Businesses are increasingly opting to use cloud-based services and software to meet their business needs. Rather than purchasing software, businesses are logging in and accessing the software on the internet
Online accounting software explained
Most businesses accept that they need some form of accounting software, especially if they've been going for a while. It can make it much easier to perform jobs like invoicing, and helps you keep on top of your record keeping.
A common accounting software set up is to have the accounting system running from a central network server on your premises. The people who need to use the system can then log in to the server to access it.
Online accounting software works in a similar way. The main difference is that instead of the data being stored on a server in your business, it gets stored on a server (or servers) which you access over the internet.
Pay by the month for online accounting software
That means, of course, that you need an internet connection to log on and access your financial information. But it also means that you can log in from anywhere (as long as you have an internet connection). This is a real benefit if you have remote or mobile workers.
Using online accounting software can therefore offer more flexibility. Workers are no longer tied to the office. They can catch up on your bookkeeping or invoicing from home or on the road. In fact, many online accounting software packages even allow you to log in from a smart phone.
Unlike traditional packages, there's not usually a big upfront charge for online accounting software. Instead, you typically pay a flat monthly fee. This could be as little as £5, depending on what features you want from your online accounting software.
It doesn't automatically mean that online accounting software is cheaper. But it does help to avoid big, one-off expenses - and with most services having no minimum contract, you can always cancel if it's not right for you. It can also make it easier to scale up as your business grows. You simply pay for the additional licences as you need them.
What's more, the monthly fee usually includes all updates, upgrades and so on - unlike traditional software where you may be forced to pay again when a newer version is released.
Online accounting software helps your accountant too
Additionally, online accounting software enables both you and your accountant to look at the same information at the same time but from different locations. This improves your communication and saves time.
One of the principal advantages of online accounting software is that teams working together have instant access to real-time data. It's ideal for multi branch operations.
But is online accounting software secure?
Businesses usually have one main concern when considering online accounting software: security and backup. With your data stored on an external server, how can you possibly know it is safe?
The answer is to take the same security precautions you would for any cloud computing service. When choosing a provider, do your homework carefully.
Make sure your chosen online accounting software has a good track record of keeping data safe. Look for an 'uptime guarantee' or 'service level agreement' too - these promise that the system will be available when you need it.
Check for specific information about how and where your data will be stored. Ask the online accounting software provider how often they take backups and where they're stored. If the answers to your questions are vague, think carefully before signing up.
Having said that, it's worth comparing the risks of an online accounting software package with those of running software in-house. For instance, if you had a fire or server crash in your business, it could cause serious disruption.
When you weigh up these factors, you may find that using online accounting software will actually reduce the risks. After all, most small businesses have a bunch of assorted servers in an old broom cupboard and are historically bad at keeping backups!