Cloud Accounting; The new trend for Ghanaian businesses

Accounting has seen consistent transformation in its presentations and practices, there has been tremendous growth and improvement from the days of bookkeeping to the current framework; this confirms the great strides the practice has seen, and all these changes were necessitated by the economic transitions at the time. When economies graduated from the closed and traditional scale of production to commercial and industrialized economics, there was the need for accounting systems to upgrade to meet the rising demand for better practices.

The rapid industrial expansions called for sophisticated and high rated inventions to man these rising challenges of the time. The prominent changes from book keeping to accounting standards have changed the nature and essence of accounting. Professional Accounting bodies were established and Accounting Standards propounded to enhance presentation and understanding. Cloud accounting is the provision of accounting services over the internet which can be accessed online from every location at all times. It is also called online accounting or cloud financials.

In recent few years, technology has seen significant advancements to the extent that all business activities are conducted electronically instead of the traditional mediums. The world of ICT has taken absolute control over the business world; it therefore calls for some alterations in the way business modules are run. Since ICT is making the world a virtual economy, Ghanaian businesses must adapt to these unstable technological environments so as to stay relevant in these times of fleeting and ever-changing technological inventions.

The new phase of technology is the convergence of rapid connectivity and digitalization which links billions of individuals, businesses and systems, creating the need for readily accessible data. As Ghana moves to digital and paper-less economy, the accounting profession must also evolve in accordance with the realities of the Ghanaian business environment.

In an era where businesses emerge and disappear within the shortest time possible, cloud accounting remains a very predictable tool to put businesses in check. Since this service provides information on the financial standing of businesses to their stakeholders on-real time basis, investors would know how to make portfolio decisions.

This is the new way businesses can connect with their clients and owners; here data is presented on business’ online cloud platform to be accessed by clients on-the-go. Business owners and customers need information to make decisions on regular basis, it is not financially prudent that investors can only make decisions on periodic basis or only when they are invited to, so far as data needed for decision making becomes available, investors should be able to look into these variables affecting their stakes in businesses and switch where necessary. Decision making is very critical in investment and the tastes for investing are the balances in the books.

The desire to increase, decrease or maintain the level of investment all depends on the financial performance of businesses; investor decision is a daily activity and so businesses must adopt the medium to routinely supply stakeholders with data to aid in daily decision making. Ghanaian businesses must move from annual statement of affairs to a real time statement of affairs to aid owners and investors make decisions as and when needed instead of waiting till the end of the accounting year.

Businesses with proper accounting systems know their flows over a period of hours and such information can be made available to owners and investors, this is the best means of measuring the performance of management since it measures the gearing over the course of business activities than waiting to lump everything together at the end of the year, where owners find it difficult to know the flows over the first few months of operations.

What it means is that businesses may not be performing at certain seasons of the year but because accounts are prepared in lump amounts, investors find it difficult to detect the real position of their businesses and how their capital is been managed. Cloud accounting is one of the best means to ensure business efficiency with the owner’s interest at premium. Financial statements must therefore be made available in dailies not in years.

With Ghana signing on to the African Continental Free Trade Agreement, the implication is that Ghanaian businesses will be transacting owner’s equity outside the country. Therefore it is safer for the investor to know the outcome of his investment on frequent basis than on yearly basis. This is more crucial because managers can mismanage resources in the course of business and cook figures to deceive owners at the end of the year but if accounts are presented on-the-go, and investors are furnished with these data, it becomes very safe for owners to know how their stocks are trading in foreign countries.

Businesses have the duty to public accountability and this should be on real time. Cloud Accounting would have saved the Ghanaian economy the losses suffered as a result of the defunct banks in 2018. Stakeholders would have known the performance of their banks over say a month and be comparing them over periods of months, and that would have been good indication enough to ward off further investments in such ventures.

