The novelty of “the cloud” may be well passed for many businesses. Still, cloud computing has many exciting applications that you may have yet to adapt to your company’s daily operations. One of these is likely utilizing the cloud for your accounting functions. Cloud accounting can be a game changer in regard to much of your accounting, including ASC 606.
How Does It Work?
What is cloud accounting? That’s one question most people ask. To understand that, you must first understand what cloud computing is. Cloud-powered software is provided by the software vendor through the internet instead of being installed locally. This connection is performed via a cloud application provided by the vendor. In this case, all one needs to access the accounting software and relevant data is the cloud application and appropriate credentials. Your accountant, for example, could utilize the software while in the office, at home, at a conference in a foreign country, on the train or even high in the air.
How Is Cloud Accounting Superior to Traditional Accounting Software?
As already mentioned, the portability of the software is far superior to traditional software that had to be installed on a local hard disk. The appropriate people can utilize cloud accounting software nearly anywhere they need to as long as an internet connection is available. Due to this feature of the software, cloud accounting software also lends itself to collaboration. It can allow different personnel from different departments to work together almost seamlessly. This way, serious accounting errors made through a lack of proper communication channels can be avoided.
What Are the Benefits of ASC 606?
One thing you have to be concerned with regarding accounting is ASC 606. This is short for Accounting Standards Codification 606. It was released by FASB, the Financial Accounting Standards Board, in 2014. This creates a framework that can be used to streamline the process of accounting for customer sale revenue. It provides standards for how contracts should work, as well as pricing strategies. As such, it’s very important for any business to implement the same in its accounting functions.
In regards to cloud computing, ASC 606 can have certain benefits when deployed via a cloud platform. For one, conforming to such standards can be completely automated. That way, mistakes are avoided, and human error is removed. Certain programs even implement AI to make automation smarter and less prone to mistakes than would be the case with standard accounting software. This is especially useful in regard to revenue recognition. Without it, many companies are prone to make serious errors that can end up quite costly later down the road.
What Are Other Benefits of Cloud Accounting?
There are also many other benefits to cloud accounting to consider for any small to large-sized business. Of these, the options for automation are some of the most beneficial for removing a lot of the work and complexity from accounting. For example, the creation of both invoices and sales orders can be automated by the software. The data will be automatically entered into the record for safekeeping, where it can be kept for further use, including for accounting purposes. This will all be done in an encrypted and safe manner.
Another benefit of cloud software is that all accounting functions and data retention can be done in real-time. What this means is you’ll have a very good view of the actual current financial health of your business. You won’t have to wait for weeks or months to make adjustments. You’ll have the data you need to make those adjustments immediately. That way, potential future losses can be avoided.
Since automation is used, errors are less likely to become part of your accounting. You’ll have more accurate data across the board. Also, keep in mind that expenses regarding tech support will be slashed as well since the software is not actually installed on your local machines. Instead, the vendor will have to perform that tech support in-house.
Overall, cloud accounting is a game changer in regard to ASC 606 implementation, slashing overhead expenses, increasing flexibility, creating more collaboration opportunities and much more. If you have not implemented it in your business, certainly consider all the benefits you could receive from doing so. It could make a big difference for your accounting department.
