Accounting has changed over the centuries from hand-written ledger books, to main-frame computers, to mini-computers, and eventually to personal computers. Now accounting is moving to the final frontier – online (aka cloud) accounting.
Cloud accounting is subscription based. Rather than purchasing software to install on your computer, you pay a monthly subscription fee to the provider for access to the software. The provider handles all updates, stores all of your accounting data, and performs data backups. Each provider has different pricing plans based on on the features and/or capabilities you need.
Advantages of Online Accounting
- Depending on the pricing plan selected, multiple users can access the data. No more installing software on each computer – and keeping everyone on the same version.
- Bank and/or credit card information can be directly downloaded into the accounting software making account reconciliations easier.
- Depending on the pricing plan selected, invoices can be automatically emailed to customers improving cash flow.
- Can access your data from anywhere that you have internet access. You no longer have to be in the office.
- Can access your data from various devices such as smart phones and tablets.
- Improved service from your CPA. If you add your CPA as a user, financial statements and other items can be reviewed without a visit to your location thereby improving the timeliness of advice.
Items to consider
Before jumping into cloud accounting you must at least consider the following.
- You give up control of your accounting data. Rather than being stored on computers in your office the data is stored ‘in the cloud’. You have to decide whether the provider’s location is more secure than your own. Can the provider’s location be hacked?
- How comfortable are you that smart phone and/or tablet access to your accounting data is secure?
- How comfortable are you that the feeds supplying bank and/or credit card transactions to the accounting software secure?
- Pricing may or may not be cheaper depending on how many desktop licenses you purchase and how often you update your accounting software.