Companies like Inuit (QuickBooks) and Sage are putting a lot of time and resources into converting their traditional desktop users onto their Cloud platforms. There are also companies like Xero, FreshBooks, and Wave that have only ever existed in the cloud. The great thing about these programs is that you can access them from whatever type of computer you have, you can grant certain people access to this information, the information is backed up so you don’t have to worry about it disappearing, and you can access the information from anywhere and anytime. Many of them also have the ability to help you import your historical information so that you have continuity in your financial information. They can also assist you with importing the information from one cloud-based program to another cloud-based program.
The Downsides of Cloud-Based Accounting Programs
But these programs aren’t perfect. There are still some features in the desktop programs that you can’t recreate in the cloud version. This can cause some angst for yourself and your bookkeeper. You are also dependant on how fast your internet connection is. Not to mention that your work will be affected by power outages and software maintenance updates. There are also some issues with the importing of the historical data, but efforts are being made to minimize these problems. I’ve also learned is that being able to access your data at anytime and anyplace can also be a negative. But I think that if you are aware of these issues and make some allowances and contingency plans for the hiccups, I believe that the advantages of using the cloud-based program outweigh the disadvantages.
Why Accessing Accounting Data Anytime and Anywhere is a Pro + a Con for Cloud-Based Accounting Programs
For me, accessing the information at any time and any place is a pro and a con. The ability to access the data at any time and any place has definitely come in handy in the past when I’ve gone on a camping trip and needed to do some work for a client. Or when I’m not physically in my office, but I’m chatting with a client about their tax returns or about something in their accounting records and I need to access information. However, I’ve noticed that carving out “down-time” needs to be consciously done and that I really need to give myself the time and permission to walk away from the computer. I truly think it’s super important for us to give ourselves permission to separate ourselves from our businesses. It isn’t meant to be an operation that we personally need to monitor 24/7.
Business Owners Should Learn How to Properly Use The Cloud-Based Software If They Want to Do Their Own Bookkeeping
One of the biggest shifts that I’ve noticed with these cloud-based accounting programs is that more clients are wanting to do their own bookkeeping. Which is great! But I do think that while it may look like you are saving money, a business owner needs to spend some time learning about the software that they are using. Otherwise, the cost savings that you are envisioning will be spent when you have to hire someone to help you clean things up when the information you inputted is incorrect.
I highly recommend that you hire someone to help you get things set up properly. A good bookkeeper or accountant who uses the program you want to use would be a good resource. There are also companies like myCloud Bookkeeping that can get you off on the right foot as well. Kerry Smithies, the founder of this company is also a CPA and knows her stuff. She’s actually going to provide a guest blog post in the near future, so you’ll learn more about her soon!
There are also so many great YouTube videos out there that can give you quick tutorials to help you with troubleshooting. My tip here would be to make sure that when watching the YouTube videos, there may be some slight differences between the Canadian version and another country’s version of that same program. So, if something seems odd or the terminology being used is different than what you are used to, double-check the country of origin for the person in the video.
Cloud-based accounting programs also help when you’ve outgrown your abilities to keep up with the day-to-day accounting and it’s time to hire a bookkeeper. You can easily grant a person access to allow for an easy transition.
Cloud-Based Accounting Programs Provide Real-Time Financial Information
As a business owner, I also think that using these cloud-based programs is great since they can give you real-time information about the financial health of your company. As an accountant, the financial statements and tax returns that I compile and prepare for my clients are based on historical information, not current information. The historical information will help create comparisons and will help demonstrate trends but they won’t tell you what is happening right now. The caveat here is that the information in the cloud-based program is only going to be as current as what has actually been downloaded/posted into the books. You will need to make sure that your financial information is complete when you do your analysis. If the information can be uploaded and properly categorized and reconciled in a short time frame, I believe that business owners will be able to make better decisions for their businesses.
A nice feature of these programs is that many of the reports within each of these programs can also be adjusted or the information can be downloaded into Excel/CSV that can be mapped to create reports that management can use to analyze things the way that they would like to.
Another nice feature with the Cloud-based accounting programs is the number of different companies creating the ability for users to have the information sync with the accounting programs. For instance, various Point-of-Sale companies like Shopify, Lightspeed, or CRM solutions like Salesforce, Insightly, and MailChimp can be linked to Xero or QuickBooks Online so that you don’t have to duplicate the same information. This is something that isn’t as easy to do in the desktop versions.
Overall, if you’re thinking about moving from a traditional desktop program to a cloud-based one, now is a great time to do so. You may have to make some allowances for some things that can’t be done in the desktop version, but I do believe that the value of having more current financial information, whenever you want, will allow owners to make better decisions for their businesses.
Dayna Holland, CPA, CA (she/her)
CEO of Dayna Holland Ltd.
Are you a small business owner or self-employed and wanting to improve your bookkeeping habits so that you can get ahead in 2021? Be sure to check out this blog post for my top three recommendations based on conversations I’ve had this year with entrepreneurs.
Click here to learn more about Dayna Holland, CPA, CA.