Cloud computing technology has started providing smart and efficient solutions to accounting professionals by providing subscription based Accounting and Tax software using SaaS (Software-as-a-Service) business model. Accounting and tax being one of the most important functions in any industry, demands state of the art efficient software applications customized to the needs of the company and its region. However, it may not always be possible for a company, especially the small and midsized ones to purchase a complete Accounting and Tax software along with the infrastructure requirements of server setup and maintenance.
Benefits of cloud
Benefits of Cloud are well known and its usage for core business purposes has increased exponentially over the years. Any cloud based application is cost efficient as it is available at much cheaper rates and hence, can significantly lower the company’s IT expenses. Companies pay only for what they use and there is no wasted capacity. Besides, there are many one-time-payment, pay-as-you-go and other scalable options available, which makes it very reasonable for the company in question.
Other benefits include no in-house maintenance, almost unlimited data storage availability for the companies to use, and seamless integration with other related software. Due to this, companies do not need to take additional efforts to customize and integrate other applications. If you have the right access you can log into the cloud application from any internet location in any timezone. Companies can put Accounting and Tax data of all their branches in centralized Cloud based application and use the same version of data and the software throughout all their locations in real time, thus increasing their efficiency many folds.
Various Options to choose
Companies have some very good cloud based Accounting and Tax software applications available today.
Xero: Fueled by $150 Mn in new funding intended for U.S. expansion, the company is using its cloud-centric approach to challenge market leader Intuit. Xero's approach (like the Intuit QuickBooks online offering) emphasizes the flexibility that the cloud provides, especially when it comes to accessing accounting information with a mobile device. Xero reported approximately $2.8 Mn in revenue from the United States and all other markets outside New Zealand, Australia and the United Kingdom. That represents an increase of 115 percent over the year-earlier period.
Quickbooks: Intended for large inventories-this online accounting service provides advanced invoicing, reporting, expense tracking, billing and payment tracking. It also comes with mobile tools for creating invoices using iPhones and Android devices. The monthly price to support one admin, a total of five users and five invoices is $39.95 per month.
Sage One: Intended for use of entrepreneuers, freelancers and startups with low inventory, Sage One is efficient, easy-to-use accounting software bundled with project tracking, task management, collaboration and payment processing. It is an online solution, so it is always up to date, backed up, encrypted and accessible via any web connection. The monthly price to support one admin, a total of five users and five invoices is $29 per month.
Freshbooks: With it, you can create invoices, manage projects and accept payments online from anywhere. This accounting software also provides free client portals, iPad and iPhone apps, and encrypted data backup. This software is highly flexible to use with different platforms. The monthly price to support one admin, a total of five users and five invoices is $69.95/month
Other options include HARVEST, ZOHO, Inttact etc., which can be compared based on the functionalities they provide.
Things to watch for:
Data Security: Security and reliability of data needs to be carefully examined before deciding to move forward with any cloud based software. Accounting and tax data being very sensitive information for any company, it is important to make sure that the centralized servers are fully secured and will not cause any data to be hacked or leaked out to third party entity or individuals without the right access.
Data backup and contingency:
It is also important to examine the process in which data is backed up and the how efficient is the contingency mechanism, to make sure that your companies data always remains safe and accessible in case of natural calamity, terrorist attack etc. It is generally advisable to have contingency servers placed in extremely secured data centers and in different contingent than the main servers. Cloud based companies may further outsource server maintenance and data centre services to a third party, and it is important to be aware of such a scenario.
Training and skill development
Even though most of the cloud based applications are designed to be extremely user friendly, it is important to consider the time you would invest in training the staff and updating their knowledge with every major upgrade or addition of new functionality which you may eventually purchase. Hence it is very important to understand that even if you have the flexibility to stop using a particular cloud based software and switch to a different one, it is operationally not as easy as it may sound – specially in case of large organizations with multiple users involved. Having said that, with cloud the company will always benefit due to low upfront costs, even while switching from one software product to another.
Ease of customization and integration
Generally, most cloud based software applications provide ease of data integration with other software applications with which Accounting and Tax software products may interact. However, it is important to carefully check how easy this integration is with the software applications which your company uses traditionally. It may happen that such an integration is not ‘automatic’ in reality and then lot of time will have to be put in to extract data from one system and feed it into another to get desired results/ reports.
Accounting is very important in the payments value chain. Infact somebody said that once you have solved authentication, payments is nothing but accounting. What is interesting to note is that Cloud/SaaS based Accounting and Tax softwares are integrating payments processing, connecting with bank accounts through APIs and doing other integrations as well. Some payment companies are doing it from the other way round. All of this integration would eventually be very useful for the end customer.