Overview of Cloud Accounting

Introduction
The Cloud, in technical terms is also known to as Software as a Service (SaaS).It is the currency of the internet's advancement.
Hardware; network, storae, services and software all rolled u! to and delivered via client "rowser anywhere any time on any device.
Cloud com!utin refers to transactions !erformed over the Internet. The !ractice does not re#uire you to install software in
your com!uter or own a server. $ cloud com!utin com!any that sells accountin services !rovides remote servers and the
a!!lications. %or a fee, there is online access for manain and maintainin financial record of the client com!any.
Cloud accounting, also referred to as &online accounting', serves the same function as accounting software that would
install "e on the enter!rise (client)own com!uter, e(ce!t it runs on another enter!rise servers (host)and can "e accessed usin your
we" "rowser, over the Internet. Client data is securely stored and !rocessed on the host servers)or &in the cloud'.
*uyin or "uildin a successful "usiness is !remise on credi"le and effective manaement. This is "ecause of the synery or
the maic wand it hold to create unimaina"le and !erha!s un"elieva"le transformation and fortune "eyond anyone wildest dream.
+ot even the e(tent or measure of the "readth of vision and crystal "all.
Cloud accountin is indirectly outsourcin su!!ort functions, !rocesses, activities e(ce!t that the functions or transactions
resultin in cloudin com!utin or accountin may not have "een carried out or e(ecuted "y the client enter!rise. It is to em!hasi,e
that cloud accountin or com!utin a!!ly to every "usiness ty!e, nature and si,e .The drivin force "ehind cloud com!utin is "eyond
immediate "enefit of cost savin.
Relevance of cloud computing/Accounting in the 21
st
Century Business
-rani,ations are startin to focus on achievin the transformational "enefits of cloud rather than sim!ly focusin on the cost
efficiencies, accordin to the ./01 1lo"al cloud survey2 the im!lementation challene under the title &cloud takes sha!e'.
Small "usiness owners and other emerin or rowin "usinesses in the rane of small3medium si,e may not have to
!urchase e(!ensive "usiness accountin software !rorams or s!end hours lost in com!licated re!orts. $ny accountin software will
!rovide the "asic a!!lications for accountin tasks, "ut !ackaes desined for small office owners and manaer tend to sim!lify the
!rocess and !rovide essentials that include a eneral leder, the ca!a"ility to create detailed invoices or view "usiness inventory and
!urchase history.
Studies conducted to assess the relevance of cloud com!utin shows that when asked a"out the o"4ectives orani,ations
e(!ect to ain from cloud, two of the to! three o"4ectives identified "y "usiness e(ecutives were o!!ortunities for cloud to enhance
new market entry and drive "usiness !rocess transformation. *oth are key ena"lers of reater "usiness effectiveness.
The transformative value of cloud
5ick 6riht, ./017s 1lo"al Cloud 8na"lement /roram 9eader, notes that achievin these transformative "enefits will
re#uire e(ecutives to !lace a stron em!hasis on understandin cloud7s strateic !otential and incor!oratin that into not only the
overall "usiness strateies, "ut also the cloud investment !lans and technoloy architecture roadma!s. $nd while cost reduction is still
a key motivator and was cited "y almost half (:; !ercent) of all survey res!ondents, the re!ort indicates that cost reduction is
"ecomin the "ase level "enefit souht from cloud. 6riht further stressed that &Cloud is much more than 4ust another IT cost
reduction lever.'
Cloud accountin services ty!ically software stored and accessed online is an attractive o!tion for small "usiness owners.
6hen usin cloud accountin software, IT tasks such as version u!rades and data "acku! are manaed "y the a!!lication vendor.
