Is online accounting software right for your business?

It’s becoming very common for businesses to replace traditional software with online services which you log in to on the internet.

These services are a form of cloud computing. One area which is growing fast is online accounting software.

These services perform the job of traditional accounting software, but work over the internet. So, is online accounting software right for your business?

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).

Using online accounting software can therefore offer more flexibility. You don’t need to be in the office to use it – you 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.

What’s more, the monthly fee usually includes all updates, upgrades and so on – unlike with traditional software, you won’t be forced to pay again when a new 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 back ups!