Cloud Accounting Software (Advantages and Disadvantages)

Types of accounting software:

• Desktop-based accounting software.

  Desktop-based accounting software must be installed on the local computer and provides data hosted locally and not available online. Only permitted staff can access software that avoids data being seen by third parties.

• Cloud-based accounting software.

  Cloud-based accounting software is hosted on cloud-remote servers and provides data that can be accessed at any time with an active Internet connection. Entered data is sent to remote servers, where information is processed and returned to the user.

So, the main difference between cloud accounting software and traditional accounting software consists in where financial data is stored.

It is the right of every business owner to decide if it is comfortable for him/her to have the company's financial data on the Internet. Before you jump into cloud accounting and start to account online for the results of your business running, consider how the advantages and disadvantages of cloud-based accounting software could affect your business.

Advantages of cloud accounting software:

• Cost.
  It is cheaper to use cloud accounting software than to buy desktop software as companies use vendors' servers to store all their business data. The responsibilities of cloud-based accounting software vendors include full software and hardware service and data maintenance. That allows for eliminating costs on the hardware, installation, maintenance, system administration, updating, and server failures. 
  
  
• Access.
  With cloud accounting software, companies have access to their financial data anytime from anywhere and get a clear overview of the company’s current financial situation in real-time. Multiple users can see information and work with documents from any device. Cloud-based accounting software enables easy online collaboration with the company’s team and advisors as well as online connection with bank accounts.

• Upgrade.
  With cloud accounting software, users always have the most up-to-date version. Providers automatically update software to add new features and include changes to accounting rules. Whenever users log in, they will immediately access the latest version.
  
  
• Security.
  Security is a top priority, therefore users could have concerns about storing their sensitive financial information in the cloud. Cloud accounting services, in reality, increase security in several ways. Providers apply multiple levels of security. Advanced encryption and access control ensure access to the data for authorized users only. To eliminate the risk of losing critical financial records, they automatically back up all data. Data stored online is secured from the losses of computers, and the company's IT team can focus on employees' proper access rights for their roles.
  
  
• Integration.
  Usually, providers of cloud accounting software offer wide suites of integrated web applications that share the same central database. As the company grows, it is possible to add modules that handle more business aspects, from payroll to inventory management, e-commerce, and marketing. Moreover, it is possible to use additional complementary software products with specialized functions, for -example invoicing and payment platforms.

Disadvantages of cloud accounting software:

• Accessibility.
  Accessibility to cloud accounting software is only possible with an Internet connection. It means that cloud-based accounting software makes your business dependent on the reliability of the Internet connection. In the case your Internet service suffers from outages or slow speeds or a provider of your online accounting software suffers prolonged server outages (even the most reliable cloud accounting service providers sometimes cannot provide their service because of problems with the Internet connection), you will be not able to work with your important financial data. 
   
• Security
  Data security is always the main concern. Cloud accounting software vendors assert that they use the latest, most sophisticated data security systems. However, even the best-in-class security system does not mean that it is invincible. Otherwise, we would not have observed scandals arising periodically because of the data breach that occurred via hacking. Moreover, you should always remember that with the accounting software online, financial data is accessible from anywhere on the Internet and can be vulnerable. So, the confidentiality of your sensitive accounting data may be in question when you are sharing your business data with a third party.
   
• Inflexibility.
  The inflexibility of cloud accounting software can be a serious problem. The cloud-based accounting software system may not support all the functionality you need; its owner may provide a standard accounting package he/she has. You should be careful when choosing a web accounting vendor that you will not become a "forever" client because the chosen software does not allow easy transferring the information into other systems. Contact someone who has already gone through the painful process of moving from one accounting system to another.
   
• Cost. 
  The cost of cloud accounting software is not an easy question. At first sight, the cloud accounting software may seem to be much cheaper than a traditional accounting software system installed on the company's computers and servers. At the same time, having customized cloud-based accounting software to meet your specific business needs can add highly to the software price. In addition to functionality, the cost may be influenced by the number of users and the amount of data storage.