5 Big Advantages Small Businesses Stand to Gain From Cloud Accounting Solutions

Today's small businesses rely on technology like never before. Between online sales and data-driven business processes, they're connected in ways that would have been unimaginable a few years ago. But that doesn't mean that every business is taking advantage of digitization in every way they can be.

One of the areas where many continue to cling to outdated offline processes is in their accounting workflows. For some, it's because of their existing investments in legacy software. They're hesitant to move away from software solutions they've spent hundreds or thousands of dollars on in past years. And for others, it's simply a matter of having an "if it isn't broken, don't fix it" mentality.

But cloud-based accounting solutions offer a variety of benefits that can help the average small business run leaner and make better financial decisions. And, it can save them money over the long term. To illustrate why, here are five big advantages that small businesses gain by switching to cloud-based accounting.

Better Financial Visibility, Anytime, Anywhere

One of the biggest benefits that come with the use of a cloud accounting solution is that it gives the business's owner better visibility into their company's finances. Unlike traditional accounting methods and even many offline accounting software packages, cloud-based accounting platforms provide data visualizations and custom reporting functions that even a novice could operate.

And what's more, they're available at the click of a mouse from nearly any internet-connected device. That gives the business's owner or manager instant access to the business's finances, enabling more timely and appropriate decision-making. It's an advantage that most small business owners wouldn't even know they were missing until they experience it for themselves.

Simpler Multi-User Accounting Access

When the typical small business starts out, they may have only a single person handling their accounting. But when sales begin to grow, it doesn't take long for it to overwhelm a one-person accounting department. And at that stage, it becomes necessary to build an accounting team that can handle the workload.

But as anyone with experience using conventional accounting software can tell you, managing multi-user and role-based access to accounting data isn't always easy. But that happens to be a strength of cloud-based alternatives. They're built to support multi-user environments by default. And adding additional users doesn't require any software installations or costly license fees. In fact, many cloud accounting solutions include access to more than a single user as a part of their base fee structure.

Access to a Bigger Pool of Talent

As is the case in most industries, the world of finance and accounting is moving rapidly toward full digitization. And for that reason, schools are beginning to gear their offerings toward financial technology (FinTech). That's already feeding a shift in the accounting talent pool that small businesses have access to. It's becoming harder to find workers skilled in more old-school accounting methods already. And that means those skills are about to get costlier.

In their place, universities are now churning out graduates with advanced FinTech degrees that understand digital accounting solutions and how best to apply them. So, it's already clear that offline accounting solutions are a dying breed, and soon it'll be near-impossible for small businesses to find anyone capable — or willing — to manage them.

Improved Data Security

When most people think about data in the cloud, they think about online privacy issues and the potential for costly breaches. But what they don't consider are the disadvantages that come with offline data storage. Businesses that still rely on offline accounting software have to deal with the potential for on-site hardware failure. And to guard against that, they have to keep regular backups of their financial data.

But if you look at surveys on that subject, you'll find something curious. As many as 51% of businesses rely on cloud backups to safeguard their data. That means there's no reason not to move to a cloud-based accounting system since their financial data will end up online in the end anyway. And platforms built to handle financial data are typically more secure than those built for general data storage, so they'll get an instant upgrade in their data security by making the switch.

Future-Proofed Accounting

Last but not least, cloud-based accounting solutions offer the advantage of always being up to date. Unlike legacy solutions, small businesses won't have to wait to purchase their next software upgrade to gain access to the latest accounting features. With cloud-based solutions, those get added by default. That means as the cutting edge of accounting technology evolves, users of cloud-based platforms gain access to it early and can use it to their advantage.

And cloud-based solutions also tend to offer added flexibility, too. Unlike many conventional accounting solutions, cloud-based options can be upgraded, downgraded, or extended as needed. So when a small business needs some particular niche functionality, they can get it on-demand. And they don't have to pay for an upgrade that contains multiple other features they don't need just to get it. And if they find that they no longer need a particular function later on, they're not stuck paying for it for a moment longer than they needed it.

The Bottom Line

By now, the unique value proposition of cloud-based accounting solutions for small businesses should be quite clear. For starters, they're more agile, more extensible, and more secure. And in any case, they're the direction that the industry is moving. That means businesses that delay making the switch will only find a tougher road ahead as the accounting industry leaves them behind. But with so many good reasons to consider moving to a cloud-based accounting solution, it's not likely that many savvy small business owners are going to stand by and let that happen.