PrintIt’s hard to read an article about business technology these days without running into “the cloud.” But ask many small business owners what cloud computing really means and the definitions are as fuzzy as cumulus. Even still, more and more small businesses are moving their accounting to the cloud.
Cloud computing is a relatively simple concept: Applications are run from a shared data center rather than on your own network. Small business owners simply log on, customize, and use. No upgrades or technical staff are needed because the cloud provider manages it all. You’re probably already using cloud computing services. Google apps, social networking sites, online backup services, even redundant servers and mirrored websites are examples.
Cloud-based accounting programs offer several advantages for small business owners. For one, your bookkeeper and other financial staff can access data as needed, from anywhere, with a secure connection. Also, cloud financial package pricing structures scale according to your needs and the amount of space you use, so these systems can also save you money. You won’t pay for services and features you don’t use. Fees are paid on a monthly subscription basis.
Most cloud-based accounting programs, such as QuickBooks Online and Financialforce.com, fall under the “software as a service” category. QuickBooks can be remotely managed by any number of cloud computing hosts. From a user perspective, this means that you must log in to the cloud provider’s server to access QuickBooks rather than log on to the Internet.
One of the most advantageous features of cloud accounting programs is the ability for employees to track their time and expenses online, a time and paperwork saver. In addition, complex integrated customer relationship management services available through the cloud allow you and your employees to view the entire financial picture of your company and customers from anywhere.
Compared to cloud accounting programs, out-of-the-box software programs give you features you may not use. And you have to make sure your operating system and other related software are up-to-date; so a simple upgrade can end up costing you a bundle in unforeseen software updates. With cloud accounting, the hosting service takes care of these issues.
At the end of the day, though, with cloud accounting, your company’s financial data is being hosted somewhere else. Some small business owners are reluctant to take that step, despite the fact that cloud-based programs are typically more secure than those hosted on a company server because the backup and redundancy provided is generally more robust than that of an office-based network.
Yes, your financial information can be vulnerable to hackers. And if the company hosting your data goes out of business, your information could evaporate. That’s why it’s crucial to back up all your accounting data on a regular basis. Also, choose a vendor with a strong reputation and history, not a startup with no track record.
Before moving to the cloud, take these steps with potential vendors:
- Ask the vendor for service references, research intensively, and make your decision based on quality, not price.
- Study the vendor’s data recovery policies and how long it will take to recover your data if you decide to leave the cloud.
- Ask about the vendor’s “downtime” records. Has it had any serious outages? How long did they last, and why did they happen?
- Find out what kinds of encryption are in place for data transmission.
- Look for any hidden fees.
Remember that cloud computing is still young; new services, better security, and more offerings are coming fast. Accounting in the cloud can be a great money and time saver, if you do your homework.
