Does your company still operate accounting software hosted over in-house servers or individual desktops? Chances are that your accounting data can fall into the hands of unauthorised personnel. Worse, it could even become inaccessible if the machine storing the data malfunctions.
Legacy accounts management processes keep the teams on a tightrope, balancing between a healthy cash flow and managing supplier relationships. Meeting both avenues is a challenge, especially if you are keeping manual records and paying through cheques. Let’s understand the challenges of traditional accounts payable (AP) systems and the benefits of cloud-based solutions.
Challenges In Accounts Payable Function
- The AP function faces numerous challenges, which leads to revenue loss. Common challenges include:
- Invoices that fall through the cracks
- Inaccurate optical character recognition (OCR) or other extraction technologies
- Pending invoices that don’t receive timely payments
- Coding for non-PO invoices that require institutional knowledge
- Slow processing of paper-based accounting
- Data entry errors or incorrect information
- Wastage of time in investigating unauthorised purchases
- AP frauds
- Payment of invoices before receiving the product or service reducing the company’s liquidity
- Lost invoices and double payments
The Benefits Of Cloud Accounting
According to a study, 87% of IT decision makers believe that on-premise software will see a significant decline by 2025. This includes accounts software that will migrate to the cloud. Here are the benefits of AP automation that will drive this change:
- Costs: A report in Forbes predicts that a migration to the cloud can reduce a company’s costs by up to 90%. In case of cloud, there’s no need to install software on every system and businesses can save the costs of maintaining a server onsite. With cloud, the costs towards version updates, maintenance, system administration, and server failures will become irrelevant.
- Accessibility: By hosting the accounts system and processes on a cloud-based system, your team can access it from anywhere across the globe. There is no need to exchange emails or share large files. People with system access can view or download the information directly from the cloud using laptops, tablets, or mobile phones. This accelerates the overall productivity and puts your business ahead of the competition.
- Security: With cloud-based accounting software, security updates will be the least of the issues faced by businesses. You don’t have to depend on USB sticks and large email attachments to share the data within or outside your company. You can grant access to the people you want to share the information with, while keeping the critical information available only to the core team. This quick and secure method does not render your data vulnerable to USB sticks and keeps the data protected.
- Real-time reporting: With hundreds of built-in reports, one can access data within seconds in a format that is easy to understand. This includes profit-and-loss statements, bank reconciliation, and balance sheets. These reports deliver company’s current financial health with the click of a button.
- Automate payments: According to an electronic payments survey, 42% of companies still pay for goods and services by cheque. The processing of cheques demands time, is prone to fraud, and is costlier to process than electronic payments. Alternatively, you can connect your cloud-based accounting system to the payment application. When a customer pays electronically, the payment is automatically updated in the accounting system, thus saving manual effort at making data entries.
- Efficient backups: With onsite software, companies are responsible for remembering and taking system backups. If the company does not take the backup at a stipulated interval, it puts the data at risk of being lost. Cloud-based accounting systems take the backup periodically, thus reducing the company’s effort.
- System infrastructure: With cloud accounting, you can access best-in-class infrastructure at the data centre that delivers incomparable performance, scale, and security. It is simply not possible to achieve all of these over in-house servers. Hardware and software need periodic updates, without which they become obsolete with time. Maintaining the hardware onsite is highly resource intensive.
- Business continuity: The COVID-19 pandemic taught us the importance of business continuity for any company. Your onsite data could also be prone to fire, floods, and vandalism. Cloud-based accounts system is on a remote server that has backups in different locations. This makes your data immune to any losses and the data remains accessible anytime and anywhere.
- Easy compliance: Extract accurate financial statements for quarterly and annual tax return compliance. This helps companies avoid under-reporting of tax liability that could attract penalties from the revenue department. Cloud-based accounting system ensures compliance with tax liabilities at all levels.
- Reduced paperwork: Traditionally, accounts departments were a pile of paperwork and files. This resulted in slow and inefficient processes. Cloud-based accounting significantly reduces reliance on paperwork. You can shoot emails directly from the system; issue digital invoices, purchase orders, and bills; accelerate the payment process; and eliminate of printing and postage costs.
Accounts payable automation solutions give your business room for innovation. You can free up your human resource and focus on decisions that lead to growth in business.
The Safety Of Cloud-Based Accounting
Since the information is on a remote server, many people may question its security. It is important to address this concern since accounting information is critical for any organisation. Cloud-based accounting uses data encryption and writes the information onto a secure and unbreakable code. This is the same approach that online banking systems use. APOC offers the following range of security features:
- Secure premises
- Security staff
- Regular audit checks
- Automatic data backups
- Restricted networks
- Inbound and outbound encryption
- Multiple user authentication levels and methods
- Anti-malware mechanism
- Automatic software updates
- Customer support staff
Whether you are a growing business or a large organisation, moving to a cloud-based system will increase efficiency and overall financial performance. Accelerate the financial closing process and meet the necessary accounting standards with minimum manual intervention.
Cloud-based systems scale up and customise as per business requirements. This makes it a logical choice for any organisation that seeks to innovate in its financial management.