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    Cloud Computing Accounting Software

    Cloud computing accounting software is accounting software that is hosted on remote servers. It is also known as online accounting software, web-based accounting software, and cloud accounting.

    What does cloud computing accounting software do?

    Cloud computing accounting software provides accounting capabilities to businesses using a  SaaS (Software-as-a-Service) business model. Data is sent into the cloud, where it is processed and returned to the user, and all application functions are performed off-site, rather than on the user’s desktop.

    In cloud computing, users access software applications remotely through the internet or other network via a cloud application service provider. Using cloud computing accounting software frees the business from having to install and maintain software on individual desktop computers or local servers. It also allows employees in remote or branch offices to access the same data and the same version of the software.

    History of cloud accounting and traditional accounting software

    Before computers, accountants and bookkeepers used paper logs to track expenses and income and manage customer records. In the early 20th century, the first punch card machine, popularized by IBM, allowed accountants to manage financial data.

    Accounting software originally ran on mainframes and mini computers, and financial data was stored in databases, from which the software accessed it. As computing power became cheaper and software capabilities expanded to handle increasingly complex accounting tasks, businesses faced a decision between keeping their legacy computer systems (with older software) or entirely upgrading.

    Accounting software installed on computers on-premises had many shortcomings. This service model required costly hardware, including dedicated computers installed with the software, a local network, and on-site data storage.

    Other costs included software licensing, maintenance, and hiring or contracting IT support staff. Data could be cumbersome to keep secure and to sync across devices and users. Increasing data capacity was costly, access to data was limited, and users had to deal with software end-of-life (EOL) issues.

    In 1998, NetSuite released the first online accounting software, generally considered to be the start of cloud accounting. Today, cloud accounting software provides advanced business intelligence and analytics that increase the insights companies gain from their accounting platforms.

    What are 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. Automating these processes can reduce error and give accountants more time to work on other projects or to provide more actionable analysis of the company’s accounting data.

    Accounting solutions based in the cloud provide even more flexibility. Here are some reasons why 67% of accountants say cloud technology is improving client interactions and service offerings:

    Access and availability

    Cloud accounting software and data can be accessed anywhere there is a secure  internet connection. Access requires only a browser or application on a thin client PC, laptop, tablet, or mobile device. This decreases access costs and opens up the possibility of distributed work teams and remote work.

    Employees can download cloud accounting software on their personal devices, if needed. Many companies have shifted to remote work or hybrid work due to the COVID-19 pandemic. Having a cloud-based accounting platform means that employees can work wherever they have an internet connection.

    Computing power and speed

    As complexity in accounting has grown, so too has the need for more computing power. Future demand for more insights and utility from accounting data will call for significant increases in computing power and speed. Forbes predicted in 2020 that AI, robotic process automation, IoT, blockchain, and Big Data will all drive the need for significant IT infrastructure growth. To remain competitive, therefore, online accounting providers are constantly upgrading storage, processors, and software to keep up with end-user demand.  

    Unified business operations

    Cloud-based applications allow integrations with other business software, so the connection between data is synced and visible. Data entry and processing takes place in real-time or close to it, so employees and decision-makers are working with the most recent financial data and can make timely, accurate decisions with that data. This improves collaboration across departments while reducing errors.

    Cost savings

    Since data is stored in the cloud, minimal capital investment in on-site hardware and technical expertise is required. Vendors handle all updates, maintenance, and technical support. Expensive and time-consuming on-site upgrades are eliminated, and a subscription model eliminates up-front costs, spreads costs out over time, and makes costs more predictable.

    Payment models based on data storage, transfer, or usage can also be more cost-effective for companies. Both subscription and usage models allow for virtually infinite and instant scaling of data in real-time for companies with flexible data needs.

    Security and risk management

    Businesses need to be able to store and mirror their financial data in more secure locations. In an on-premises accounting application, all the information is stored in local servers, which are vulnerable to theft, fire, and natural or man-made disasters. Because cloud service providers backup application data in different locations, companies are less likely to see a disaster wipe out their data.

