The success of a startup is based on efficient cash flow within the organization, structured bookkeeping, and effective financial planning. However, over the years, significant changes taking place in the accounting industry like advancements in technology and new tax regulations have brought a transformation in the ways startups operate nowadays.
As a fact, lack of financial management is often a reason that causes startups to fail. A study by CB Insights of 101 Failed Startups found that cash flow was the No. 2 reason why some of the startups/small businesses failed.
So, what is the solution?
Many small businesses are now moving to the cloud to stay organized, increase efficiency, enhance security, optimize business performance, and get a leg up from their competitors.
Here is why cloud accounting can be a perfect match for your business.
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Moving all your confidential information to cloud might be worrisome for startups, especially organizations that deal with sensitive financial information. But the reality is, cloud security is one of the most reliable ways to save relevant data as cloud hosting providers employ several techniques like password protection, firewalls, encryption, and antivirus to keep your data safe.
So, on the cloud, even if your laptop gets stolen, no one can access your financial data unless they have access to the cloud portal.
On the other hand, with locally installed software, your data is your responsibility.
Remote Access And Multi-user Collaboration
The beauty of cloud accounting is the flexibility to run your business at any time, from anywhere, and with any internet-connected device with access to real-time data. Also, multiple users in your startup can share, access, and view files on the same cloud platform.
On the contrary, locally installed accounting software onto a single computer comes with limited access to your financial data for you and your team.
Time And Cost Savings
Cloud accounting can turn out to be beneficial when you are at the early stages of your new venture on a tight financial leash. Moving to cloud cuts cost as you no longer need high-end hardware or IT staff to update and maintain software leading to fewer overhead expenses. With easy pay-as-you-go plans on the cloud, you pay only for what you need, hence, manage cash-flows effectively.
Mostly, locally installed accounting software turns out to be less cost-effective as you pay additionally for choosing added features like extra users, customer support costs, and hardware costs.
Cloud accounting facilitates automatic background updates of your software without hindering your performance so that you save time on your invoicing and accounts receivable tasks. It also saves the most advanced version of your accounting files, so you’re never working on an outdated version.
On the other hand, with accounting software installed on your local system, you manually schedule updates that are expensive, difficult, and time-consuming.
To Wrap It Up
No matter what kind of business you run, with cloud accounting, you do more of what interests you and enhance business productivity. Though it may not seem like the prime priority in the initial stage of your new venture, as your business expands, efficient money management and bookkeeping will become vital to make your business thrive.