the traditional supply-chain process in its simplest terms for both small and medium enterprises (SMEs) and accounting professionals. First, the person handling the transaction (supplier) gets the invoice and sorts it in a particular way. Next, the person in charge of running the business (SME owners or managers) reviews all, or at least a summary of, the invoices received and matches them with the purchase requests or orders placed. Third, the supplier’s invoice is approved or disputed. If there is a problem with the payment, this is communicated orally or in writing. Fourth, when an invoice has satisfied the propriety and the amount of the invoice, it is entered into the accounting system (or sometimes the accounting system has already reported the work requests placed). Payment is then scheduled, tracked, and made through the merchant’s CMSA as a final matter. Thus, the payment process of typical supplier invoices can range from 3 days to 2 to 3 weeks.
Advantages of Online Accounting and Bookkeeping Solutions
58% of examined users devoted at least one hour each day to creating invoices joined onboard an online accounting suite, and 59% recorded that online accessibility to financial data helped them make enhanced decisions. The capability to operate financials promptly and receive real-time info about the economic condition was the capability that mentioned online accounting users desiring the initial. The usefulness of such solutions could make accessing financial data online a major differentiator for businesses. These solutions permit an enhanced decision-making process. Managers received remarkable benefits as a result of real-time data for enhanced decision-making process compared to small business bookkeepers and accountants. This is indicated by audited key customers of a study.
Several online accounting and bookkeeping services offer the basics, such as invoicing and expense organization, along with advanced functions like confidential employee collaboration and customizable dashboards and reports. Many cloud-based products are door-openers for small businesses, sole proprietorships, and startups that require primary accounting necessities. In addition, as they are normally priced, users can increase functionality by recommending a range of add-ons or using versa-ware one-system, all-in-one accounting system.
Cost savings
Some have argued that the ability to work across multiple platforms that online programs provide can also result in greater overall productivity for the firm. This is because, among other reasons, office-based staff can have real-time access to the same data and might be able to help deal with client communications more quickly than if they are doing work for the client in their local office. Other cost savings can arise from the billing practices of accountants. Such a transition would most likely promote a move towards efficiency-based billing and/or, more particularly, fixed-price service offerings. While those who deride fixed pricing in all instances focus on the potential loss of billable hours, what they often fail to take into account is the impact that something like uninterrupted data access can have on various processes in the firm.
Since many online accounting programs are available on a software as a service (SaaS) model, the primary cost-saving expectation is the shift from purchasing traditional software to a monthly subscription. Additionally, since the software is hosted “in the cloud,” there should be less up-front investment in computer hardware than would be necessary for installing traditional software. Other potential savings can come from the fact that the cloud-based programs are typically scalable and therefore can be accessed from any device with an internet connection. Data also gets stored in the cloud, therefore cloud accounting systems offer a backup and restore mechanism at no extra cost. In addition to this, the online version of these software programs typically involve less file transfers, which can be another platform requiring a robust data eradication process.
Real-time access to financial data
In a similar vein, consumers need close-to-real-time access to financial recording of product penetration data to assist choice-making. As traditional accounting and bookkeeping solutions have been unable to supply near-real-time data to meet these business needs, managing activities are increasingly being undertaken by error-prone, less formal, and scattered management tools. This situation creates challenges, such as the need to aggregate and reconcile many dissimilar data series from different sources. Access to close-to-real-time data has been defined as an important aspect of accounting work that helps improve the performance of accounting departments. Some cloud service providers of accounting and bookkeeping solutions have developed applications tailored to the needs of digital marketers.
Real-time access to financial data refers to the ability to access financial data as transactions happen, which can be achieved through cloud accounting and bookkeeping solutions. Participants of the interview study reported that gamers often pay subscription fees for online accounting and bookkeeping solutions to enable up-to-date access to financial data to better manage their gaming expenditure, which they consider “crucial” for successful gaming activities. Close-to-real-time tracking of financial status is needed for contingent and mathematical planning, such as anticipating future business possibilities and more opportunities for successful operations in game-related decisions when the data informs decision-making. It has been suggested that business-profitability-enhancing social media platforms such as Facebook create the demand and business readiness for cloud accounting and bookkeeping solutions.
Automation of repetitive tasks
The bookkeeping process can be time-consuming and involve a substantial amount of repetitive data-entry work. With online accounting and bookkeeping solutions, a bookkeeper can record a financial transaction once, and the appropriate accounting entries are automatically entered or posted into various general ledger accounts and customer and vendor sub-ledger accounts. This functionality solves input errors caused by rekeying and then recopying accounting information. An online, real-time, software-integrated bill recording process may involve uploading an electronic invoice, correcting any initial data-entry errors in accounts payable, and submitting the bill for payment. Repetitive and time-consuming tasks, such as selecting customers and vendors from different lists, rekeying data in various entry fields, and choosing internal cost allocation between various accounting cost centers or business departments, are typically automated. This has the added benefit of keeping checkbox lists managed by different software applications of document-saving online folders and invoice authors in synchronization with postings in a software system. Preliminary functions and software systems are examined. The prevailing and existing method is compared, and several valuable ideas and tips regarding potential benefits of this software-integrated solution are presented.
