Everything You Need to Know About Cloud-Based Accounting

Cloud accounting is becoming increasingly important for small and medium-sized enterprises (SMEs). It allows for a more flexible, accessible, and automated approach to managing accounting operations. With cloud-based accounting solutions, you can streamline your finances, improve efficiency, and enhance security. 

What is Cloud-Based Accounting? 

Cloud-based accounting uses online platforms instead of traditional desktop solutions to manage financial processes. It automates tasks like bookkeeping, data entry, and financial reporting, enabling you to access your financial data in real time from any location with an internet connection. This modern approach reduces manual errors and provides faster and more accurate insights, facilitating better decision-making. Cloud-based accounting is particularly beneficial for organizations looking to focus on growth by freeing up resources through automation. 

How Cloud-Based Accounting Works 

Cloud-based accounting operates by replacing on-premise systems with internet-based platforms to streamline accounting tasks. 

Key elements include:  

• Data Hosting on the Cloud: Financial data is securely stored on cloud servers, removing the need for physical storage or on-site installations. 

• Automation and Integration: Cloud-based software allows you to automate routine tasks such as data entry, reconciliations, and report generation. It integrates with other tools, like payroll and Customer Relationship Management (CRM) platforms, ensuring seamless data flow across operations. 

• Real-Time Access: Users can view up-to-date financial data anytime, allowing quicker, informed decision-making. This is particularly valuable for dynamic organizations that require frequent financial insights. 

• Outsourcing Options: Cloud platforms allow companies to outsource accounting tasks to remote professionals, enhancing efficiency and scalability without needing on-site visits​. 

Cloud-Based vs. Traditional On-Premise 

Unlike traditional accounting systems, which require physical infrastructure and manual updates, cloud-based accounting is accessible via the internet. It eliminates the need for costly hardware, software maintenance, and on-site installations. Cloud systems also provide real-time data updates, enhancing performance and decision-making, whereas on-premise solutions often lag in delivering insights due to manual processes. 

Cloud-based accounting also supports outsourced finance and accounting services, where professionals can manage financial tasks remotely. These services benefit businesses of various sizes​ and increase flexibility compared to traditional models​. 

Cloud accounting simplifies financial management and supports SMEs in staying competitive and responsive to market dynamics. 

Benefits of Cloud Accounting for Small and Medium-sized Businesses 

Cloud accounting solutions for small and medium-sized businesses offer several benefits, including: 

• Accessibility – Cloud-based systems allow SMEs remote access to their financial data anytime, anywhere, enabling seamless collaboration. 

• Cost-Effectiveness – Lower upfront costs and reduced IT expenses through subscription-based models 

• Efficiency – Automated workflows, reduced manual tasks, and seamless integration with other business tools 

• Security, Data Backup, and Recovery – Enhanced security protocols, regular backups, and efficient data recovery processes 

• Scalability – The ability to scale the accounting system as the business grows 

Leading Cloud Accounting Solutions for SMEs 

When comparing popular cloud accounting solutions for SMEs, you should evaluate key features and suitability for your organization. Some of the current leading cloud-based accounting software options include Xero, QuickBooks Online, Sage Intacct, and NetSuite. 

Xero 

With its advanced scalability and integration capabilities, Xero's cloud accounting solution is ideal for SMEs in the growth stage. It seamlessly integrates with over 800 third-party applications, such as Bill.com and HubSpot, and streamlines workflows. The platform offers real-time updates, automated bank feeds, comprehensive reporting tools, multi-currency support, scalable features, and affordable pricing tiers. Xero’s robust cloud accounting is ideal for businesses expanding their operations and needing advanced financial insights. 

QuickBooks Online 

QuickBooks Online offers simplicity and efficiency for small-scale operations. The platform is ideal for startups and smaller SMEs that need an intuitive platform for basic accounting functions. It provides a user-friendly interface with multiple templates for invoices and reports, integration capabilities with third-party apps to expand functionality, and advanced tools for tracking income, expenses, and taxes. The platform has a strong reputation and an extensive ecosystem of integrations, so it is well-suited for businesses needing robust payroll and tax support. 

Sage Intacct 

Sage Intacct cloud accounting is suited for SMEs scaling operations, especially those in industries requiring robust multi-entity, ERP, or project management features. Sage Intacct stands out for organizations in industries such as construction or professional services due to its focus on industry-specific needs. The platform offers industry-specific tools like project cost tracking and advanced job costing, which come with higher costs compared to basic accounting solutions. Although this comprehensive feature set may require more training and longer implementation times, Sage Intacct is exceptionally scalable and equipped with an open API architecture, enabling seamless integration of over 350 external applications. The platform also has advanced reporting, analytics, and customizable dashboard functions. 

NetSuite 

NetSuite is typically well-suited for larger SMEs that require more complex workflow and process automation. Extremely popular with venture-funded entities, NetSuite offers comprehensive financial management tools designed to accommodate the sophisticated needs of rapidly growing businesses. Key features include advanced ERP capabilities, multi-entity support, project management functionalities, and real-time financial reporting. The platform's scalability and open API architecture allow seamless integration with numerous third-party applications, enhancing overall operational efficiency. With its robust analytics, customizable dashboards, and automated workflows, NetSuite enables venture-funded organizations to streamline processes, gain critical financial insights, and make data-driven decisions essential for sustained growth. 

Key Features of Cloud-Based Accounting Software 

Cloud-based accounting’s features make it a powerful tool for organizations aiming to optimize their financial operations and scale effectively. 

