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Financial Accounting, Finance & Compliance Services via Cloud Computing – The future of Financial Accounting & Finance Functions

Preamble

The rapid of globalization & advancement in technology which led to rise in internet-based applications, leading to emergence of a new concept of virtual cloud-based accounting. Financial Accounting which is an essential component of the framework that sustains any enterprise’s activity. The article focuses on throwing light on the concept of virtual cloud computing, cloud accounting, concept of outsourcing the Financial accounting services, finance & compliance service, its benefits & on-going trend.

Overview

As most of the Small & Medium Businesses are either trying to establish a finance department to meet the future needs of accounting, compliance & finance functions. It is clear that Cloud Computing is where the profession is heading; in fact one can argue that it’s where the profession is!!

Accounting & Finance function is a critical &a time consuming responsibility, further it is a specialized function which is very crucial for the long-term success of the business.

Technology is revolutionizing how accounting; compliance & finance functions are being carried out. The Cloud is a platform to make data & software accessible online anytime, anywhere, from almost any device having an internet connection. The major driver of this change is cloud computing which is enabling enterprises to have access to offshore accounting services via the internet, rather than developing an in-house Accounting & Finance team since for most Small & Medium businesses maintaining up-to-date bookkeeping is probably the most important part of daily routine & establishing an Accounting & Finance team buying appropriate accounting software is costly affair.

Cloud computing has been around since the mid 90’s however commercial implementation of cloud computing did not start off until Amazon created its web services division (AWS) in 2006 & Microsoft released its Azure platform in 2010. The concept of ‘cloud accounting’ became popular after it was first put forward by Ping & Xuefeng in 2011. Cloud Accounting has been defined by cloud computing on the internet to build a virtual accounting information system i.e., cloud computing plus accounting equals cloud accounting.

Globalization & the increasing development of technology & advent advanced cloud-based technologies allow enterprises to hugely benefit from outsourcing the entire accounting & finance function. Further increased complexity of the business environment, along with the continuous need for global accounting standards & practices has further accelerated the outsourcing trend.

Gartner, a leading research company, designated Cloud Computing as the number one trend that will change the face of business.

Cloud Computing

Cloud Computing

Cloud Computing is the delivery of different services on-demand through the internet, whereas Cloud accounting, is accounting that is executed using software that is based remotely on the cloud. Cloud accounting enables accounting efficiency to every business enterprise in a new generation similar to SAAS (Software As A Service) tools of the business model.

In Cloud Computing, the Users access the software applications (i.e., cloud accounting or online accounting) remotely without any wired connectivity through the Internet or other network via a cloud application service provider. Using cloud computing accounting software frees the business from installation & maintains various software on each desktop computer. It also allows or permits staff in remote or several branch offices to see & access the same original data & on the same version of the same software.

Thus, with the advent of Cloud Computing has enabled to provide Financial accounting services; remotely & on demand on a SaaS model i.e., pay as per use model.This has enabled the companies to purchase the use of specialized accounting software rather than purchase of expensive software itself.

Cloud Accounting solutions are transforming the way that accounting applications are used & they are modernizing the entire business environment.

Reasons for Using Outsourced Virtual Bookkeeper

Why You Should Outsource Bookkeeping
  • Focus on their Core Business: Businesses are realizing that running a finance & accounting department is not their core competency & these activities are specialized in nature & would require considerable attention from the owners eventually leading to reducing focus in their core business activities.
  • Reduced Capital Expenditures: Accounting software requires large capital investments, which can be minimized or eliminated altogether by outsourcing the bookkeeping & finance functions.
  • Access from Anywhere: One of the most important features of Outsourced Virtual Accounting & Finance is the ability to access critical business information such as Account Receivables, Account Payable, Costing information, Pricing information etc., from anywhere with the help of internet services.
  • Reduced Payroll Costs: Hiring experienced & competent accounting & finance professional would involve considerable employee costs, outsourcing the activity to specialized outsourced firms would enable the enterprises to reduce payroll costs.
  • Real Time Updating of Key Financial Information: Outsourced Virtual Bookkeeper enables the businesses to have access to real time key financial & business information, enabling the quicker & efficient decision making.
  • Automatic Data Back-Up of Financial Information: Various laws require retention of financial records for specified number of years, which can be costly affairs, with outsourced virtual bookkeeping, the outsourced firm would take responsibility of retention of data & also reduce the risk of data loss.
  • On Demand Expertise: Having access to a deep bench of accounting experts gives a client access to all the resources they could ever need to answer any question or meet any deadline.

Hidden Costs of Doing Your Own Bookkeeping

Hidden Costs
  • Compliance Cost: Managing your own accounting & finance activities may expose the organization to compliance costs due to human error & mistakes. Compliance Cost may amount to significant portion of the total cost mainly due to the dynamic nature of the various laws requiring the organizations to comply with various laws, which require numerous filings.
  • Missing Important Deadlines: It may expose the organizations, to miss various important deadlines, leading to considerable fines & litigations.
  • Missing to avail various Deductions: Accounting & Finance function is a highly specialized field requiring experienced & highly skilled & updated personnel’s, however managing own accounting & finance department may lead to businesses missing to avail these deductions, schemes etc., eventually may lead to failure of the organization.

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