    Cloud accounting software also features security measures such as end-to-end data encryption, administrative permissions, multi-factor authentication, virus and malware protection, security audits, dedicated servers, secure server sites, segregated networks, automatic security updates, and more.

    The specialization and comprehensiveness of security features and risk mitigation may be greater than any one business could affordably provide for itself. All of this minimizes the possibility of critical failures and ensures business continuity.

    Automation and financial intelligence

    Cloud accounting automates workflows and handles repetitive tasks, lessening the possibility of human error, improving user efficiency, and freeing up human resources for better uses. The pooling of data in the cloud also makes it easier to analyze data and provide advanced reporting, analytics, data visualization, and financial intelligence. This supports the optimization of operations at every organizational level.


    Other features saving time and money include live bank feeds, online payment, the payment of local and national taxes online, built-in industry standards compliance, and the ability to leverage cutting-edge technology. All of these end-user focused features contribute to more streamlined invoicing, quicker payment processing, and transparency into the financial health of the company.

    Webopedia’s Top Accounting Software Recommendations

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    Most cloud application providers typically charge based on usage compared to site license fees associated with traditional accounting software deployments. Accounting data backup and disaster recovery should also be a part of your cloud computing accounting software account.

    Oracle Netsuite logo.

    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 Logo. Microsoft Dynamics GPis an accounting solution with core accounting and ERP features that can be expanded to a full ERP solution. It offers a large number of mobile applications and customizable reports and benefits from integration with other products within the Microsoft ecosystem.
    FreshBooks icon.

    FreshBooks offers features for invoices, reports, time-tracking, and project management. It also integrates with applications like Trello, Salesforce, and Shopify.

    quickbooks logo.

    QuickBooks, offered by Intuit, occupies about 66.58% of the market between its on-premises and online versions. Versions designed for freelancers as well as for small and medium businesses are available.

    xero logo.

    Xero offers unlimited users and administrative permissions, automations, and ample other features suitable for freelancers and small to medium businesses. Plentiful integrations with third-party apps also enhance its utility for e-commerce, marketing automation, invoicing, time tracking, and CRM.

    Zoho books logo.

    Zoho Books is suitable for small to medium businesses that want cloud accounting software integrated into the rest of their Zoho ecosystem. With integration, Zoho Books supports business management features beyond mere bookkeeping.

    GoDaddy icon.

    GoDaddy Online Bookkeeping is specifically for sellers and resellers on Amazon, Etsy, and eBay. Inexpensive and streamlined, Godaddy Online Bookkeeping is an affordable option for users that don’t need double-entry accounting features.

    ZipBooks icon.

    ZipBooks is a simplified and affordable application with basic accounting features. It even offers a free tier with streamlined features for users just getting started with cloud accounting.
    Financial Force logo.

    FinancialForce is a cloud accounting application in the Salesforce ecosystem. FinancialForce is for medium to large businesses that need not just accounting but a highly-customizable ERP solution that can also integrate with other Salesforce applications and third-party applications to form a unified business solution.

    Sage Business cloud.

    Sage Business Cloud is for small businesses with multiple users and even multiple subsidiaries. It offers strong accounting features but lacks native payroll, inventory, and time-tracking, although integration with third-party applications helps round out its features.

    Kashoo icon.

    Kashoo is a simple cloud accounting solution that offers features like double-entry accounting, multiple users, and integrations.
    Wave icon.

    Wave offers a solid array of core features, double-entry accounting, integrations, and automations. As Wave is free, this makes it an appealing option for businesses that aren’t yet ready to invest in an accounting application.


    Learn more about cloud accounting solutions

    Read detailed reviews: goes into much more depth on several top cloud-based accounting solutions with its deep-dive reviews of this year’s Best Accounting Software & Tools

    Compare your options: Find the right solution to fit your needs, then compare features with this easy-to-use comparison tool.


    This article has been reviewed and updated in February 2022 by Lucas Ledbetter.