Sarah Daly explains some of the issues to consider when thinking about switching to a cloud-based accounting system.
In recent years, GroForth has supported many clients who have moved to cloud-based accounting solutions. Often, the reason for the move is that as businesses grow, they find it difficult to keep on top of their administration. Rather than hiring accounts staff, it is often more efficient and cost-effective to adopt cloud accounting. However, the cloud is not for everyone so, as always, you need to weigh the pros and cons for your business.
Advantages of cloud-based accounting systems
Probably the most common reasons why GroForth clients turn to cloud accounting solutions are that they want to improve efficiency or that they need more up-to-date, better quality financial information. Other advantages cited by clients include:
- Cost effective: For many businesses, cloud-based solutions are more cost effective than having an in-house accounts executive or accounts department. Cloud solutions operate on a subscription basis with the price depending on the number of users and the modules required. Entry level costs are typically around €20–€50 per month.
- Ease of use: Cloud systems usually have easy to navigate user interfaces and many have mobile apps which allow you to access your accounts on the go.
- 24/7 access: A big advantage for many clients is the ‘always on’ availability of their financial information. Important indicators are often displayed on a dashboard so that you don’t even have to go looking for them.
- Realtime information: Another big advantage is that ‘real time’ information is available provided that you input your data on a timely basis.
- Streamline processes: Many clients find that cloud-based systems help them to streamline processes, eliminate duplication and allow faster collaboration between teams.
- Security and backups: The cloud-based solution provider looks after security and backups so once you are satisfied that their processes meet your needs, this takes away the headache of having to keep an in-house accounts system updated and secure.
- Ability to expand as your business grows: Scaling up is easy when you are using cloud-based systems. Usually it’s just a question of increasing your monthly subscription.
Disadvantages and risks of cloud-based accounting
As mentioned at the outset of this article, cloud accounting is not suitable for everyone so it is important that you investigate the risks as well as the advantages before deciding to switch to a cloud-based solution. Set out below are a few key risks to be aware of.
- Internet / Broadband speed. Cloud-based accounting requires a good Internet connection — otherwise slow speeds could impact efficiency and/or you could be affected by outages.
- Data security. This is extremely important so you need to be confident that your provider adheres to high standards. In addition, you need strong discipline around things like controlling access so that when staff leave, for example, their logins to your system are removed.
- GDPR. Again, this is very important especially if the solution provider that you choose could involve having to transfer data out of the EU.
- Brexit. We don’t yet know what future arrangements will be in place around data and digital services.
- Vendor lock in. Some clients worry about this in case they may need to switch to an alternative solution provider in future.
- Lack of customisation. This is usually more of a concern for large organisations with legacy systems.
Choosing a cloud-based accounting solution provider
GroForth clients use a broad range of cloud-based accounting solution providers and we have experience with most of the commonly-used systems including BrightPay, SortMyBooks, Thesaurus and Xero. We also use various other cloud-based solutions such as payroll and banking solutions that integrate with our clients’ accounting systems. If you are considering switching to the cloud or would like more information on the topics discussed here, please get in touch.