Cloud Accounting vs. Manual Accounting- What’s the difference?

Small Business and Cloud Accounting

Manual Systems

Most small businesses are still using manual bookkeeping systems instead of Cloud Accounting. And it is costing them money.

For those using manual systems the people I speak to have thrown out the old Paper General Ledger and are now much more “advanced”. They have that all on Microsoft’s Excel.

And, amazingly, they also have now become very advanced and have access to their bank accounts online!

They have a person, often the poor wife, doing all this bookkeeping using these two “highly advanced” systems.

Well, honestly, perhaps it is a bit better than a paper General Ledger. But that itself is debatable because a paper General Ledger is unlikely to suffer from a hardware failure, i.e. a hard disk crash.

Accounting Software

Some time ago, accounting software for small business started to appear.  In 1983 by Scott Cook and Tom Proulx in Palo Alto, California hit the scene with Quickbooks.

At the time there were other competitors who have faded into the background. Quickbooks has managed to gain a substantial market share in the USA, but still a small percentage of small businesses use their software.

In 2006 Xero was founded by Rod Drury and Hamish Edwards from New Zealand. Xero has taken a large section of the Australian and New Zealand market and is expanding into the USA.

The original accounting software from Quickbooks ran on a Desktop Computer and allowed small businesses to keep bookkeeping records on line.

Desktop Accounting

Far from being similar to Excel, Desktop accounting software could:

  • Give reports.
  • Help balance the books.
  • and track inventory, etc.

Desktop accounting software is so far ahead of manual methods. Small businesses using desktop software are far less likely to get into trouble with the IRS and were far more likely to be profitable than those using manual systems.

After all, Desktop accounting software saved a lot of time for owners and reduced their costs considerably.  For the most part, those small businesses that didn’t use desktop accounting software, either just never knew about it, or were to intimidated to learn it.

Cloud Computing

Recently, a major advance has been made in Accounting Software and that is “Cloud-based” software. To give you a basic picture of cloud based software, it has two major advances:

  1. Anyone can access it if they have the username and password. So, staff all over can access it and permissions can be given to restrict people to being able to see only what they need to see.
  2. It is not subject to data loss through hardware crashes.

The two major suppliers of Cloud Accounting software to small businesses have bank level security on their systems. You have a lower risk of being hacked with cloud accounting than the chance of your hard-drive crashing in your desktop version.

You run a higher risk of having your office broken into and your computer stolen with all your data on it.

Even with all the scary news about businesses and governments being hacked, you are probably a lot more secure with cloud accounting software than you are having it on your desktop.

What’s good About Cloud Accounting?

So what can be done with cloud software vs. desktop software?

  • Well, for starters, now you can access it on the road, allowing your sales people to actually create an Estimate right on their smartphone, email it to the client, or even have the client read it, accept it and sign for it straight from the smart phone.
  • Your employees can accept credit cards straight on their phone and have that automatically credited to your bank account.
  • Invoices can be paid online, straight from the clients email
  • You can keep track of your business even while on holiday.

And these are just a few of the things you can do.

If you haven’t looked at cloud accounting software, now is the time to do it. And if you just want to talk about it, please feel free to give us a call!

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