The importance of accounting software in modern-day business can never be overstated. Any business aspiring to have effective control over its financial and accounting systems needs to use accounting software in its daily financial operations. Accounting software, or app, is a system designed to help you as an accounting professional manage financial accounts and record financial transactions conducted by the business.
Organizations use two main types of accounting software today; cloud accounting software and the installed accounting software. Let’s find out what’s in for your business in each accounting software below.
Cloud Accounting Software
Many business owners prefer using cloud accounting software because of its numerous benefits. A cloud accounting software, also known as web-based accounting software or online accounting software, is an accounting software hosted on remote servers. With it, you can send your raw financial data to the cloud, where it is processed and return to you for use.
So, why should you use cloud accounting software? Let’s find out below.
Benefits of Using Cloud Accounting Software
Using cloud accounting software has numerous benefits for businesses of all sizes. Whether you are just starting or are already established in business, you can enjoy the following benefits from using cloud accounting software.
Cloud-based accounting software enables you to access your financial data anytime and anywhere you go. It gives you peace of mind as you won’t have to worry about regular downloads and updates that are common with regular accounting software.
Additionally, some cloud accounting software comes with a mobile app, making it easier for you to access your data while on the go. It also gives you the flexibility of working remotely and eliminates the stress of sitting in your office to access your accounts.
Financial account management can be complex, and to perform it effectively, you need accounting software that can completely accommodate your needs. Cloud-based accounting software is scalable and you can, for example, switch your subscription depending on your business needs. You don’t have to bear the fixed cost of a development or support team when you don’t need them.
The cost of cloud-based accounting software is typically lower than an installed or internally developed software. This is because you need a substantial investment in form of a powerful server, a team of developers and support personnel and software installation in each of your devices. Much of these can be eliminated with cloud-based software. Additionally, using the cloud accounting software means you will not need to occasionally download and install an update of the accounting software, thus cutting the cost of buying an accounting program and installing it on your computer.
Cloud accounting software providers typically take care of all the period software updates. This means you don’t have to worry about making the updates, testing their effectiveness and installing them in each machine. With cloud accounting software, you can effortlessly get closer to your business and have a clearer image of your finances, thanks to the software’s consistent automatic updates.
Cloud accounting software is considered superior for many reasons, but its reliability is one of the major aspects that stand out. The software is consistently updated and automatically improved. Often developed and maintained by experts, you can always rely on it to offer the best services at all times, even when there is an upgrade in technology and trends are changing.
Backup and Recovery
Your data is stored and secured in a safe cloud server, which means you can access it anytime you wish, even if your device(s) crash. Cloud accounting software ensures your data is constantly backed up and protected. You have little to worry about someone hacking or deleting data on your server.
Installed Accounting Software
A locally installed accounting software is the accounting software your IT technician downloads and installs for you on your computer and is hosted on your computer’s server. Though old, installed accounting software has numerous benefits you can enjoy as a business. Let’s explore some of the benefits of using installed accounting software.
Benefits of Using Installed Accounting Software
Here are some of the major benefits of using locally installed accounting software that could help your business grow.
No Need for Internet Connectivity
You don’t have to worry about internet connectivity issues when using a locally installed accounting program. A locally installed accounting software can run without the internet. This means when the connection is down, you can continue with your accounting endeavors as usual and achieve your work milestones in time. You can also access your data anytime you have the computer with you without connecting to the internet.
With cloud accounting software, the process of saving your data to the cloud can take time, especially if you are transferring a large volume of data at the same time. You need a high-speed internet connection to transfer and store your data effectively. However, that is not the case with locally installed accounting software. Here, data is stored faster to the computer’s hardware and accessed anytime you have access to the computer. The downside, though, is that you can lose your data when you lose the computer.
It is easier to access onsite IT support with locally installed accounting software as existing technicians can support your localized IT challenges much easier. The support team will also help manage various areas of your organization’s accounting IT solutions. With onsite IT support, you can enjoy the flexibility of choosing services that are best for your specific IT goals.
Limited Security and Privacy Issues
Unlike cloud accounting software where the servers are connected to the internet, locally installed accounting software won’t stress your security and privacy issues. Your local financial database in installed accounting software is relatively safe since the servers are on the local area network. Your data is safe from all forms of cyberattacks as cybercriminals with potentially harmful intent won’t manage to access the local server if you properly follow the cybersecurity protocols.
With everything available offline in a locally installed accounting software, you do not have to worry about downtime or lapse periods when there is no connection, and everything stops. You can keep working and balancing your financial accounts within your time schedules with little worry about network interruptions. It can be particularly helpful if you run a software-backed business where any downtime can directly affect your revenues.
Potential for Customization
It is easier customizing your local network privacy and software settings to help limit people you do not want to access the sensitive financial information you have in your installed accounting system. You can limit access to your data and keep your organization’s essential data much safer, a process that is highly challenging to achieve with online accounting software.
When to use Cloud Software?
There are various triggers for using cloud accounting software and special circumstances requiring you to use cloud accounting software.
If you are running a small business, you would probably benefit more from cloud accounting software because of its lower costs. Smaller businesses often shift their locations as they grow, which means the option of accessing the software anywhere can be useful.
Cloud accounting software is reliable and will also allow you to manage your accounts effectively for real-time benefits. It also comes in handy when dealing with varying sizes of financial data that keep fluctuating. You can tap on its scalability to accommodate various sizes of data at different times. For instance, as your accounting staff increases, you can upgrade your subscription for better accessibility.
You can always choose cloud software anytime you handle a not-so-sensitive business operation that requires high rates of flexibility.
When to use Installed Software?
Cloud accounting is most preferred because of its numerous modern benefits. However, there are benefits peculiar to installed accounting software. In some instances, using locally installed accounting software is mandatory because of its nature and the type of information in question.
When you manage large volumes of data or if the location has limited or slow internet connectivity, installed software will serve your needs best. You won’t have to experience downtime and network breakdowns that will slow you down.
If your organization is large and particularly concerned about security, it will need accounting software that is less prone to hack. Locally installed software offers safer accounting options for the protection of high-security data.
You can also always enjoy the freedom of customization with the installed software. When customization is the center of operations in your business, you will be better off with locally installed software than with a cloud one.