Even in 21st century, there are businesses, particularly in Africa, that still operate without keeping books of accounts – even when others are already doing cloud accounting. These businesses mostly fall in the cadre of micro and small enterprises that we Kenyans normally term as either mama mboga or hawkers. And this is what differentiate us Africans from the rest of the world. It is the single most important aspect of our culture that makes us always lie at the bottom of progress ladder. We hate keeping records.
In 21st century everyone running a business ought to be able to keep records, most importantly, financial records. It shouldn’t matter how small your business is. It shouldn’t matter the revenues you get per day, or year. What should matter is whether or not you keep records.
Agreed, keeping records could be tedious, especially when you have to keep them in the old paper books. Errors, reconciliations, and necessary skills are challenges. And that’s why in the era of computers and smartphones, applications meant to aid you in keeping your financial records have been made. A hawker today with a smartphone can keep track of her stock so easily. Mama mboga can know in a tap her business’ financial standing.
If record keeping is important for the micro and small businesses, how important is it for an SME and big enterprises? The challenge however is that most of the SMEs still keep their books either on paper or in programmes installed in office computers. Paper accounting has so many problems that I wouldn’t want to get into right now, so let’s focus on the problems that come with keeping accounting books in computer programs installed in office computers.
The most obvious problem is that one will need to install a software in at least one computer; which often times require an IT specialist. The software also don’t come in cheap, require constant updates as new versions get released almost every year, and require prompt support in case the software develops hitches. Most importantly, the data will need to be backed up in some external devices as computers are prone to crashes.
The solution to these is cloud accounting; and in the last few years many companies have been migrating their accounting activities to the cloud. Here is why:
The first reason is obviously to address all those problems associated with keeping records in your own computers and hard drives. When you migrate to cloud accounting, or any type of cloud computing, you will no longer be required to install any software or worry about hard disk storage capacity. Backup worries also reduces significantly as most cloud solutions offer automatic backup in several servers that they maintain.
The second advantage of cloud accounting is the flexibility of access. With office based bookkeeping, your accounting (which might be you) must always be in office to perform data entry, reports generation, and reviews. Cloud accounting on the other hand assures you of access at any time from anywhere as long as you have Internet Access.
The fact that cloud accounting allows access from anywhere means collaboration is also very efficient. Several accountants can be given access to different aspects of the accounts for data entry, reports generation, and authorization of transactions, and in this way the financial status of the business can always be up to date at any given time of the day or month. Actually a number of cloud accounting solutions like SAGE can allow auto reconciliation between a business’ online bank account and the cloud application; meaning all bank transactions can always be auto captured in the cloud accounting.
Lastly and probably the most important advantage of cloud accounting is the ability for most cloud accounting solutions, SAGE Cloud Accounting included, to be up to date with the legislative framework in the territories they operate. This makes it so easy to file returns whenever they are due as one can put reminders, or allow auto filing whenever necessary.
The advantages of cloud accounting doesn’t mean there are no drawbacks. One significant drawback is that migrating to a cloud accounting solution might be tedious and slow. SAGE Accounting has however made such migrations seamless and easy. The next drawback is that the solutions come with monthly or annual subscription options as opposed to one time purchase of an accounting software for offline based accounting operations.
Lastly and this shouldn’t be a problem with SAGE Cloud Accounting, is the worry that you will be giving your accounting information to a third party. Privacy and secrecy issues become a matter of concern especially in instances you’d be dealing with unknown or unverified providers of the cloud services. SAGE on the other hand has been in the accounting business for years and being one of the leaders globally, there won’t be a reason to worry about the safety of data provided for their keeping. SAGE data storage is encrypted so even if on the unlikely event that they are hacked, no one will be able to understand the data you have stored in SAGE servers. You just need to be careful not to be hacked.