Traditional accounting software requires a devoted hard drive where the data and software get deployed. The data is accessible via a desktop application and the user can’t access it from any other device or network.
Cloud accounting software offers similar functionality to traditional software as in on-premise accounting software. But, you can connect the cloud accounting software with the internet to process on remote servers. You can access the financial data or records via a web-based interface rather than using a desktop application.
So many companies are adopting cloud based accounting software to attain the benefits of efficient and cost-saving workflow correlated with cloud technology. In this pandemic situation, globally companies, and the education sector, and many users are accessing cloud services in one or another way.
Small and medium scale businesses adopted advantages of cloud-based services precisely in their accounting and other financial processes by removing the requirement of on-premises IT infrastructure for handling the accounting data and processes.
Cloud technology is available with different features and contributes to various sizes, conclusively providing a solution to companies’ financial management requirements. Cloud technology is a secure and flexible solution for accounting professionals to process accounting tasks with well-efficiency.
Some challenges faced by the accountants
Accounting professionals who are working on accounting software deployed on-premises computers often face challenges while working.
- Traditional accounting needs a whole day sitting in front of the desk. They can’t attend a meeting or any other dedicated appointments due to losing your daily accounting work.
- Costing of hardware setup and maintenance is expensive without any scalability options. If you need to upgrade your resources as per business requirements, then you have to replace the hardware completely.
- Also, data security, IT obstacles, collaboration with the clients and colleagues are some of the other challenges.
Cloud VS traditional – Which one to choose?
Previously, the deployment of accounting software to cloud hosting, accounting software used to host on the hard drives of desktops. The traditional accounting software requires initial infrastructure costing including, maintenance cost for on-premise software and hardware.
Whereas cloud accounting software functions without any immense costs or licensing fees. The cost difference is mainly due to the facility by cloud services of storing software, updating, and maintenance on a central server. As far as controlling software provided by SaaS companies offers significant control over the software, minimizes supporting cost, and being sharp on software pirating.
The SaaS model in cloud accounting is similar to On-premise (traditional) accounting, excluding the benefit of flexibility and collaboration in the cloud.
Cloud accounting facilitates accounting professionals to pull out real-time data with mobile collaborations. It provides an active and efficient organizational tool in your company that gives exact, balanced, and easily updated information from anywhere and any time.
The difference in costing
Cloud accounting software is a more cost-effective model than traditional software as it doesn’t have any software version upgrades and ongoing IT maintenance expenditure.
Another vital difference between traditional software is that there are limited users due to the extra cost of the software. On the other hand, cloud accounting software is free from any upfront cost. Costing of the software depends on the number of users and the add-on packages selected as per requirement. The software applications get demanded precisely as per the needs of the business and theFFF owner requests it accordingly.
Data security in cloud accounting
In traditional accounting software, the hosting happens on your hard drives. Hence there is no way your financial security and banking information can get compromised unless your computer gets stolen.
However, the security of cloud software is questionable due to the internet being accessible to everyone wound-the-world. The traditional accounting software offers zero safety on the hosting device, and its accessibility is prone to cybercriminals. Cloud accounting enhances the security benefits as every application gives security solutions like authentication and encryption. It assures the users that their data is protected every time, irrespective of the geographical location.
Ease of accessibility
In traditional accounting, real-time information and financial data are accessible to only specific people, while in cloud accounting, real-time data is accessible to everyone in the company.
In the traditional accounting model, meetings and discussions about financial affairs are possible when all the relevant teams are present in the same room. However, in the cloud accounting model, the collaboration between the teams and employees got enhanced. Discussions related to the accounting records can happen in the office or through virtual conferencing, where the teams can access the software through the internet from anywhere and any time.
Distribution of financial records or information among the employees or team is a tough job in traditional accounting due to the multiple processes involved. On the other hand, cloud accounting offers quick and easy reporting of financial information, and the authorized person can fetch the data conveniently.
When you use traditional accounting software in your business, then you need to update and manage the system regularly to test its relativity to your resources. While in cloud accounting, the software gets automatic updates as per the business and its resources requirement.
You can adopt paperless work culture in cloud technology which is not possible in traditional accounting. This technology offers you to access financial information with a mobile device and internet connection. In usual accounting, financial information gets distributed by printing it on paper.
Cloud Accounting or Traditional Accounting Software
The users of cloud-based accounting software consider it the future of the finance management system. But before taking any decision for your business, you need to analyze whether this accounting model is suitable for your business. Some symbols will show that it’s time to migrate your workflow towards cloud accounting:
- Accessing financial data: Financial information is a vital component for every business. The financial records of the business requirements need to be handy every time for the business growth and continuity. If you analyze and find out that the accessibility of your financial data is hard to get when you access it out from your office, then cloud computing is a good option for your business.
- Worried about your financial data security: If you lose your financial data due to system failure, or your system gets stolen, or there is a lack of automatic backups, you can’t retrieve the data on time. Therefore, cloud technology deployment is the right solution for your business. It allows automatic backups of your financial data, and you can retrieve the information whenever you access it, or if any system failure happens, the business continuity gets ensured.
- Paperless work culture: If you want your business to be an environment-friendly work culture, then cloud accounting will allow you to imply a paperless work environment. Employees and staff members can access the financial records and data on mobile devices whenever it’s necessary. Financial meetings and discussions will also turn into huddle-free.
Finally, we can say that traditional practices of accounting software have become former times now. It has significant advantages that enhance the growth of your business and the productivity of accounting professionals.
You can select migration of your business into cloud hosting applications, or you can choose the migration in one shot to the cloud-based accounting software.