CIO.com specifically looked for applications designed to meet both the budget and the needs of a typical small
office or small business. Five cloud accounting service options available cost $20 or less per month and are easy to use
even for small business oners ith little or no e!perience ith accounting tasks. "hey includes
Fresh#ooks is a simple cloud accounting application designed to help small business oners to get organi$ed and get
paid. %ince it&s a hosted accounting service' you can access your business data everyhereon a mobile device or
desktop computerand your data is secure and backed up for you.
Fresh#ooks features options for online payments' e!pense tracking' time(tracking and accounting reports and ta!es.
)ighlights include customi$ing invoices' sending late payment reminders' automatic and recurring(e!pense tracking'
managing different rates for multiple pro*ects and profit+loss reports.
%mall business oners ill appreciate Fresh#ooks& guided step(by(step i$ard and help bo!es that appear each time you
perform a ne task' such as create a ne invoice or add a ne client to your records. ,s you familiari$e yourself ith
Fresh#ooks' you can turn these helpful tips off.
The FreshBooks Help boxes guide you through the process of configuring accounts and records.
Fresh#ooks is free for -0 days' ith the basic business plan starting at $././0 per month. "here&s also an add(on store
here you&ll find third(party applications to add ne features and functionality to Fresh#ooks. %ome apps are freesuch
as the Constant Contact 1!port and the Fresh#ooks Connector for %age 2eachtree 3no knon as %age 004hile
others are available on a monthly subscription basis.
QuickBooks Online Simple Start: !ood "alue for Small Businesses
QuickBooks Online Simple Start makes creating in#oices and do$nloading bank transactions% $ell% simple.
"oday' 5uick#ooks is synonymous ith small business accounting. 6hile a number of standalone and hosted versions
are available' 5uick#ooks Online %imple %tart is a good value for small office accounting needs.
"he online version is $.2./0 per month and includes a -0(day free trial. "his softare makes it easy to create invoices'
track sales and e!penses' donload banking transactions and access business data on any mobile device. Other handy
features in Online %imple %tart include check printing and e!porting data to 7icrosoft 1!cel.
If you need a little more functionality than 5uick#ooks Online provides' there are a fe add(ons. "hese include the
82ayroll #undle8 to pay your employees and a merchant service app to accept debit' credit cards and checks in
5uick#ooks Online.
&ashoo: 'rofessional (n#oices% Simple )ashboards
9ashoo is another cloud accounting service orth a look. It&s a simple accounting app for small businesses offering
anytime access from an i2ad or 6eb broser.
Features for the small business include connecting to online bank accounts and credit cards' professional invoices' simple
dashboards and options to categori$e income and e!penses specifically for ta! reporting. In addition' you can easily share
your business data ith your accountant online. Finally' 9ashoo boasts secure' double(entry accounting for bank
reconciliation and financial statements.
9ashoo is priced at $.: per month. , free version is available; hoever' users are limited to 20 transactions each month
Outright: Online ccounting for *commerce Businesses
Outright is an easy(to(use cloud accounting system that lets small business ecommerce oners organi$e and keep track
of sales and finances in one place. ,t a glance' you can see here money is going' vie profit+loss statements and see
ho your customers are.
1!isting accounts such as banks' credit cards' 2aypal' e#ay' on 6eb store or Fresh#ooks can be linked to Outright' as
ell as import e!isting transaction history. From then on' Outright donloads ne data each day for the business.
,nother useful feature< Outright organi$es all of your data into I=%(approved ta! categories' potentially loering the
orkload and headache level at ta! time.
%mall business oners on the go ill appreciate the Outright i2hone app; ith the mobile app' you can stay on top of your
business and enter travel e!penses and mileage from the road.
Outright offers a free account' but small businesses are more likely to use the 2lus version 3$/./0 per month4' hich
offers more features than the free version.
+ero: Share ,our Business -umbers Online
.ith +ero% you can customi/e reports and templates to fit your small business needs.
6ith >ero online accounting' you can share access to the latest numbers and check cash flo in real(time. Once loaded'
>ero offers a dashboard to ?uickly vie your bank balances' invoices' bills and e!pense claims. "here&s also an
interactive graph to sho money going in and out; you can also monitor specific data accounts from the dashboard.
