Cloud Accounting or Traditional Accounting – Why Cloud is Better for Small Businesses
Regardless of what type of business you run or the size of it, accounting and paper work are essential components. Over the years accounting software has advanced even further, and now business owners are faced with oodles of options to meet the individual needs of their own profession.
Tracking expenses, invoicing applications, bookkeeping and accounting is tedious – no matter how good you are at the math and organizational side of things. But, if you don’t stay on top of it or make it a priority, it doesn’t take long before your business becomes a hectic mess or worse – and funds are lost or unaccounted for.
With the emergence of cloud accounting solutions creating huge media fanfare in the last 3 years, traditional accounting software has been forced to improve their programs and fight for its place in the business world. Despite cloud accounting’s success though, business owners are still juggling with the concept of which software is right for their business. We delve into the two and uncover why cloud accounting software is the hottest thing for business owners right now, and why it’s the best solution for you.
Accounting Software Shouldn’t Be a Chore to Use
Besides making a profit, the second most important thing for a small business is saving time. Convenience is crucial so finding accounting software that can prioritize this will help take the headache out of paperwork.
Time saving has everything to do with accounting software so using programs that suck the life and effort out of your business doesn’t add any value – just stress. Owners want their businesses to work faster and smarter – this enables more time to grow what you started.
Varieties of Cloud Accounting Software
The process of accessing data through just an internet connection and web browser has given business owners a hassle free accounting solution. Cloud accounting technologies include both Software as a Service (SaaS) and desktop version software application hosting, and has allowed for greater access to real-time data, thus creating effective engagement with business financials and prompting better decision making.
1. Automatic backups and no multiple data files: In the cloud, everything is run online so there’s nothing to install and backups are done automatically every day. All updates are instantly available and free, with no need for version-control data or large accounting files that take up too much space.
2. Business costs are reduced and worry free maintenance: Because all updates are free, business costs are significantly reduced. System admin costs, server failures and maintenance are no longer issues you need to deal with as they will all be managed by the cloud service provider, making your life much easier. With cloud there will only be one monthly fee for licensing.
3. Reduced need for data entry: In this technology age, there really is no need to manually enter and re-enter data into accounting software. The cloud allows you to upload this information that’s readily available in your banking system through automatic “live feeds”, showing up the business credit card transaction data quickly and easily. This ensures time and money is saved and leaves no room for typing errors.
4. Reduced worry about security: Regardless of what disaster can happen, computers failing, files being lost or not backed up properly the cloud ensures your valuable information is secure.
5. Increased flexibility, mobility and convenience are prioritized: Important business information can be accessed from anywhere 24/7 including outstanding invoices and overall cash position. As a business owner, you will be able to run your company from anywhere in the world on an iPad, small phone or tablet device, leaving you with a more flexible lifestyle. Information can also be accessed by other team members worldwide by accessing the cloud. The only time you will not be able to access your data is if the internet is down.
Traditional Locally Installed Accounting Software
As the business world’s data goes to remote hosting, it’s hard to imagine that accounting software was once purchased on a disk or downloaded online. While traditional locally installed accounting software still has its advantages, the benefits compared to managing accounts through cloud are far outweighed.
But, some prefer to stick with the traditional method that still works for their business. With the online world developing though, there are problems with traditional accounting software protocol that has made the switch to cloud easier for business owners.
1. Costly for businesses: If you’re running a small business, forking out money for updates and backups adds up all too quickly. Not only is it costly, but backups and software updates can be complicated and very time consuming.
2. One person user: Only one person will have user access which makes it difficult to access financial information or business and customer details.
3. Not secure or reliable: Information stored on hard drives, computers and USB devices can be easily lost. Data is subjected to viruses, corruption, hacking and maintenance issues which can leave you and your business in a fragile state.
4. Lack of customer service: Customer service for traditional accounting software can be costly for your business or slow in getting back to you. When time as business owner is so precious, there is nothing worse than sitting on hold for an hour to ask a representative for help or advice.
Cloud Accounting – Why It’s Better for Your Business
Cloud-hosted accounting software has become a trusted and viable option for small businesses to ensure professionals can get the job done quicker and easier. Smaller companies should consider cloud hosting so they don’t lose the benefits innovative technologies are offering them.
Cloud-based accounting software is taking off – because it works. For a small business, cloud can free up local server space, improve accessibility, reduces costs and keeps valuable information secure. Larger, well-funded firms that have major investments in security and IT may still benefit from traditional accounting software, but for the rest of us – accounting in the “cloud” makes financial sense.
Michael Pendred is Managing Director of Horizon Business Systems, a leading provider of Accounting Software Solutions in Perth, Australia. Michael brings a broad business understanding from his economics educational background and worldwide deployment. Michael has worked in management & senior management roles for companies such as PKF Chartered Accountants, Solution6 and Cayman Distributors, and consulted for organizations like EuroDisney and Barclays Finance. Find Michael on Google+.