When choosing accounting software to manage your accounts there is one important factor you must consider: whether to choose an on-premises software package or opt for a cloud-based accounting software service.It\u2019s essential to understand the difference between these two accounting systems before you get caught up in conducting a comparative cost-benefit analysis of different products. Once you understand the differences and their inherent pros and cons you can greatly reduce your research time and narrow down your options.<\/p>\n
To help you on that path to discovery, let\u2019s take a look at what the terms \u2018Cloud\u2019 and \u2018On-Premises\u2019 mean and the key differences between the two.<\/p>\n
Cloud Accounting Service<\/strong><\/p>\n \u2018Cloud\u2019 is a term you may have heard a lot recently in relation to internet-based services. When a service is referred to as being \u2018in the cloud\u2019, it simply means that the user logs in to a hosted website to access the service \u2013 as opposed to logging in to a software programme that has been installed on their computer\u2019s hard drive.<\/p>\n Cloud is also known as Software as a Service. This means rather than paying up-front for a proprietary software package, you simply pay a monthly or annual subscription fee to access the service.<\/p>\n On-Premises Accounting Software This was the most common form of accounts and book keeping up until around 2005 when cloud solutions started to become more prevalent.<\/p>\n A Comparison Of Cloud And On-Premises Software<\/strong><\/p>\n Both types of accounting packages have the same objective: to assist you in managing your own accounts, invoicing, pay roll, VAT and so on. But they both also have their own distinct advantages and disadvantages.<\/p>\n Make sure you understand the pros and cons of both types of accounting software to help you make a more informed choice.<\/p>\n Cloud Accounts Software:<\/strong><\/p>\n Cloud-based accounting software is low cost, easy to use and highly accessible. Because the service is \u2018in the cloud\u2019 you can log on from any internet-connected device (be it a lap-top, PC or portable device), which means you can work on your accounts anytime, anywhere. Your data is securely stored in a remote server, so you don\u2019t need to worry about backing up and storing large files on your own network.<\/p>\n Because you are using the accounts package as a service, and not actually purchasing a license for proprietary software, the cost is low, usually involving a small monthly fee. Cloud accounts services also provide excellent technical support, so you can get help using the service when you need it.<\/p>\n The main worry for cloud computing opponents has been concerning the security of data in remote servers. However these fears are increasingly becoming negligible as cloud technology continues to evolve. It is now widely accepted that remote servers used by cloud service companies are vastly more secure than most home- or office-based servers.<\/p>\n On-Premises accounts software:<\/strong><\/p>\n For many companies, on-premises software is ingrained in their day-to-day operations. Large investments were made to purchase software licenses and entire IT departments revolve around maintaining, upgrading and protecting the software and data.<\/p>\n While cloud is fast becoming the go-to solution for small to medium business owners and accountants because of its low cost, low maintenance and flexible access, on-premises software is still preferred within large-scale organisations such as financial or government institutions, where data can be managed centrally.<\/p>\n But for most small business owners a simple more streamlined way of managing accounts is preferred, making cloud-based accounting software a more attractive alternative to cumbersome in-house accounts software.<\/p>\n Accountants also increasingly prefer to use cloud accounting as it allows them more access to their clients accounts, saving them large amounts of time and money.<\/p>\n
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\nAs opposed to offering a \u2018service\u2019, on-premises software is purchased from a proprietary software provider and installed on your computer where it is literally kept \u2018on your premises\u2019.<\/p>\n