What is cloud accounting? This is part 2 of a 3 part series.
Cloud accounting takes advantage of accounting and finance provided by an entity that is off-site and controlled by someone else. The ultimate cloud accounting is when you give up all control of your accounting and finance department to an outside source.
Think of a yahoo model. You give your cloud accounting address to all the people you want to send you information. The cloud accounting department takes the information, processes it and you login and see only the information you need to see. With yahoo email, you see the email message body and not all the code behind it. You do not see all the servers it passed through or all the filters that were applied and you probably do not care.
No apply that to accounting and finance. You get invoices from vendors. You biggest concern is the total aggregate of your vendor invoices, not the individual invoices. If you say you do, then what do the in-house accounting staff do? I bet the process the invoices and you get a monthly report of Accounts Payable and Vendor Balances. If, as a business owner or CFO or CEO, you are looking at each invoice, then something is wrong in your organization.
Now, cloud accounting uses technology and standard industry best practices to make that a seamless service. Your vendor invoices, client payments, and all other inputs are filtered through a system that ensures that the items are accurate and belong. exceptions are send to a manager who checks them and responds. Your reports are done on time and sent to you so you can make senior level decisions.
Sounds great!!
But so much can go wrong with this scenario. AND so much does go wrong. In part three, I will explain what can go wrong, how to probably choose a cloud accounting provider and how to properly implement (or manage an implementation) of a cloud accounting solution.
