Cloud computing accounting software is accounting software that is hosted on remote servers. It provides accounting capabilities to businesses in a fashion similar to the SaaS (Software as a Service) business model. It’s also known as cloud-based accounting software, web-based accounting software, or online accounting software.
What is cloud accounting?
In cloud computing, users access software applications remotely through the Internet or other network via a cloud application service provider.Â Data is sent into the cloud, where it is processed and returned to the user. All application functions are performed off-site, not on the userâ€™s desktop. Using cloud computing accounting software frees a business from having to install and maintain software on individual desktop computers. It also allows employees in remote or branch offices to access the same data and the same version of the software.
History of digital accounting
Before computers, accountants and bookkeepers used paper logs to track expenses and income. They also managed customer records within such a log. In the early twentieth century, the first punch card machine, popularized by IBM, allowed accountants to manage financial data.
Accounting software originally ran on mainframe and mini computers. Financial data was stored in databases, from which the software accessed it. As technology and software developed, businesses often faced a decision between keeping their legacy computer systems (with older software) or entirely upgrading.
In 1998, NetSuite released the first online accounting software, generally considered to be the start of cloud accounting. Now cloud accounting software provides advanced business intelligence and analytics that increase the insights that companies gain from their accounting platforms.
Benefits of cloud-based accounting software
Without assistance from software, accountants and other financial professionals spend long periods of time completing manual tasks, such as creating and filling out spreadsheets and completing math equations. Accounting involves a lot of detail and attention to numbers, and this takes time. Automating processes gives accountants more time to work on other projects or focus on the big picture rather than their menial, everyday tasks.
Having that software based in the cloud provides even more flexibility:
- Employees can download cloud accounting software on their personal devices if needed. Many companies have shifted to remote work, and even if they haven’t, their workforce might still need to work remotely, depending on the spread of COVID-19 in their area. Having a cloud-based accounting platform means that employees can work wherever they have an Internet connection.
- Data entry is real-time or close to it so that employees have the most recent numbers and aren’t behind or confused.
- Cloud-based applications allow integrations with other business software so that the connection between data is synced and visible.
- Businesses can store their data in more secure locations. In an on-premise accounting application, all the information is stored in one local server; but typically cloud service providers back up application data in different locations. Companies are less likely to see a disaster wipe out their data.
Top cloud-based accounting software providers
Most application providers typically charge based on usage compared to site license fees associated with traditional accounting software deployments. Accounting data backup and disaster recovery is often a part of your cloud computing accounting software account. Popular accounting software providers include:
NetSuite is a full ERP solution that includes cloud-based accounting, as well as plenty of other enterprise planning features. It’s a significant commitment and takes time to learn and implement, but if a business is looking for not just accounting software but other financial and ERP solutions that all work together, NetSuite is a good choice.
Microsoft Dynamics GP is another ERP solution that takes time to implement. It offers automated integration between its finance features.
FreshBooks offers features for invoices, reports, time-tracking, and project management. It also integrates with applications like Trello, Salesforce, and Shopify.
QuickBooks, offered by Intuit, is one of the top accounting providers in the market. It has options in the cloud as well as on premises and includes payment bundles for freelancers as well as for small and medium businesses.