One standout feature in >ero is the capability to collaborate online so small business employees can ork as a team on
financials. @ou can share your data and collaborate ith your accountant and bookkeeper to get the advice you need.
>ero lets you invite an unlimited number of people for free; you control hat each person can see.
"he invoicing system lets you customi$e invoices and connect ith your customers through online invoicing. "here are
also options to create repeating invoices and schedule bill payments' and all payments' returns and credits are tracked
automatically.
2ricing for >ero starts at $./ per month. 7obile apps for ,pple' ,ndroid and #lackberry are available. "hird(party add(ons
can e!pand >ero functionality by incorporating C=7' inventory management' invoicing' *ob systems and other speciali$ed
business tasks.
6ave
CloudAs ability to support %oftare(as(a(%ervice has loered the barrier of entry for ne players like Bet%uite' 6orkday'
=ev%tream' =ev2ro and Cuora as ell as the traditional players like Oracle and %,2 that are looking to enhance their
e!isting platforms. "ypical 6ave includes
Customer =elationship 7anagement 3C=74 and Collaboration platforms ere the first ave of %aa% solutions. Driven by
sales' this as on the periphery and not a core process area.
"he second ave focused on )uman Capital 7anagement 3)C74 has driven %aa% deeper into the enterprise impacting
all employees and core business process areas. "hese solutions have been established and are no commonplace in
many large organi$ations.
"he third ave ill see %aa% moving even further into core business process areas in Finance. "his natural progression
includes point solutions ithin finance for functions such as revenue recognition and subscription billing as ell as core
finance processes including record(to(report and procure(to(pay.
0onsider the checklist belo$ as you determine the right solution for your organi/ation.
Thorouhly understand the client "usiness (nature, model and cycle), industry, o!eratin !rocess, risk manaement !lans and
!roram (risk analysis, risk assessment and mitiation !lans), reulatory framework, "est "usiness !ractice and other stakeholders
re#uirements as well dynamic and ro"ust arranement to meet continency of contem!orary !lacin of thins
Conce!tuali,e the "usiness accountin system, internal systems of controls and key !erformance indicators as well as the
milestone em!hasi,in S6-T analysis (strenth, weakness, o!!ortunity and threat) around clearly understood "usiness dynamics,
com!onents, features, cost centres, investment units, revenue3earnins, !rofita"ility, survival and rowth.
Structure the $ccountin system, !rocess and outcome around the orani,ational staes of develo!ment, !roduct<service life
cycle, availa"le resources and creatin fle(i"ility for learnin o!!ortunity, rowth and develo!ment.
Chart of accounts to su!!ort accountin system, reference documentation and system notes (includin flow chart and loic
+otes), accountin manual, !erformance o!eration criteria and other functional !arameters in measura"le monetary terms.
