Cloud accounting software is similar to traditional, on-premises, or self-install accounting software, only the accounting software is hosted on remote servers, similar to the SaaS (Software as a Service) business model. Data is sent into "the cloud," where it is processed and returned to the user. All application functions are performed off-site, not on the user's desktop.
In cloud computing, users access software applications remotely through the Internet or another network via a cloud application service provider. Using cloud accounting software frees the business from having to install and maintain software on individual desktop computers. It also allows employees in other departments, remote or branch offices to access the same data and the same version of the software.
With cloud accounting, it’s also easier to get real-time reporting and visibility throughout your organization, with greater mobile capabilities and collaboration. Subscription-based models are popular among cloud accounting providers, and in most cases these subscriptions are usage-based. Companies that pay a cloud accounting subscription receive updates to the software as soon as they arrive, with no additional software purchases required.
What’s the difference between Cloud accounting and traditional accounting software?
There are several key distinctions between cloud accounting and traditional, on-site accounting. For one, cloud accounting is more flexible. Accounting data can be accessed from anywhere on any device with an Internet connection, rather than on a few select on-premises computers.Secondly, unlike traditional accounting software, cloud accounting software updates financial information automatically and provides financial reporting in real-time. This means account balances are always accurate and fewer errors take place due to manual data entry. They are also better able to handle multi-currency and multi-company transactions more efficiently.
In the on-premises world, every time a firm grows, they encounter greater software license and maintenance costs as well as new licenses and fees for the database, systems management, and other software. The firm might also have to make expensive capital purchases of new hardware, such as servers. With cloud solutions, businesses don’t get stuck with permanent, expensive equipment and licenses when your business contracts are up and, likewise, there are no big spikes in costs when it expands a little.
Also, cloud accounting requires far less maintenance than its traditional counterpart. The cloud provider completes the backups, updates occur automatically and nothing needs to be downloaded or installed on a company computer.
Is my financial data secure with cloud accounting?
Cloud accounting provides an equally secure (and sometimes even more secure) method of storing financial information than traditional accounting software. For instance, a company computer or laptop with critical financial information could be lost or stolen, which could lead to an information breach. Cloud accounting, however, leaves no trace of financial data on company computers, and access to that data in the cloud is encrypted and password protected.
Sharing data is also less worrisome. With cloud accounting, two people simply need access rights to the same system with their unique passwords. Traditional methods often require flash drives to transport data, which could be lost or stolen.
Lastly, cloud providers usually have backup servers in two or more locations. Should one server network go down, you still have access to your data. Information kept just on-premises could be destroyed or damaged in a fire or natural disaster, and may never be recovered.
Will cloud accounting save me money?
Companies that use cloud accounting require less initial server infrastructure to store data, and IT staff is not required to maintain it or update the cloud accounting system. Fewer overhead expenses and no new software purchases mean greater savings for businesses. For the on-premises world, it’s the exact opposite. Every time a firm grows, they encounter greater software license and maintenance costs as well as new licenses and fees for the database, systems management, and other software.