If you’re still using traditional accounting software – or even a paper-based system - in your business, switching to cloud-based accounting may seem daunting.
But you might be surprised at the benefits it can bring to your business. Among other things, it can dramatically improve collaboration and security, help you control the level of access to your financial information and provide an overview of your business’ financial position in real-time. Plus, you can finally ditch the Excel spreadsheets (or shoebox!).
So what is cloud-based accounting?
With cloud-based accounting, your financial data is stored in the cloud (rather than on to a server), which means those with a login can access it securely from anywhere with internet access. Businesses pay a monthly subscription, whereas those using traditional software pay a significant fee upfront.
Stacey Price, of Healthy Business Finances, says many small businesses are still getting their heads around the technology.
One of the major benefits of cloud-based accounting is the ability to choose the level of access: for example you could give your payroll person access only to payroll - not your sales figures.
“Businesses don’t want to give out the exact details of how the business is performing,” says Ms Price.
“If you change bookkeepers or change accountants, or an employee’s leaving, you can take away their access.”
Let’s take a look at three of the most popular offerings.
Ms Price says Xero is the best known, and probably the first true cloud-only accounting software.
“The feedback is that Xero is easy on the eye. People just feel familiar.”
Ms Price says Xero has been designed for small business owners, not just bookkeepers or accountants.
“The biggest plus is that business owners can use it straight away, whereas with MYOB you need a little bit of training.”
There are a few downsides to Xero: no phone hotline (though you can email, or ask your accountant), and you can also only use Xero if you have internet access.
Ms Price says some users also don’t like the fact that you can’t back up Xero, though she suggests that businesses download their reports each quarter.
If you’ve used the traditional version of MYOB, the cloud-based version will look familiar and should be easy to use, says Ms Price. However it can be daunting for first-timers.
Ms Price says MYOB has a Melbourne-based phone support team.
“The support from MYOB is amazing, QuickBooks Online is second and Xero would be third,” she says.
Another bonus is that if you have unreliable internet access, you can download a desktop version and keep working. Once you have internet again, the file will update online.
MYOB has a handy ABN look-up feature. It is also better for more complex inventory needs, such as managing retail stock, she says.
The cheapest of the three, Ms Price says this service is “designed for the lower end of the market”.
As with Xero, the only way to back up QuickBooks is to download the reports you need and save them on to your computer, says Ms Price.
Even the cut-price versions allow free payroll for up to 10 employees.
Where to start
Start by asking yourself a few questions, including the following:
- What’s your budget? And could you potentially save money by switching to cloud-based accounting?
- Which features will you actually use?
- What kind of support do you think you’ll need?
- How large is your business likely to grow?