Chart of accounts num"er rane for assets, lia"ilities, shareholders<owners e#uity, income, e(!enses, and net income as well as
Transfer to owners e#uity (reserve) are well understood and clearly identified with the transaction and account "alances, sim!lify
classifications, a!!ro!riately linked to references for ade#uate descri!tion and notes includin attachments, notes and codes to su!!ort
source documents, 4ournals and eneral leder !rovidin audit trail to the financial statement, enhances trans!arency, with im!roved
!resentation and disclosure com!liance. %or e(am!le code num"er =3=>>,3?@@3?>>,A@@3A>>,:@@3:>>,B@@3B>> and C@@3C>> could "e
re!resented or identified with transactions and accounts "alances if any for assets,9ia"ilities, shareholders<owners e#uity, income,
e(!enses, and net income as well as Transfer to owner7s e#uity
$ssess your current o!eratin model to "aseline costs, !rocesses and staff to identify o!!ortunities for im!rovement
= 8valuate your current 85/ a!!lication !ortfolio to understand what systems are in the !ortfolio, how they su!!ort your current
model and the costs and com!le(ity of kee!in these systems alined with the strateic direction of finance
? Define your future state o!eratin model
A 8valuate SaaS solutions to su!!ort this model, "oth all3in 85/ solutions or a "est3of3"reed a!!roach
: Develo! a "usiness case and facilitate the vendor selection !rocess (e.., 5%/s)
B /rovide a SaaS readiness assessment as well as an 85/ u!rade assessment)definin re#uirements and customi,in
accordinly may create undo com!le(ity
C Enderstand the roadma! of future releases and esta"lish a !ro4ect readiness !lay"ook
F 8sta"lish a ro"ust !ro4ect overnance structure to manae releases
; 8sta"lish a chane manaement framework and tools that ena"le effective colla"oration with %inance7s internal and e(ternal
customers
> $dhere to stron overnance, which includes services manaement, decision and authority rihts, and o!eratin structure
=@ /ractice stron vendor manaement, not 4ust throuh !rocurement, "ut as !art of the onoin "usiness !ractices
=eferences
5 Top Picks for Small Business Cloud-Based Accounting
A small business doesn't need expensive software to manage a general ledger and basic business
accounting tasks. Here's a look at fve reasonably priced cloud services.
#y Eangie #eal
.ed% February 12% 1345
http<++.cio.com+article+F2/-G0+0H"opH2icksHforH%mallH#usinessHCloudH#asedH,ccounting
Cloud(enabled transformation from the
people ho kno your business http<++.kpmg.com+ I%+en+services+,dvisory+management(consulting+
2ages+default.asp! or contact 9eith 7attioli at kmattioliJkpmg.com or Calvin Kiu at cliuJkpmg.com.
http<++smallbusiness.chron.com+cloud(accounting(--//0.html
Setting expectations
Organizations are starting to focus on achieving the transformational benefits of cloud rather than simply
focusing on the cost efficiencies, according to the cloud takes shape.
Indeed, when asked about the objectives that their organizations expect to gain from cloud, two of the top
three objectives identified by business executives were opportunities for cloud to enhance new market
entry and drive business process transformation. oth are key enablers of greater business effectiveness.
! Rick Wright, "#$% in the &S
Virtual Accountants
A cloud accounting company eliminates the need for you to hire an accountant or bookkeeper. It also
provides the computer program for you to generate your own fnancial reports. The Internet service acts as
your virtual fnance manager, categorizing your fnancial transactions according to generally accepted
accounting practices.
Cloud vs. Traditional Accounting
Cloud accounting frms follow the same fnancial standards as traditional accountants. The tools are
dierent, but the policies they abide by are the same. The standards are created by the !inancial
Accounting "tandards #oard, which establishes how private companies prepare their fnancial reports. The
"ecurities and $%change Commission governs the accounting practices of public entities, but it has
historically based its policies on the accounting model the private sector provides.
Cloud Accounting Advantages
Cloud accounting re&uires few overhead e%penses from the user's end. A computer and Internet
connection are the only can't(do(without investment. #esides, your virtual accountant is open for you to
input new information or generate a report any time of day, while a )esh(and(bones accountant has
limited work hours. *epending on how often you access your cloud accounting service, your subscription
may cost less than what a professional would charge for the same availability.
Considerations
In April +,--, the online merchant Amazon, which also provides cloud service to a number of companies,
went o.ine. The outage left a number of companies that rely on Amazon's $ast Coast server for their
operations unable to conduct business. A server is the brain of a computer network, facilitating
communication to and by all its members. /hen Amazon's brain failed, the companies linked to it could no
longer receive or send information. 0our business becomes vulnerable to the same e%perience when it
outsources its accounting to a cloud computing company. As technology writer "tephen "hankland says on
C1$T, your decision whether to use cloud computing should be based not only on the losses you'd suer if
the system failed but also on how its 2reliability, e%pense and adaptability3 to your needs would oset
those losses in the long run.
