Unlocking the mysteries of cloud accounting solutions Part 2.

This continues in our series looking at issues around cloud based accounting software as distinct from desktop solutions.

Are there differences in functionality?

In terms of the technology, some people appreciate the new connectivity, while others say it has made no difference to their operations This all depends on the functionality of the software and if it matches with their business model. This has nothing to do with whether it is hosted on the cloud or on a local server, but what the package is capable of. One business associate of mine who was convinced by his accountant to move to a cloud based system, admitted to me that his old QuickBooks desktop version did the exactly same thing (debits and credits, profit loss etc.) as the new solution, except now he must pay a monthly fee. He struggles to see the benefit.

Pricing modules?

You are not going to have a lot of choice these days. Nearly all software (both desktop and cloud) is charged under the software as a service (SAAS) model. That means vendors charge by monthly or annual instalments whilst you use their solution. It is rare now to buy a package over the counter as a one-off payment. For customers, it allows them to spread the cost over a period, whilst the vendor has a guaranteed income for future development. You are more buying into the concept that is ever changing, rather than a static product.

What about sharing files?

In terms of sharing files outside the organisation, say to an external accountant, you can still do that with various server based applications including Sage Line 50, QuickBooks, Mamut and Account Edge (MYOB for Mac). You can compress and email a file, (or upload to their FTP site) or send the file via a 3rd party, for the accountant to download the software and do their end of year adjustments. It won’t be live feed so I suggest they trial the journals first, then import them in so there is no confusion over the version of the current file.

What sort of companies are suitable for cloud solutions?

For me personally, I only recommend cloud based solutions for very small businesses that can’t afford the hardware, IT support, and infrastructure required for server based applications. Cloud is obviously ideal for those working remotely (outdoor flower stalls for example). At the other end of the scale, multi-national organizations need live data access across several territories which hosted solutions are well suited. For most SME’s who work from 9 till 5, in an office, there is no advantage of working remotely and it does increase the risk of unauthorised access to your data as it is stored off-site.

Back to the Future.

My accountant, who is a little older than me, recalls the days when a computer was just a dumb display with a keyboard sitting on a desk. It would retrieve data from this mysterious “Mainframe” that was stored in a great big room somewhere in the building. When PC’s became more powerful, you can then run programs from your local machine and store the data locally, or on a central server. Now we have reverted to computers being dumb while the processing is done remotely, the difference being that the information is somewhere else in the world. That means that technology is going backwards.

To quote from The Knowledge Illusion (Sloman and Fernbach, 2017), “As technology becomes more sophisticated, we will become even more ignorant about what’s under the hood.”

About the Author:

Malcolm Ford has 25 years business experience on two continents and now implements different accounting software and other solution to companies across the UK. He is a specialist in Excel programming and in creating dashboards for live financial reporting.

Difference between an Accounting Package and an Enterprise system Part 1.

Pros and Cons of Cloud Accounting Software Part 1