Should Your Business Switch to Cloud Accounting? Key Benefits and Considerations

If you are considering moving your organization to a cloud accounting service, there are several operational factors you should consider. When pinpointing these factors, ask yourself and your organization questions such as, “Do you want to focus on customers and new opportunities and not spend your time worrying about recordkeeping, taxes, and regulations?” If you answered yes, congratulations, you are an owner who doesn’t want to waste time on non-core activities. Cloud accounting takes away time-consuming daily accounting functions from employees, allowing organizations to focus on what counts. 

Benefits of Cloud Accounting  

Integrating cloud accounting software offers several benefits to organizations, regardless of industry or size. Rather than worrying about hiring costs or facing potential layoffs during economic downturns, organizations can outsource their accounting function to a trained cloud accounting team, a virtual back office. Let's face it: it’s much easier to obtain (and cancel) a service than consistently hiring and terminating staff.  

With advice from seasoned accounting professionals, one gains access to proactive information, which is the key to a cloud accounting solution. When determining if cloud accounting is right for your organization, ask yourself if your current bookkeeper is maintaining the status quo rather than helping you grow your business. Wouldn’t it be better to have a team that makes sure accounting transactions are recorded accurately and timely while providing development and growth insights to help future-proof your organization for success? 

Data-Driven Decisions 

As a business owner, you probably opt to make decisions rooted in accurate data, industry-based analytics, and from a knowledgeable accounting team rather than just making the best guess. 

Let’s say you want to decide between hiring new employees. Wouldn't it be great if you could make that decision based on knowledge from financial projections that make you comfortable that you can meet payroll? That, again, is the advisory benefit of a cloud accounting solution. 

Fundraising and Investor Confidence 

Scaling a business typically requires additional investment, and unfortunately, fundraising is not easy or trivial. Debt requires negotiating with banks to get the best interest rate. Equity requires maximizing valuation to minimize the amount of ownership given up. The complexity of these tasks is only compounded by inaccurate financial data and reports. Cloud accounting can reduce the headache by providing accurate data, advice, and guidance. Cloud accounting teams have a “been there, done that” knowledge because they service multiple companies that are probably of a similar size or in a similar industry to yours. 

Once the funds are obtained, the work continues. Investors typically have specific reporting requirements and possibly covenants that need to be maintained. Mistakes in meeting these requirements can be catastrophic for a business owner. Cloud Accounting teams follow defined and monitored workflows. Additionally, they have the proper accounting controls in place to make sure tasks are done on time and without fraud.  

A final consideration is setting your business up for the next financing round. This is particularly true for startups, as they could seek angel funding, series A, series B, etc. How a business handles initial funding can significantly impact future financing. 

International Expansion 

Cloud accounting can benefit foreign organizations that are establishing operations in the U.S. But how? Cloud accounting quickly and accurately allows a foreign company to maneuver the often-daunting maze of U.S. rules and regulations. A U.S.-based cloud accounting team provides a local presence that is well-versed in local laws, regulations, and customs. The team knows the nuance of doing business in the U.S. and can make essential introductions to other important business relationships such as bankers, attorneys, and insurance brokers. Additionally, when an accounting firm with international experience delivers services, organizations can be sure that knowledge about complicated issues such as international formation, tax, and transfer pricing is readily available. 

Leveraging Technology 

As society progresses toward technological innovation and digital expansion, it is vital for organizations to effectively and efficiently leverage accessible technology. If you are not currently doing this, the time to start is now. With the vast technological options, figuring out where to start can take time. Cloud accounting is a great place to start, as it can work with other systems already in place to enhance an organization’s workflow. Whether your technology consists of a pen and paper or using a smartphone to run your business, cloud computing can make the process easier, safer, and more accurate. 

Given the recent advancements in generative AI, the technology landscape is shifting faster than ever. It is difficult to know which advancement has merit or is merely hype. By its nature, Cloud Accounting has exposure to the cutting edge. Cloud Accounting providers must invest heavily in understanding this technology and constantly test what works and what doesn’t.  

Ultimately, the question comes down to whether you want to grow your business most efficiently and effectively. If the answer is yes, then look to the cloud. To learn more about cloud accounting or to evaluate your organization’s needs for continued growth, connect with us below.