What is 'the Cloud'?
"he Cloud' hich in technical terms is often referred to as %oftare as a %ervice 3%aa%4' is the ne!t stage of the internet&s
advancement. It&s the hardare; netork' storage' services and softare all rolled up to and delivered via your broser
anyhere any time on any device.
Over the past fe years' cloud computing has emerged as an increasingly poerful tool in the information technology
toolkit. 6hile many organi$ations find that it makes them more agile and trims costs' ultimately it&s like the supply and
generation of electricity. @ou use electricity' and you pay for as much as you use in a month. Bo one in the modern age
maintains their on generators' you don&t ant to buy the hole infrastructure of electricity production and generation'
and you *ust ant the supply.
Bo' think of your I" resources as that. , utility your firm needs to function' not one you ant to maintain.
There are many ene!ts of mo"ing to the Cloud#
Anytime, Anywhere Access
@ou are alays connected to your firm and your staff' even on the goL "he Cloud lets you login and plan' revie
performance or ork herever you are' on hichever device you have available at the time ( hether that&s your laptop'
i2hone' i2ad or other mobile device.
4aintenance free5
)o many times have you orried about the rising maintenance cost of your I" hardare' softare updates and bugsM
6ith a Cloud based system' bid fareell to I" consultants ho come in to fi! your broken systems and bring your firm to a
standstill for a day. 6ith the cloud upgrades happen in the background ithout disrupting any business activities' and far
more regularly than ever before.
6educe Costs
"he greatest value of the Cloud for the accounting firm lies in the fact that you can free up capital that&s sitting locked into
e!pensive and depreciating I" assets like servers and storage systems. 6ith the Cloud' you don&t need to buy a server
ever again. @ou pay only for hat you need and nothing for hat you don&t. @our I" e!penses are more predictable and
under control' giving you peace of mind and alloing you to focus on running your firm. 6hat&s more' as your firm
flourishes and gros' your cloud based system gros ith you' ithout the need to ac?uire more hardare.
Always at the cutting edge
In the previous era of accounting softare' you had to ait for ne softare releases to benefit from any improvements to
the system' and even then' you often incurred additional costs and comple!ities associated ith upgrading the system'
often making the hole process ?uite impractical. , Cloud based system is auto(updated; so you&re alays running the
latest versionL
6eliability
6hen disaster strikes' the only firm that&s still up and running is one that has its I" systems and softare on the Cloud.
"he security layers in the Cloud mean three things for your data N backup' backup and backup. 6hether it&s an
unforeseen natural event or a hard disk crash' ith $ero I" dontime' the Cloud offers the robustness of operations
accounting firms of tomorro need.
"eamless integration with other applications
Online softare orks flalessly ith other softare applications that are important to your business. It is alays in sync
ith your clients& %71 accounting packages' payroll systems' online ta! services and moreO
Increased e7ciency
In the ne age of online accounting softare' e!pect $ero dontime for your I" systems' increased staff productivity and
collaboration. @ou ill discover integrated tools such as intuitive document management solutions' eb management tools
and more' that help you streamline processes and make yours' a truly modern practice.
Cloud Computing ( A matter of survival for the accounting industry8
http9::www.cchifrm.com:why;ifrm:cloud(computing(and(the(accounting(industry
0loud accounting' also referred to as Ponline accountingQ' serves the same function as accounting softare that you
ould install on your computer' e!cept it runs on our servers and you access it using your eb broser' over the Internet.
@our data is securely stored and processed on our serversor Pin the cloudQ.
Cloud computing refers to transactions performed over the Internet. The practice does not re&uire you to
install software in your computer or own a server. A cloud computing company that sells accounting
services provides remote servers and the applications. !or a fee, they grant you online access to them for
managing and maintaining your fnancial records.