Do You Need a Cloud Accounting System, or Is Your Current System More Than Enough?

Do You Need a Cloud Accounting System, or Is Your Current System More Than Enough?

discover | Thursday - 31 / 10 / 2024 - 11:12 am

Year after year, you’ve grown accustomed to your desktop accounting system. Then you witness a mass migration towards cloud-based accounting systems. This raises your concerns, prompting you to ask: Should I make the switch too?

Initially, both systems serve their purpose. While technological advancements have enhanced the appeal of cloud accounting systems, traditional desktop accounting systems still hold their place and uses. This makes choosing the best accounting system a challenging task.

 

Did you know?

Traditional accounting systems are installed on your desktop and typically require annual updates, which often involve purchasing a new version at full price. Additionally, a traditional, desktop-based accounting system is usually used by a single person on a standalone computer (or by multiple people within a local network).

While the information above might seem like drawbacks, many people actually consider them advantages! For example, because desktop accounting system data can only be accessed by the same user, it’s considered safe from the risk of loss in case the cloud-based accounting system provider’s servers fail. And since the system operates without an internet connection, it’s the ideal choice for companies in developing countries.

On the other hand, accounting software companies realized the potential to charge businesses monthly fees instead of annual fees thanks to cloud computing. And businesses didn’t mind paying monthly fees in exchange for the simplicity of cloud-based accounting systems and the reduced workload for accountants.

A good internet connection is a prerequisite for any cloud-based accounting system. Meanwhile, running a desktop accounting system requires a computer with good specifications.

These minor differences make decision-making quite difficult.

Don’t worry, let us help you make a decision…

In this article, we’ll go through your needs one by one and see which system is best suited to meet them.

Easy Access When Needed:

Working from the office might provide adequate access. But what if you’re a remote project manager or an accountant forced to work on a weekend? In this scenario, cloud computing easily wins because it provides global access to cloud-based accounting systems.

Purchase, Installation, and Operating Costs:

Take the subscription price of any Logix package and compare it to any desktop accounting system (or even another cloud-based accounting system) and you’ll discover that cloud computing also wins in terms of pricing.

– Desktop accounting systems are usually expensive upfront, and you’ll be forced to upgrade to newer versions that are released every year, in addition to needing to purchase computers to run the newer versions. Depending on the model, this may cost more than the system itself!

– For just a few hundred riyals, you can get a powerful cloud-based accounting system from Logix that is updated for free and regularly.

Did you notice the difference?

Scalability:

When you’re a small business owner, you might not need more than a simple accounting system, making a desktop system an ideal choice. But what if your company starts to grow and you need more accountants? This is where you’d have to purchase [enterprise accounting] packages that allow multiple users to access the accounting software simultaneously.

So, for the third time in a row, cloud-based accounting systems come out on top; the scalability offered by the cloud makes it easy for you to grow with your business. You can start with basic services and expand to more features and capabilities as your company grows. This way, you won’t have to invest in new systems until you really need them.

Security and Backups:

You might feel more comfortable having your data on your own computer, and backup processes are often simpler with on-premises accounting systems. However, on the downside, your data is more vulnerable to theft, both from inside and outside your company. Plus, your hardware could fail, leading to the loss of all your data.

In contrast, cloud accounting systems handle backups for you, ensuring that your data is never lost. In terms of security, leading cloud accounting systems – like Logix – employ advanced encryption, role-based access controls, and multi-factor authentication to protect your financial data. With data securely stored in the cloud, the risk of unauthorized access through lost or stolen devices is significantly reduced.

The most significant benefit: cloud accounting significantly reduces administrative tasks. Since there’s no need to install software, manage backups, or perform updates, your staff can focus entirely on financial management and accounting, rather than system maintenance.

Automation:

Logix System is undoubtedly the best cloud-based system when it comes to automation. It makes it incredibly easy to automate transactions, payment reminders, and recurring payments. We should not forget the automatic scanning feature that captures data from receipts and converts it into transactions with minimal effort.

Integration with other business applications:

Cloud-based accounting systems like Logix system are designed to integrate seamlessly with other core business applications (without having to leave the system interface). This integration allows businesses to link financial data to processes such as human resources, payroll, inventory management, and more.

In contrast, desktop accounting systems are often not designed to integrate with other applications, resulting in information silos that hinder decision-making across different departments within an organization.

Report Generation:

In traditional, on-premise accounting systems, report generation capabilities are often limited. This necessitates companies to export data into spreadsheets to create custom reports. This process is time-consuming and error-prone. In contrast, cloud accounting systems provide real-time, flexible reporting, allowing businesses to quickly generate custom reports and gain insights into financial performance.

International Accounting:

We were just discussing the growth of your business, right?

As we all know, on-premise accounting systems are designed to handle the accounting for a single entity. But what about businesses that operate across multiple regions or countries, or those looking to expand internationally? This is where cloud accounting systems excel, as they can support the operations of multiple entities and transactions in multiple currencies.

Compliance with Regulations:

Leading cloud accounting systems like Logix help businesses comply with complex regulatory requirements and accounting standards, whether they align with Generally Accepted Accounting Principles (GAAP), International Financial Reporting Standards (IFRS), or specific country tax laws. Cloud systems provide automated tools for generating compliant financial reports.

When new regulations are implemented, we at Logix are quick to automatically update our cloud system, ensuring that businesses using Logix remain compliant without the need to purchase and install costly upgrades.