As discussed in the previous section, in the last 10 to 20 years, many manufacturers have developed and brought to market a wide variety of modern, user-friendly, web-based computer software and associated computer applications that accountants and bookkeepers use in their work. A great benefit of many of these software programs and their associated applications is that they allow for repetitive tasks to be completely or partially automated. This automation functionality offers a significant potential advantage or value proposition over manual records-keeping processes. Over the past 10 years, research studies have revealed that automation improves productivity and financial performance.
Security and Data Protection
Schools are encouraged to use password management systems to ensure that complicated passwords are rotated frequently and that two-factor authentication is enforced to protect against unwelcome access and malware attacks from public computer systems. Finally, accounting academicians may begin to reevaluate the accounting curriculum’s approach to accounting security and privacy controls, emphasizing that cost efficiency may increasingly be supplemented by cloud vendor considerations in their majority in the “good enough security” model or one that conforms to higher data privacy standards. It may soon be evident to employers and their representatives that the U.S. Certified Public Accountant (CPA) exam content specification framework needs to be augmented by a discussion of what risk factors are beyond the specific control of a cloud vendor in an increasingly cloud-dependent financial environment.
In the hands of a professional, tenacious small-business owner, cloud accounting could also be seen as a potential risk because it may enable fraud from small-business owners (particularly with respect to internal fraud). However, it is highly unlikely for most small businesses to have any security concerns in relation to internal fraud, given the highly specific skills needed to uncover complex fraud by business owners. As Cooke noted, some fraud is incidental and occurs when treating employees are faced with personal financial pressures. Speedy identification of such problems can help concerned business owners uncover underlying issues promptly and support their employees who might need help and guidance.
New Zealand (where Xero was developed) has state-of-the-art security and privacy legislation that benefits Xero and Xero customers alike. For QuickBooks Online, despite recent allegations that some customer tax returns had been compromised, most concerns were associated with data being retrieved from their small business clients, rather than directly from the QuickBooks platform. In both instances, the security concern may relate to how strong the passwords were set up and whether two-factor authentication was enabled. By coincidence, both concerns have been addressed by Intuit and Xero quickly.
Both QuickBooks Online and Xero have numerous security protocols and are continuously updating security measures and controls to eliminate threats to financial data. As privacy and data security are primary concerns for online accounting, the security features of both platforms generally exceed the abilities of small to medium-sized business owners to provide for their business IT infrastructures.
Encryption and secure data storage
Many organizations acquire their monthly or periodic transactional data consisting of a huge volume of individual documents. It is common for outstanding invoices and bills to form part of the data held by businesses, not to mention the retained invoice copies. Considering that a business is a focal point of the entrepreneurial model, it is crucial to retain access to business transaction data in order to facilitate annual reporting requirements and control objectives. These objectives can only be met if sessional transactional data is restored off the user’s site promptly. If the data were ever to be lost, this could result in a catastrophe and jeopardize the future of the business. Data in the cloud is stored across various branches of multiple data servers uniformly managing the customer’s data. But encryption requires keys, and users are the owners of the keys used to encrypt the data. The most chosen personal encryption key charts seven hundred cloud servers that manage a massive amount of machine-generated data connected by the cloud application.
Encryption is a process of converting text information into an unrecognizable form, referred to as ciphertext. In an RSA key encryption scheme, the algorithm involved would store information in a formatted, unconcealed way. Once this information is made publicly available, he or she would proceed to use one of the receiver’s publicly known encryption keys to transform the information into ciphertext. The key’s user can only decrypt the ciphertext by processing it with the correct private key. If correctly implemented, encrypted traffic is virtually impermeable to hackers. This is why all respectable online accounting applications employ it every time that data is exchanged over the Internet. The most potent encryption keys are symmetric keys with a significant nominal length. Depending on the length of the encryption keys, the computing power of the user’s station, and the dedication of the hacker’s efforts, an encrypted file can range from being virtually indecipherable to practically unjumbled hash data. In addition to stored information, the better online applications also encrypt the data when transporting it using secure socket layer (SSL). This results in further assurance against unwanted intrusions and privacy threats.
Data backup and disaster recovery
Furthermore, accounting and bookkeeping solutions may be the difference between a disaster and a catastrophe and can also be an excellent advantage of the cloud if the on-premises infrastructure of a small business is corrupted or rendered useless by Mother Nature. The cloud may be the best, and certainly the easiest way to execute continuous business continuity and disaster recovery programs, just by its protection and availability. The key is a real-time enabling in-house financial records and procedures and the restoration capabilities of premium storage on servers in the cloud of the management group of accounting. The role of public auditing solutions is to export the records and the procedures whenever possible to them to make certain that a small business knows how to best guarantee its longevity and sustainability. In this sense, several web-based accounting and bookkeeping solutions that facilitate regular computer backups online offer services to backup and restore sensitive financial data. Additionally, by safeguarding this information and its availability off-premises, critical details and remote access, the ability to be restored, or access with some self-service options, small businesses will then be able to get all their records quickly; to continue executing various critical projects that will prevent the business from failing and to quickly recover from the cloud infrastructure and procedures.
