Understanding the Pros and Cons of Cloud Accounting Software

Are you a business owner looking to streamline your company’s accounting processes? Or perhaps you’re launching a fresh startup and you’re looking for an easy and efficient way to manage your finances without hiring an accountant for now. Whichever the case, you would be well-served by using cloud accounting software. By installing accounting software of this specific variety, you can leverage the power of the cloud and take advantage of the unique benefits it offers.

Similar to other major business strategies, you shouldn’t simply decide to utilize cloud accounting software without knowing all about its advantages and disadvantages. To help you with this, we’ve assembled all the pros and cons of using such software in the list below, for your convenience. Before that, though, let’s have a brief refresher on what the cloud actually is, as well as cloud accounting software.

What does the Cloud mean?

The cloud is essentially a network of computers and servers that store data and apps. This network can be accessed from anywhere in the world through the internet and from multiple computers. If a business wants to access a particular piece of data or application on the cloud, all they have to do is to connect to that external network to do so. This allows them to utilize high-end storage or apps without needing the infrastructure to store them within the office premises.

What, then, is cloud accounting software? How is it different from traditional types of accounting software?

Cloud accounting software functions the same way as traditional accounting software. However, since it runs in the cloud, it means that employees can access the software from any location as long as they have access to an online connection. Moreover, the data that the accounting software interacts with is also stored in the cloud and the data can be immediately updated by the user.

By being on the cloud, the accounting software is made easily and widely accessible, while also ensuring that all instances of it are only used by one master data source. This increases the efficiency as well as minimizes error due to outdated data. To improve a retailer’s accounting system would be trivial with cloud accounting software, even with just these benefits.

Now that we know all of that, here are the complete pros and cons of cloud accounting software.

PROS:

• It’s more accessible. Like mentioned earlier, cloud accounting software is an application that runs from the cloud”an off-site server that you can connect to online. This allows the company accountant or owner to utilize it no matter where they are, whether at home or outside the office. This allows for greater efficiency allowing users to perform some emergency accounting if the situation calls for it.
• It’s more affordable. Traditional accounting software is usually sold as an entire software suite, one that companies have to install in their own in-house IT infrastructure. This can be quite expensive, especially if it requires the company to beef up their current infrastructure in order to properly house the software. With cloud accounting software, though, companies are usually only asked to purchase a time-based subscription to access the software. This ends up saving the company a lot of money, both in the cost of infrastructure and the ability to use the software itself.
• It protects against data loss. Storing accounting data on-premises can be risky, as natural disasters, fires, or even malware can destroy a company’s in-house IT infrastructure and compromise the data. By using cloud accounting software, however, all accounting data is stored externally. So even if the company’s servers or computers are rendered useless by a calamitous event, the data remains intact in its offshore storage.
• It’s more accurate and efficient. Cloud accounting software stores the data it works with in the cloud. As such, it’s guaranteed that everyone in the company who accesses the software will be dealing with just one master archive of the data. The fact that it’s in the cloud also means that no matter how many employees are accessing the software are any one time, each interaction they make with the data is accounted for and saved automatically. This prevents accounting problems and errors that usually arise from using outdated data.

CONS:

• It’s reliant on having an internet connection. Natural disasters or power outages can kill internet connectivity. In such scenarios, companies may find it hard to access or utilize their cloud accounting software and could result in zero productivity for the day. The external database itself may also be unable to connect to the internet and prevent the company from accessing it.
• It can be vulnerable to data breach attacks. Hackers and cybercriminals nowadays have shifted their targets from end users to big servers and networks. Cloud servers therefore fall naturally underneath this target zone and could prove to be a security issue. However, cloud servers are aware of this and have made their own moves to protect themselves from electronic intrusion attacks.
• It can be costly in the long run. While a subscription-based software service may be cheaper to get into, you have to take into consideration that it’s going to be an ongoing cost, rather than one big and final transaction. You may find that more taxing on your finances.

Cloud accounting software may be the right choice for your business

Like all business solutions, cloud accounting software has its own pros and cons. Take all that we’ve listed above into consideration as you make your decision. However, if you do decide to go with such software, then make sure to take advantage of all the benefits that it offers while placing the necessary safeguards from its shortcomings as well.