Digital Transformation Of Accounting: The Role Of Cloud-Based Accounting Systems In Small And Medium Enterprises

The rapid evolution of digital technology has fundamentally reshaped how businesses manage their financial records and reporting processes. This paper examines the digital transformation of accounting practices, with a specific focus on the adoption of cloud-based accounting systems among Small and Medium Enterprises (SMEs) in India. Drawing on a review of existing literature and conceptual analysis, this study explores the key drivers, benefits, challenges, and future implications of transitioning from traditional manual accounting to cloud-enabled digital platforms. The findings indicate that cloud-based accounting systems offer significant advantages including real-time financial reporting, cost efficiency, improved data security, and enhanced regulatory compliance. However, SMEs face barriers such as limited technical literacy, infrastructure constraints, and data privacy concerns. The paper concludes that a phased, well-supported transition strategy is essential for SMEs to harness the full potential of digital accounting transformation.