If you’ve been googling “QuickBooks consultant near me” or “Xero accountants,” you might be interested in knowing a little more about cloud accounting. Cloud accounting – also known as online accounting software or web-based accounting software – is accounting software that’s hosted on a remote server. Users send data to “the Cloud,” where it’s then processed and returned to the user.
The History of Cloud Accounting
Cloud accounting came into existence in 1999 when Net Ledger (now NetSuite) started. Intacct followed that same year. Then Microsoft acquired Great Plains in 2001. These accounting packages created the space of accounting for midsize companies.
In 2002, QuickBooks introduced QuickBooks Online (QBO). Four short years later, in 2006, Xero was created and the competition between QBO and Xero for small business accounting services has been on ever since. Which is better depends on who you ask—Xero accountants, or a QuickBooks online accountant. As of 2019, QBO had 4.5 million users and Xero has approximately 2 million.
Why the history lesson on cloud accounting? It shows you that cloud accounting has been around for over 20 years. The knock against cloud accounting early on was its security. However, cloud accounting software is run from a data center, which offers multiple levels of security to protect the software as well as sensitive data. In fact, the typical data center has significantly better security than most small businesses.
Why is Cloud Accounting Important?
Prior to cloud accounting, most businesses had their accounting services taken care of by staff on their premises. This consisted of a bookkeeper if the operations were small, or an accounting department if the operations were larger. The accounting software was stored on a server at the same location. Businesses had to hire employees to fill these spots, and when an employee left, with them went their knowledge.
Also, there was a large difference in skills of the people a business would hire. A bookkeeper does not have the same knowledge as a controller. So, a small business had to choose between competence and cost. Hiring employees is already expensive and risky. You never know if the employee will work out. Early on, as cloud accounting first appeared, most businesses didn’t trust the Cloud so they stuck to this in-house model.
Changing With the Times
Over the years, cloud accounting has become the more secure, efficient and flexible model. Why is it more secure, efficient and flexible? Xero accountants or a QuickBooks online accountant will all tell you there are a few points to consider.
- Better security on the cloud than on premises – Most cloud accounting has incredibly tight security. In fact, most cloud applications now require dual authentication if you’re logging in from a new location or computer. The security measures at a data center are top notch and cannot be matched by a small business. The only issue is ensuring your employee passwords are changed consistently and that they’re complex enough to avoid hacking.
- Anytime, anywhere access – As long as you have an Internet connection, you have the ability to work from anywhere at anytime.
- No installations or updates – Cloud software updates are usually done seamlessly without any involvement from the business. In most cases, the software provider also tests all the links to ensure any applications that may be connected to your accounting function properly.
- No Long-Term Commitments – While there are no long-term commitments, typically there is some cost to configure the software for it to fit the company’s operating needs. This is usually an implementation cost. It can range anywhere from $250 to $100,000, depending on the size and complexity of the system.
- Staff Flexibility – Your business now has access to top-quality staffing. Accounting firms like Unalp CPA Group have formed over the past 10 years to respond to cloud accounting trends. This allows businesses to invest in things like fractional CFO services that can scale up or scale down based on what’s needed. The business can purchase the level of workers that they require. Most of these firms provide a quote for monthly costs based on the company’s needs. Businesses can also access expertise like budgeting, forecasting and cash flow analysis.
Do you have questions? If you’re interested in looking into cloud accounting, stop googling “QuickBooks consultant near me” or “Xero accountants,” and give us a call today at (925) 256-6321. At Unalp CPA Group, we’ve been working on the Cloud since 2006 and we’re happy to discuss the benefits. We use Xero, Sage Intacct, QuickBooks and QuickBooks Online.