Is Online Accounting Software Right for Your Company?

Small businesses have successfully been using a PC-based accounting software program to manage and track financial transactions for a long time. However, in the last few years, many companies have switched to software-as-a-service (SaaS) accounting solutions to reduce costs and minimize performance risks. A number of leading software publishers have released SaaS versions of their existing products, and many new products have been announced. While that business model provides a solid value proposition, it’s not for every company. Consider these pros and cons before you deciding on an online accounting software solution for your business.

Online Accounting Software vs. On-Premises Systems’ Costs and Risks

Compare the costs of an online accounting software system to those of an on-premises system. To implement on site, you must provide room and electricity for the system hardware. You have to purchase hardware and software and pay for technicians to install and configure the system and provide ongoing support and maintenance. You also incur all risks of system failure, poor performance, and security breaches. When the systems become obsolete or hardware wears out, you have to pay for new components. Overall, it’s an expensive and stressful proposition.

Online Accounting Software Eliminates Initial Cost

Online vendors provide, support, maintain, and upgrade their software as needed, including all hardware and software components. All risks are assumed by the vendor as well – it is their system, so you pay only to use the system. While the exact business model can vary, clients typically pay only when they use an online accounting software system. Charges may be based on the number of transactions completed, the length of time you had access to the system, or another measurement. Most providers let you cancel at any time with short notice.

Because the online accounting software provider has many customers, the company is able to justify a massive computing capability that accommodates any size customer, number of users, or transaction volume. The systems are typically cloud-based, with a virtualization technology allowing additional servers to come online instantly as usage levels peak. You never worry about bandwidth, system access, or storage capacity with online accounting software. Hardware and software repair, replacement, and upgrades are the vendor’s responsibility.

Online Accounting Software is Stable and Secure to Enable Business Continuity

Reputable online accounting software providers also replicate their systems at multiple data centers in geographically separated locations so that business continuity is assured in case of a natural disaster or major system failure. System backups are performed automatically and all data is archived on redundant servers to eliminate the risk of data loss.

To create similar capability and system security with an on-premises solution is prohibitively expensive for most small businesses. At best, those companies might afford a back-up server, but that does not eliminate all risk of system downtime or enable the company to scale performance instantly at peak load. Any major storm that knocks out electricity could take your systems down.

For many companies, the ability to connect workers at multiple locations and allow access to mobile users is a necessity. With an on-premises solution, you are responsible for network connectivity and compatibility with mobile devices. Online accounting software providers deliver their solutions over the Internet so your users can access the application from any browser-enabled device anywhere in the world, including mobile devices. This eliminates any concern over maintenance of the user workstations. Since all data is stored online, when a user’s system crashes, s/he simply moves to any other Internet-connected machine and continues working.

Stay Connected to Ensure Benefits

Using online accounting software does create one risk – you are responsible for maintaining Internet connectivity to the user workstations/devices. If the Internet goes down, you can’t work. While an online accounting software vendor almost certainly maintains world class security at the server-level, you will want to continue protecting the local machine from viruses and malware attacks.