Choosing accounting software is one of the most important decisions owners have to make when establishing a business. The right accounting software will ensure that the finance function of the business runs as smoothly as possible where as the wrong software can waste time and money and cause owners a lot of unnecessary stress. With the advent of cloud accounting in the past couple of years the choices of software provider are more numerous than ever, so which one is right for your business?
Firstly let’s distinguish between “Cloud Accounting” programs and “Other” programs. Cloud Accounting programs are stored remotely via the internet. Like your iCloud, your G-mail account and your internet banking this information is not stored on your computer but rather “in the cloud” for you to access anywhere, anytime. “Other” programs, on the other hand, are the exact opposite in that they are required to be installed on your computer i.e. Microsoft word. So when we are talking about this with regard to accounting programs we are comparing software that you have to install on your computer versus those programs that are accessed via the internet.
These cloud accounting programs can save a business time & money, allow access to real time financial data, are not required to be backed up or saved and provide sleek dashboard reports that give a simple snapshot of how the business is tracking. However other accounting programs can prove cheaper in the long run, do not require internet access and can provide a lot more reporting functionality.
Because cloud accounting programs are based on the internet they are able to sync and source data from other areas of the internet. The most notable example of this is with business bank statements. These programs can not only import data from your online banking service, but with today’s technology, can identify what most of these transactions relate to and allocate them to the appropriate nominal ledger account. This results in a lot more efficient data entry and can half the bookkeeping time when compared to other accounting programs. However unlike hard-drive programs often cloud-based programs require commitment to a contract of service over a period of time (i.e. 12 months). Although hard-drive programs offer similar contracts that allow access to constant upgrades many businesses do not require this service and choose to only pay a one off upfront fee, which can prove more cost effective in the long run.
Another advantage of cloud accounting programs is the fact that they allow access to real time data anywhere that you have access to the internet. As these programs are continually syncing with sources of external data (i.e. internet banking) the information contained in the reports you are accessing is constantly up to date. That is the reports are inclusive of all transactions up to that point in time and do not exclude transactions from the past few days/weeks, as can be the case when you are relying on reports from a hard drive program. This provides a huge benefit to owners and stakeholders of the business who require this information when making important decisions about the operations of the business. It’s important to be aware that some transactions, such as manual accounting adjustments (i.e. depreciation, accruals, prepayments etc.), are still required to be entered manually and therefore some of the reports provided may not be 100% complete. Also should, for some reason, you lose access to the internet, or the quality of your connection be poor you will not have access to your system and the reports contained within, which is a non-issue for other accounting programs.
Cloud accounting programs provide sleek, simplistic, easy to use reporting systems that allow businesses to produce the reports they require with minimal effort. The majority of these programs also provide a set of dashboard reports that give users a general overview of the how the business is tracking. These reports include real time information such as: bank account balances, debtor balances, upcoming bills and other liabilities, sales trends etc. This has proven to be a very useful tool for business owners and other decision makers as it provides a snapshot of the business every single time you log in. However it should be noted that the reporting functionality of these cloud based programs is still lacking when compared to those reports that can be produced by other programs. Cloud based programs provide very basic reports (i.e. Profit & Loss, Balance Sheet, Cash-flows etc.) that serve the needs of most small to medium businesses, however for those businesses that require a little more advanced reporting functionality (i.e. product classing, in-depth analysis etc.) other accounting programs may prove to be a better suit.
All businesses are unique and therefore all businesses will have different requirements of there accounting software. For small to medium businesses cloud accounting can prove to be a very useful tool assisting in reducing bookkeeping time, producing accurate and reliable reports and be provide access anywhere that you have access to the internet. However there are certain drawbacks that all business should analyse before making a decision about which program is right for them. At Progressive Accounting Solutions Geelong we have years of knowledge and experience in dealing with various accounting softwares whether they be based on the cloud or not. If you require some advice or have any questions with regard to your businesses accounting software and any other accounting and/or bookkeeping issues please feel free to contact us to set up your free consultation. firstname.lastname@example.org or 0438329958.