The explosion in the use of internet over a few decades has made cloud accounting a must for businesses. The rise in multimedia and collaborative software has made information processing and transmission very easy and affordable and Ghanaian businesses are no exception. With the easy access to internet, the information base of users has increased and people spend more time online than any other venue, so meeting customers where they spend their time is the best means to profitability.

The rise in the taste for social media and easy access to information for daily economic decisions has made cloud accounting a better option for Ghanaian businesses to increase performance. The new generation of smart mobile devices has encouraged the use of cloud services, the taste for interactive technologies is increasing at an alarming rate and businesses need to tap into this domain, alter their operations to increase customer base.

A research by GSMA in 2019 revealed that over 55% of Ghanaians use smart technologies and so adapting cloud services to meet customer needs is a rightful decision at the right timing and profits of local businesses are expected to shoot up if they take advantage of these new developments.

Moreover, the increased cost of installing traditional accounting software like up-front investment and routine maintenance expenses are reduced since cloud services are operated on pay-as-you-go-model or by monthly subscriptions based on consumption. With cloud accounting, there are no software or hardware licenses to purchase, this service allows businesses to run their internal processes and operations using the same IT systems employed by large companies or competitors and only pay a monthly subscription.

By adopting the cloud services, there is no hardware to repair since there is no need to install applications on any local computer; applications are accessed over the internet. Users do not buy accounting applications but only pay for accessing the platform. Cost and time are heavy drains on profitability; hence expenses and time spent on printing notices for Annual General Meeting would be reduced since stakeholders would have known the state of affairs over the period of call.

Cloud services are available 24/7 and this enhances output and productivity. Workers will not be limited to only office hours but can access the platform at all times to work on their schedules, the issue of machine breakdown and theft is also minimized. The investor is able to check their stock values online and customers are able to access their bank balance over the internet at a go, this increases efficiency and effectiveness and the overall output increases. Even in cases of machine breakdown, client data is not lost since they are saved in the cloud and protected under strict security encryptions and protocols.

Customer sovereignty is of prior significance in today’s world, businesses are striving to serve customers well in order to win loyalty. Today’s clientele wants to be served in a unique way, every customer wants customized business services and cloud accounting is an avenue to meet this demand perfectly. Customers receive personalized services from the cloud platforms based on their individual needs and this helps to strengthen customer loyalty. Adopting cloud accounting by Ghanaian businesses will help provide customers with relevant data and give them access to on-the-go services. Clients can make withdrawals and payments effortlessly and get online access to other services without physically walking to business premises to join queues.

As in the case of every new invention and technology, cloud accounting is confronted with skepticisms and criticisms. Some professionals are of the view that technology has a lot of interruptions and disruptions and so performing transactions manually is the best means to solving problems than handling them in a medium one has no control. There is high degree of fear, thus fear of the unknown. Most Ghanaian businesses lack knowledge and information on the use and benefits of integrating cloud services in their operations and as such businesses would need routine on-the-job training and career developments to help optimize workflow.

There is also the fear of loss of control over data, there is the notion that cloud service providers may temper with client information. To mitigate this challenge, local businesses are therefore to negotiate on the terms and conditions of the engagement, a well understood and thought through negotiations will ensure maximum safety of client information.

It is obvious any novel technology comes along with its shortcomings and challenges but proper organizational structures will help minimize these risks. Internet hitches and interruptions are possible challenges preventing local businesses from graduating unto this more interactive platform, but as Ghana tries to scale her connectivity and internet services, these problems would be a thing of the past.

Companies can also patronize internet services from a more reliable internet provider and this will help do away with inter-connectivity problems. Ghanaian businesses must therefore pay attention to ensuring overall efficiency to help reduce the costs and risks of cloud services.

In conclusion, cloud accounting is the new way to ensuring organizational effectiveness and efficiency, and Ghanaian businesses should be receptive and embrace this avenue to build resilience. This is a paradigm shift in business operations to salvage local businesses and improve overall performance ratios, hence local businesses must shift from old fashioned services to a more proactive cloud service.