So what is the difference between Traditional Accounting Software and Online Accounting Solutions I hear you ask. And what one should you use? Desktop Accounting Software, or ‘Traditional Accounting Software’ has been around for many many years. Online Accounting Solutions have been around for a while as well, but they have only taken off in the last few years. In this blog we are going to explore the difference so that you can make an informed decision when you are choosing your software.As a bookkeeper I can see the benefits of both Desktop Accounting and Online Accounting. I have been using Desktop Programs for many many years now, but made the decision to move most of our clients across to the ‘cloud’ 2 years ago. Looking back at this decision, I still wonder if it was the correct one. But there is advantages and disadvantages to both of these forms of software, so lets take a look at them.
Traditional Accounting Software always required you to make a purchase up front before you could install the program. Sometimes the cost was way more than you could afford and therefore businesses would hold off as long as possible to purchase it, or would take their work to their bookkeeper to have it done on their software instead. Then every time there was an update it would cost you more money to purchase that update.
With the introduction of Online Accounting came the introduction of subscription based purchases. This is where you pay a monthly fee for the software and it is direct debited from your bank account or credit card. This made purchasing accounting software much more affordable and made Online Accounting very attractive.
Traditional Software suppliers didn’t take long to recognise the advantages of having a subscription service for their software and quickly moved over to this method of purchasing as well.
Pre Online Accounting, if you wanted more than one person to have access to the file at the same time then you had to purchase the most expensive version of the software, this would allow you to have several ‘licenses’ so that several people could have access. If you went home and needed to work on your file then you would need to either take your computer/laptop home with you or you would need to back up the file and take it home with you (if you had another version of the program on your home computer.)
With the introduction of Online Accounting, you now have access to your file anywhere you are (provided you have internet), be it home, office, on holidays etc. There are so many advantages to this its not funny. For me, this is what makes Cloud Accounting so appealing. Do you know how many Floppy Disks/Hard Disks/CD’s/Memory Sticks etc that I have been through over the years due to backing up/restoring/backing up/restoring etc etc? Oh and lets not even mention the number of files that became corrupt over the years because of this process.
Traditional Accounting Software suppliers have tired to overcome this through the introduction of Hosted and Live versions of their Desktop Software, this has been a success for some companies and not for others.
With Traditional Accounting Software, whenever you needed to see your Accountant about something you would need to take him a copy of the file, or send it to him prior to your appointment. By the time you got to your appointment it was either a couple of weeks since you had copied your file or you forgot to take your file with you. Either way, getting real time advice about improving your business was quite difficult, unless your accountant came to you.
Online Accounting makes it easier for you to just go see your Accountant and he/she can log into your file while you are there and go through things with you. This makes getting real time advice from your Accountant a much easier process.
Once again, with the introduction to Traditional Accounting Software being Hosted or Live this issue is somewhat overcome.
There is no denying that Traditional Accounting Software can be labour intensive for the Small Business Owner. With the introduction of bank feeds into your Cloud Software and the ability to set ‘rules’ around transactions life has got easier.
But there are still a lot of inefficient bugs in Online Accounting Software today. Some programs are having issues with bank feeds down loading multiple times and if you are not a competent bookkeeper this can be missed and therefore throw all your figures out when you are reporting to the ATO. Some banks are also having issues ‘allowing’ access to the bank accounts from the software companies.
The Traditional Software Companies are also introducing automatic bank feeds into their Traditional Accounting Software versions, particularly their Hosted and Live versions, but once again, this is a big buggy so be wary.
Security is the question that I get asked most about when it comes to Online Accounting Software, but it is something that you do not need to worry about. Online Accounting Software is just as secure as internet banking, so if you trust internet banking then you will be right with Online Accounting Software.
As for safety, if your home/office is burnt down, or your computer blows up, you do not have to rely on a back up (and pray that it works) to get your data back. Just find another computer and log into your file. For me this is the best feature of Online Accounting Software.
With Traditional Accounting Software, if you had a PC you purchased a PC version of the product, if you had a Mac then it was the Mac version and more times than not you could not use your file on both versions of the software.
Now with the introduction to Cloud Accounting Software, it doesn’t matter if you have a PC, a Mac an iPad, Tablet, iPhone or Android phone you can access your data on any device. All you need is a device and the Internet and you are set.
Internet in Australia is not the best, so this is the down side. I have been at clients working away and their internet drops out and sometimes it takes quite a while to start up again.
Online Accounting Software has some great advantages over Traditional Accounting Software, but they are not perfect and the errors that can occur can be huge and cost you more time and money than you would have ever dreamed of. Don’t just jump over to Online just because it’s the latest trend. Really research each product and take the time to ‘get to know’ the Pros and Cons of all software.
In an ideal world I would have a Desktop version of software with all the advantages of being Online and there are some programs out there that are Traditional Accounting Programs with Online features and they are becoming more and more attractive.
I would love your opinion on this subject, so if you have moved from Traditional across to Online, why did you do it? If you decided to stay Traditional why was that?
Please remember, if you have a question for me, go to the ASK page of my website and you will be instructed how to ask me your question.
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