As a professional accountant, I still come across clients who are reluctant to used cloud-based systems for their accountancy and bookkeeping. And yet these same individuals are undoubtedly using the cloud in their daily lives – we all do! Every time we use an on-line purchasing system, or pay bills on-line, or look for information on the internet, we’re almost certainly accessing information that’s stored on the cloud.
So why the reluctance to use this technology to make your business life slicker, easier and up-to-date?
Here’s the three main issues and what you can do to minimise the risk:
How secure is your data?
Since your data is stored on the cloud provider’s server, protection from the risk of unauthorised access to your data is outside your control. However, security on cloud-based systems can often be better than you have through the firewalls and other protection systems you use for your non-cloud-based systems because cloud providers are able to use the economy of scale to solve security issues by devoting resources to this beyond what you may be able to afford. For a system to be trusted, the provider can’t afford too many breaches!
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Can your data be altered?
Since the cloud provider can of course access the data stored on the cloud, there is the possibility that information could be accidentally altered or deleted. However, you should be able to encrypt data to prevent unauthorised access and it’s also essential to know under what circumstances the provider can share information with other parties (e.g. if required by law). Read your provider agreement!
Who owns the data on the cloud?
Again – read the provider agreement. If legal ownership isn’t covered, you need to make enquiries, to check that you retain ownership of the information you store. You don’t want anyone else to profit from your business information! And you also need to check that your cloud computing complies with data protection and any regulatory requirements.
So – now we’ve looked at the main risks, what benefit do you get from using cloud-based accountancy systems? Cloud accounting is just like using accounting software installed on your own computer, except that you access it using your web browser, over the Internet. The cloud provider installs and manages the infrastructure and platforms that run the applications and the cloud users (you) access the software through the cloud clients (your service provider).
So what are the advantages?
- Effective outsourcing of hardware and software maintenance and support, which saves costs
- Maintenance is easier and more cost-effective because the applications are not stored on each individual user’s computer
- You can access your information anytime from anywhere
- Scaling up or down is much easier than upgrading you own system
- No new software needed to incorporate updates
- Multiple users can work on the same data at the same time
- Information is entered only once no matter what the source
- You don’t need to arrange for off-site backup
- Resources and costs of a cloud-based system are shared between many users, so there are economies of scale, plus infrastructure can be based in low-cost areas
- Using a cloud-based system, you only access it when you need to, and the cloud provider will arrange systems to cover peak-load times
As you may have gathered, I’m a keen advocate of using cloud-based systems. Why? because they work and the advantages greatly outweigh the disadvantages. It’s a great way to maximise efficiency and minimize cost.
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I encourage my clients to use a system called Xero, which is a cloud-based accountancy system developed especially for use by small and medium-sized businesses. Clients upload their bookkeeping onto the cloud instead of maintaining it on an individual computer system. This enables us, as their accountants, to access the information direct for the preparation of management and final accounts, VAT returns and the provision of business advice. But the system also provides a complete overview of the financials of the business, in real-time, and automated feeds import all bank account and credit card transactions. You can create and send invoices on-line with all payments, returns and credits automatically tracked. What’s not to like?
Just one more point – whichever service you choose, make sure that you read your cloud provider’s service agreement right through to the end before you sign up. Not all cloud providers are created equal!
Shaz Nawaz is one of the UK’s leading small-business growth strategists, with more than 3,000 consultations (and counting) under his belt. His clients have increased their turnover by over £150 million thanks to his advice, especially in the crucial area of pricing & profits. These amazing results have ‘earned’ him the title ‘The Profits Wizard’.
He’s an author and keen blogger. He’s a Chartered Accountant and Managing Director of national award-winning firm AA Chartered Accountants. Alongside this, he owns three other thriving small- businesses. Shaz is joint-president of the Professional Speaking Association for the East of England.