Pros and Cons of Cloud-Based Accounting

If you have been using traditional accounting software, it might be time to think about switching to cloud-based accounting applications. Traditional programs offer many benefits, but you have to install them on your firm's computers, maintain them, and troubleshoot them when things go wrong. Some software programs also take a long time to generate reports, which puts your company at a disadvantage when an executive or department head needs financial information in a matter of minutes. If you're thinking about making the switch to cloud-based accounting applications, keep these pros and cons in mind.

David Markus of "Smart Company" says one good reason to switch to cloud accounting is because IT systems rely on humans and hardware to operate properly. If a human makes an error, or a piece of equipment malfunctions, it could take several days to fix the problem. In the meantime, you need to establish a back-up solution, which could cost you extra money and training time. Switching to cloud-based accounting applications is very appealing to accounting professionals who don't want to pay thousands of dollars per year to maintain and troubleshoot in-house systems.

Ease of use is an important consideration when deciding to employ cloud-based accounting applications. One of the pros of cloud-based accounting is that no new hardware is needed. Accountants can use cloud accounting applications from any device with Internet access, which is also a benefit if people in your firm routinely work from home or travel for business. When you use the cloud, your data is backed up regularly, making it more secure. All of these things help reduce the amount of time and money your firm spends maintaining on-site accounting systems.

Like any business solution, cloud-based accounting does have some drawbacks. It may take a little more time to load Internet-based applications than it does to load programs installed on your company server. Some cloud applications are not as robust as their software counterparts, which means you could lose the ability to run custom reports or use features you rely on to make financial decisions. The main concern with cloud-based accounting is the security of your data. Many accountants wonder what would happen if the cloud vendor went out of business or did not take the right steps to protect sensitive data.

If you want to cut costs and reduce the amount of time spent troubleshooting your firm's accounting systems, switching to cloud-based applications might be the right decision. Making the switch could help you streamline your firm's operations and avoid the problems associated with installing new hardware. Data security is a concern, however, so research each cloud-based accounting vendor carefully before making a selection. Doing your due diligence will help you enjoy the benefits of this technology while minimizing the risks.

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