Cloud computing has vastly improved disaster recovery, business continuity, and disaster preparedness. It is the centerpiece of a secure, reliable disaster recovery plan. As the data is automatically backed up in the cloud infrastructures, small businesses can get any files back quickly and easily. For example, several online accounting and bookkeeping solutions have security protection measures and storage and backup available, and are accessible from any device. Therefore, the data remains secure, is easily retrievable and can be restored on a full scale from the cloud. One might argue for a cloud computing recovery plan others from file backup and disaster recovery solutions to on-premises solutions, but then the network bandwidth of a business can easily become a weakness. Utilizing a cloud-based solution does not warrant timely retrieval, without any problems, of all the records and procedures that are needed during and after an emergency.
Integration and Collaboration
Businesses today are realizing that more potential exists by integrating their applications to deliver a better experience for their end customers. An unaware customer is an unhappy customer, and today customers can get up-to-the-minute accounting information by using online accounting applications. When customers are provided with an enhanced service, customer satisfaction increases and thus business remains not only competitive but able to take a larger market share. When it comes to purchasing decisions, both small and large businesses will make contact with a vendor. The ease, accessibility, and speed of service have an impact on a business’s ability to remain competitive. When users’ attitudes are changing away from traditional contact skills, businesses will have to develop the capability to serve potential customers through alternative methods. Financial conversations now have a paradigm shift towards cloud-focused discussions, and businesses lacking the ability to serve their potential customer through such a channel may fall behind. Collaborating with an accounting expert with a special area of focus provides for quality real-time service and increases potential for ongoing relationships, as mindshare increases between the two businesses.
Integration between applications allows cloud users to access a wealth of applications that work together far cheaper and easier than previous solutions that have existed. There are many applications on the market that are listed in accounting app marketplaces that integrate with a core accounting application. Users can tailor the solutions that they use to best fit their business needs by having more choice. Furthermore, data is synchronized between these systems so that a user is not entering the same information into multiple places for different purposes. A system that integrates is no good to a business if not designed to solve specific problems for the business. A business is no good to users if it does not deliver a solution specific to their customer’s needs. The number of online applications on the market today is uncountable, and the number of online accounting applications is growing significantly. Collaboration between the various cloud systems is critical for delivering a solution to the end users; however, design is the key factor for selecting the right solution to satisfy a business’s functional need.
Integration with other business tools
Many investors or lenders ask for a balance sheet of future expectations, but also for the presentation and implementation of the strategic management plan for small-scale entrepreneurs and the zero version. Cloud computing has changed the way companies do business. The right combination of tools and integrated systems can save significant resources for a small business. Accounting and accounting services online interact with the presentation of the annual declarations, the stock market, the profit and loss account, the balance sheet, the annexes, as well as record various existing products of fixed assets and real estate belongings. Anyone doing their own tax return is aware of the time it takes to calculate, organize receipts, and prepare statements and schedules. With this type of accounting software, the result of an automated system can be obtained – a platform that stores all financial data in the cloud and organizes it with an integrated system for filing tax returns.
When you first meet with your accountant or bookkeeper, they will ask you how your business is run and which applications you are using to manage it. Automated solutions can make a significant contribution to the regulatory process, reduce the probability of errors, increase the speed of data entry, increase data adequacy, and make it possible to reduce costs with workload reduction. When discussing with them the advantages and disadvantages of each application for your business, be clear about what you need to achieve from your accounting process. To be honest, anyone who knows a little about computers can understand, with the help of a specialized professional, how to use these solutions. It is necessary to have this open conversation between employers and suppliers in the segment. In addition to saving time and gaining efficiency with accounting control, the entrepreneur can invest more in their core business, making it more profitable. Generally, with a Windows user manual, you will be able to get out of the dilemma and start solving it faster. A business management plan is important for many reasons, such as funding or investment decisions, management and evaluation, and is suitable for various types of private and public organizations or group projects.
Streamlined collaboration between accountants and clients
A lot of the business owners’ time, money, and can be saved by using cloud-based accounting and business tools. Time-saving in terms of reduced data entry, since the files can be auto-scanned and imported into the system, and automated daily reduces time reconciling. The prospect of being able to electronically collaborate live with their accountant is very powerful and compelling. How many business owners have wasted time by working on outdated data? The cloud-based accounting software ensures their books are always current and eliminates the need to manually “save a backup copy of the books” to send to the accountant on designated days. When the business owner works with an accountant utilizing the same cloud-based accounting software, the books are automatically updated for the client and the accountant in real time. This allows for accurate business decisions and forecasting. The client’s benefits also extend to tax planning when using a real-time system. Accounting and bookkeeping solutions will place the critical information in the hands of the business owner in one electronic location.
The remote nature of online accounting and bookkeeping software and cloud-based storage means that accountants and clients no longer need to be located near each other. The internet has become a ubiquitous tool for staying in touch and sharing information and files, so not only can companies find an accounting professional who specializes in their industry, but they can collaborate in ways that were not possible before. This independence greatly benefits those business owners or entrepreneurs who do not have the time or physical ability to meet face to face and comfort speaking directly to their accountant or bookkeeper.
