By Steven Cohen, Managing Director, Softline Pastel Accounting

Did you know that only 53% of professional accountants would recommend an online accounting product to their SME clients?

This statistic comes from independent research we recently conducted relating to accounting and business solutions for the SME sector. What was interesting for me was that a lack of understanding and experience is one of the main reasons preventing the uptake of cloud-based services.

Accounting in the cloud is exactly the same as the accounting we’re all used to; the core difference relates to where the software application is hosted and where the client’s data is stored. So, when we refer to the cloud, we mean that the accounting program is hosted on the web and not on your computer. It’s the same as your Facebook account where all your information is stored ‘somewhere on the internet’.

Accounting in the cloud will not fundamentally change how the core business process is conducted but it will certainly make it easier for businesses to manage their accounting processes, particularly with an increasingly mobile workforce and the growing number of external corporate consultants. Accounting in the cloud gives accountants and business owners alike the ability to conveniently access records and transact from remote locations with little or no advanced setup.

But working online is about far more than just accessibility; the cloud makes the lives of users considerably easier. It removes the need for manual program installations, and the associated hassles. It also means that users never have to worry about upgrades or backups as the system will automatically be the latest available version that is, by its nature, backed up as information is saved.

So for those willing to embrace accounting in the cloud, the result will be a streamlined book keeping and accounting process across the business that feeds into a central database and minimises the risk of data errors, or worse, losses. The more tangible benefits are felt when new legislation or tax rate adjustments, for example, simply feed into the system without the cost or aggravation of having to buy and install new programs.

Our survey also tells us that security concerns are the other major driving force preventing the uptake of cloud-based services amongst SMEs. I hear this kind of commentary from our clients all the time. And I repeat myself at every opportunity that security concerns shouldn’t deter users from embracing the cloud because service providers in this space probably offer better security than regular IT vendors, leaving your vital business information safer in the cloud than on the local network.

For example, the security for our online accounting solution, Pastel My Business Online is iron clad. It includes physical armed security and restricted access to our data centres. We have firewall and intrusion detection with ongoing system reviews to identify possible weaknesses and new vulnerabilities. We have technologies in place to ensure that if server errors do occur, we can minimise downtime. And we also back up data daily and store that information in two separate locations.

But users remain apprehensive about all of their data and activities taking place in what they consider to be cyber space. So, I’ve started recommending a hybrid approach, where certain applications sit on the actual server while others run in the cloud. This means that users can still feel in control of the majority of their work but can slowly familiarise themselves with the way online services work.

I would suggest that there is one of two ways to split the application locations. The cloud is either for the mundane yet necessary activities that end users spend disproportionate amounts of time getting right on their own or for highly specialised services that require outside expertise. The heart of the system –client and financial data – should sit on your mainframe in the office.