Cloud

What it means

Cloud means the software and the data run on a provider’s servers and you reach them over the internet. Instead of buying a server you pay monthly for the capacity you use - an investment turns into an operating cost.

The split is by how much you run yourself: SaaS is a finished application, PaaS a platform for your own one, IaaS a bare server. Mixing it with your own infrastructure is a hybrid setup.

Cloud does not simply mean a server outside the company. What defines it is that capacity can be added or removed without buying hardware, and you pay for what you use. Classic hosting on a fixed server paid yearly is closer to renting a machine, even though it also runs at the provider. The difference shows under growth: in the cloud capacity is raised in minutes, while a rented machine means moving to a bigger one.

How it works in practice

In accounting the cloud is effectively the default: documents live in cloud storage, the ledger runs in a browser, and client and accountant see the same data without mailing copies back and forth. Legislative updates stop being your problem too.

In the books the monthly fee is a service, not an asset, so nothing is depreciated. A subscription paid a year ahead belongs in accruals and deferrals.

When choosing a cloud service for a client we look mainly at three things: where the data physically sits, whether it can be exported in a usable format at any time, and how access control works for the director, staff and the accountant. For accounting data that also means two-factor authentication at sign-in.

What to watch out for

The cloud does not transfer responsibility for the data. The provider contract has to satisfy GDPR and include a data processing agreement, and you still need your own backup - the provider guarantees service availability, not that nobody deletes a folder by mistake.

Cloud fees creep up quietly: users, storage and add-ons accumulate, and the price rises once the introductory discount ends. Once a year it is worth going through the subscriptions in the books and cancelling unused accounts. Invoices from foreign providers also need checking for VAT self-assessment, which is easily forgotten on small amounts.