Tax Readiness:

Tax readiness is one of the most prominent benefits of having a good cloud accounting system. Logix cloud accounting system ensures that you can calculate your tax liabilities, work with multiple tax rates, and generate tax reports to help you comply with the tax rules set by the Zakat, Tax, and Customs Authority.

Overcoming Challenges in Cloud Accounting:

While cloud accounting offers numerous benefits, your organization may encounter challenges while adopting a cloud accounting system. It’s important to be aware of these challenges and develop strategies to overcome them.

Data Migration is a common challenge in cloud accounting. This process involves transferring financial data from existing systems to the cloud accounting system. This may include data cleaning and organization, ensuring accuracy, and mapping data fields.

User Adoption is another challenge. Employees may need to learn how to use the new system and adapt to new processes. Providing comprehensive training and ongoing support can help address this challenge and encourage user adoption.

Technical Issues such as connectivity problems or software compatibility may also arise. Having a dedicated IT support team or working closely with your cloud accounting provider can help resolve these issues and ensure smooth operations.

Addressing Common Concerns:

When transitioning to cloud accounting, businesses may have concerns or reservations. It’s important to address these concerns and provide reassurance to ensure a successful implementation.

Security concerns are a common worry, as businesses may be apprehensive about the safety of their financial data in the cloud. You should emphasize the security measures implemented by cloud providers, such as encryption and access controls, to protect sensitive financial information.

Cost-related concerns are another common worry, as businesses may be concerned about the ongoing costs of cloud accounting software. We’ve highlighted the cost-effectiveness and scalability of cloud accounting, compared to traditional accounting software, to address these concerns.

Technical support is also an important consideration. Ensure that we provide strong technical support and assistance in case any issues arise or questions emerge during the implementation and ongoing use of the software.

Best practices your organization can adopt:

– Establish standardized procedures and implement internal controls. Regularly review and update these processes to ensure they remain effective.

– Develop disaster recovery plans. This includes regular data backups and testing of recovery procedures to ensure you can quickly recover and resume operations in the event of a disruption, such as a data breach or emergency.

– Provide ongoing training. Offer continuous training and support to your team members to ensure they are familiar with the system and its capabilities. This can include regular training sessions, access to educational materials and user guides, and the availability of technical support.

By implementing these solutions and adopting best practices, your organization can overcome challenges and ensure a smooth transition to cloud accounting, maximizing the benefits of our cloud accounting system.

How do you transition from paper-based accounting to a cloud-based accounting system?

Step 1:

Identify opportunities to go paperless:

The best approach to going paperless is to identify processes that are relatively easy and that use a lot of paper. Even if you plan to eventually adopt full digitization, these are the systems you should target first.

Your first step should be to conduct a comprehensive review of your business processes and highlight the most paper-intensive processes that need simplification and that can be easily digitized. For example, electronic invoices are a good starting point. They are easy to set up and help you reduce the frequent use of paper.

Step 2:

Choosing a Cloud-Based Accounting System:

As your business grows, so too will your plans to digitize operations. Considering the size, scope, and future potential of your business is important when determining which system to use to get the most out of cloud accounting.

Cloud accounting technology has truly evolved into a powerful tool.

For example, Logix systems come equipped with features that help you expedite payroll, settle invoices, transfer funds, and provide analytical insights, all within seconds of clicking a few buttons.

If you’re going paperless, you should definitely be looking into these services at the very least. You should also choose a system that can extract key data from documents and merge it with your new system to enable reconciliation and audit trails with just a few clicks.

Step 3:

Employee Education:

Implementing a cloud-based accounting system won’t be beneficial unless your employees are informed about it and trained on how to use it. Your employees are the ones who will have to interact with these systems most of the time; therefore, they should be well-versed in how this technology works. You need to train them, preferably through dedicated workshops.

Step 4:

Implementing Organizational Change:

Once you have finished selecting the right system, or Logix system more specifically, and training your employees, etc., you must then apply the new cloud-based accounting system throughout the entire facility. It’s best to implement this transition gradually. Start by conducting small-scale tests using a small team working on two or three paper-intensive processes. Once these tests yield positive results, you can then move on to applying the system throughout the entire facility.

Step 5:

Disposing of Old Paper Copies:

Storing and managing old copies of data is cumbersome and unnecessary. With cloud accounting software, this data is securely stored in the cloud. Moreover, these copies are likely to lead to increased storage costs. You can either partner with a shredding service to dispose of your documents using a mobile shredding truck or use industrial shredders they may have at a separate shredding facility. You should also obtain an official certificate of destruction after shredding is completed. This certificate includes details such as the time and place of shredding and can also serve as proof of compliance in case of legal disputes.

Step 6:

Ensuring Compliance and Mitigating Risks:

Last but not least, you should focus on ensuring that you follow the guidelines you have set and those required by your government, while simultaneously minimizing risks.

To protect your systems from accidental deletion, damage, system failures, or other unexpected emergencies, you should make sure to regularly back up all your data in the cloud. Backing up your data helps you quickly restore to a normal state.

Maintain a complete view of transactions and changes by choosing a cloud-based accounting system that records the history of document interactions. This helps you create audit trails that ensure accountability and compliance. You should also ensure that you have appropriate file storage and retention policies to protect yourself from lawsuits and liability claims.

Final word:

As businesses increasingly transition to remote and hybrid work environments, cloud-based accounting systems have become the preferred choice over traditional on-premise systems. In addition to providing real-time access to financial data, cloud accounting solutions like Logix offer more advanced features, better security, and greater flexibility to meet the needs of growing organizations. By adopting cloud-based accounting, companies can improve operational efficiency, reduce costs, and gain the insights needed to drive business growth.