Bank Reconciliation 

Automated bank feeds streamline the process of reconciling bank transactions with accounting records. The software automatically imports bank transactions, matches them to corresponding entries in the ledger, and flags discrepancies for review. This reduces manual data entry, improves accuracy, and saves time. 

Expense and Payroll Management 

Proper expense tracking with cloud-based accounting solutions helps control costs and maintain accurate financial records. The software lets users capture, categorize, and monitor expenses in real-time. Further integration with mobile apps often enables employees to upload receipts and log expenses on the go, helping to account for all costs. 

Cloud-based payroll management leads to timely and accurate employee payments, compliance, and tax reporting. The systems manage payroll calculations, generate paystubs, maintain employee records, and streamline tax withholdings and filings to follow labor and tax regulations. 

Invoicing 

The tools also allow users to create professional invoices and send them directly to clients. Users can monitor real-time payment statuses and enable timely follow-ups on unpaid invoices. Efficient invoicing ensures timely revenue capture and minimizes administrative burdens. 

Reporting 

Financial reporting provides insights into business performance, and cloud computing allows users to create detailed reports and customizable dashboards with real-time data to visualize key metrics. 

Integration 

Seamless integration eliminates silos and ensures consistent data flow across systems. The software connects with other tools like CRM systems, inventory management, or e-commerce platforms. This ensures that financial data aligns with other operational systems. These features make cloud-based accounting tools indispensable for businesses aiming to improve efficiency, accuracy, and decision-making. 

How to Choose the Right Cloud-Based Accounting Solution 

When choosing the right cloud-based accounting solution for your organization, consider the factors that align with your operational goals. Start by assessing your business's requirements and identify whether it needs scalability or industry-specific features. 

Here are some factors to consider:

• Business size and complexity 
• Industry-specific needs 
• Budget 
• Scalability 
• User-friendliness 
• Customer support 

How to Transition to a Cloud-based Accounting System 

A smooth transition to cloud-based solutions requires a systematic approach. Here are key steps to a successful implementation: 

1 – Data Migration 

Begin by taking inventory of your current accounting system and identifying all data you want to migrate. This includes financial records, transactions, and vendor information. Transferring data from existing systems can be tedious, so you must create a data migration plan. This plan will consist of data cleansing (removing outdated or inaccurate data) and testing the migration in a sandbox environment (a secure, isolated virtual space) before executing the final complete transfer. Many cloud accounting platforms offer no cost or low-cost data migration tools and services, which can greatly streamline the migration. 

2 – Integration with Other Systems 

Connecting the cloud accounting system to your existing business tools, such as payroll, CRM, or inventory management systems, is essential. To maintain consistent data across your organization, you should choose the cloud-based accounting software that supports integration with your other platforms. Your vendor may even provide support or integration training. While there might be technical challenges to connect the systems, there are often accounting issues as well. You may want to work with an external accountant who has experience with the applications being integrated. 

3 – User Training 

Training employees on the new software is essential for a successful transition. You should create a detailed training plan tailored to different roles within your organization so that everyone can efficiently use the new system. Cloud accounting solutions may provide hands-on training sessions and offer online tutorials, webinars, and user guides. This training should focus on key tasks like entering data, generating reports, and managing finances. 

4 – Security Best Practices 

Organizations must follow several best practices when protecting sensitive financial data. Fortunately, cloud-based accounting systems typically handle most of this effort for you. Given the number of clients on their platforms, and the criticality of the data, these providers invest a significant number of resources to make sure their systems are secure. It is highly recommended that you utilize single-sign-on (SSO) and multifactor authentication (MFA) features if available. 

Within the applications, organizations should implement strict user access controls so authorized personnel can only access specific financial data. Regular audits and monitoring of financial systems can help identify potential breaches early on while complying with regulatory requirements. Consider working with a cloud provider offering strong backup and recovery options so you can feel secure knowing your data is always recoverable in an emergency​. 

How Does Cloud Accounting Supporting SME Growth? 

Cloud accounting is a powerful tool that supports SME growth by streamlining financial processes and providing real-time insights. Automated tasks, seamless integration with other business tools, and multi-entity management capabilities save time and resources, allowing SMEs to focus on core competencies. 

Additionally, cloud accounting enhances decision-making by providing access to accurate, up-to-date financial data. The built-in analytic tools enable businesses to generate dynamic forecasts, identify trends, and make informed decisions. 

Cloud accounting reduces errors, ensures data consistency, and automates routine tasks, creating a solid foundation for long-term financial health and scalability. 

Partnering With a Consultant for Implementation and Support 

EisnerAmper provides tailored support for organizations transitioning to cloud-based accounting solutions. From integration, our team offers seamless implementation and ongoing management. We take a comprehensive approach, starting with setting up cloud accounting systems and combining them with your existing processes. 

We offer advisory services if you need guidance in selecting the right platform that aligns with your organization's operational needs and scalability goals. 

 For organizations seeking outsourced support, we also provide services such as bookkeeping, financial reporting, payroll management, and compliance – all managed remotely via cloud platforms. We manage the day-to-day accounting functions, allowing you to focus on strategic growth. 

Suppose your organization considers adopting cloud accounting or needs help assessing which platform is right for you; in that case, our advisors can advise you on your options, guide you through a seamless transition, and provide ongoing financial management. 

Contact us today to discuss how we can support you.