As the pandemic has ravaged all facets of human life, we had to begin to adjust to it. Businesses had to figure out ways to continue with their operations while complying with the new regulations and minimizing the risk to workers by implementing work from home measures. Two adaptations in the accounting sector in businesses were the widespread usage of cloud accounting and outsourced accounting services.
However, widespread usage also means that more and more people are getting introduced to the advantages of upgrading to the best cloud accounting and outsourced accounting services. As we hopefully move through the twilight era of this pandemic and enter the post pandemic world, these best cloud accounting and outsourced accounting services seem like they are here to stay. So today, I hope to give you a small overview of what these cloud accounting and outsourced accounting services are and the advantages a firm can receive in switching to cloud accounting or utilizing outsourced accounting services.
Cloud Accounting and its Benefits
Cloud Accounting is on the most basic level, accounting that takes place over the internet or the ‘cloud’. Traditional accounting centers on a team of accountants working together in offices using desktop computers connected to each other through transmission. The desktop computers have the necessary software and the accountants use them to complete the specific parts of their job, like tracking of all the necessary real-time expenditure, earnings, payroll details, taxes, compliance, etc. All this information then has to be compiled together in appropriate formats and everything takes place under the confines of the office premises. Cloud accounting basically allows the shifting of all these accounting functions from the in-house premises to online. The advantages of using cloud accounting services are numerous and include:
- Easy access and work from home: previously accountants needed to work from within their offices with their desktops if they wanted to access the appropriate financial information and records necessary to do their jobs. Now by utilizing the encryption of cloud accounting, the appropriate financial information and software can be stored into the cloud which allows easy access from potentially anywhere. This also allows work from home which is absolutely necessary as the pandemic rages on and may become a more prevalent part of our lives even in the post pandemic world.
- Greater security and accountability: the encryption of the cloud is military grade and cutting edge. By utilizing cloud based accounting you can gain that security as well. Furthermore, as information in the cloud can be remotely accessed by all authorized individuals, there is an increase in accountability as it is easier to detect fraud.
- Reduced costs: cloud accounting removes the need for keeping hardware and software in-house. That removes the need for obtaining and maintaining expensive hardware and software and reduces operating costs in terms of removing unnecessary workers, i.e. specialized staff to maintain and operate the hardware and software.
Outsourced Accounting and its Benefits
Outsourced Accounting takes things a step forward from cloud accounting. While in cloud accounting, there is still an accounting department which works remotely through the cloud, by using outsourced accounting services businesses can basically outsource their entire accounting operation to a small specialized firm offering this service to businesses commercially.
This means you can outsource all of your accounting responsibilities to a group of professional accountant. These responsibilities include but are not limited to:
- Real-time transaction processing
- Taxes and other compliance needs
- Payroll management
- Financial reporting
- Budgeting, forecasting, and actuarial services
The outsourced firm sifts through all of the company’s financial data and leaves you with prompt financial reports which allow you understand the important details of the company’s finances without getting bogged down on all the tedious processing.
The advantages of outsourced accounting include:
- Reduced costs: outsourcing your entire accounting operation has significant savings. First you save upon the monetary costs of hiring, funding, and paying/maintaining an entire accounting department. Meaning that by outsourcing, you don’t need to hire your own accountants and keep them on your payroll or purchase your own hardware and software cutting down those costs.
Secondly you save on the administrative costs of hiring and maintaining an accounting department. You don’t for example need to go through the trouble of hiring and training employees or changing and scaling your operation as you go forward. Just send the necessary instructions to the outsourced company and let them do the work for you. Furthermore, the personnel and resources saved can then be reallocated to different parts of your business optimizing it.
- Expert accountants and specialized software: most outsourced accounting firms are groups of well-trained experienced accountants using the most cutting edge software in the industry. By outsourcing your entire operation to them, you gain the benefits of having these experienced professionals managing your accounts and, with an added benefit, they may even utilize their experience to advise you. This basically allows your firm, regardless of whether it’s big or small, to have the benefit of having a full accounting department working its finances.
- Improved security: an outsourced accounting firm can usually provide better security and accountability then your own in-house accounting department. They usually have to cater to a large amount and variety of firms so need to have the most cutting edge security encryptions which are very difficult to hack. Furthermore, there is a reduced risk of fraud as you are handing your financial data to professionals who are very unlikely to misuse it.