Which is the best: Desktop accounting software or Cloud accounting software?

For the first time I encountered an argument against cloud accounting software. In the article “The Worst-Kept Secret About Quickbooks Online” by Gene Marks he says that desktop accounting software is better than cloud accounting software. Although the article is fairly old, desktop accounting software is still being used by many businesses. At some stage every business owner must consider which is the best: desktop or cloud accounting software?

The “Worst-kept secret about Quickbooks Online” is that it is one of the top cloud accounting software solutions

The article by Gene Marks made me realise that there are folks that still prefer to buy their accounting software in a box and install it on their PC or server. Desktop software can also be purchased and downloaded onto your PC or server. It is a fairly simple process to install desktop accounting software on a single PC.

In my experience, the challenge with the installation of desktop accounting software starts when you buy multiple licenses for a number of users and you have to register these licenses on a server. Getting this software to work has proved to be cumbersome and complicated. The installation is not only time consuming but requires a network specialist.

The desktop accounting software providers maximize their profit by attempting to get all of the users of their products to pay them. Hence license codes are issued for multiple users within an organization. Complications start as soon as these licenses are issued to a single organization for all it’s users to be registered on the individual computers and a server.

In many cases I had to make use of a network specialist that understands:

  •  the accounting software provider’s database,
  • has network knowledge,
  • PC knowledge and
  • an understanding of the intricacies of my own business server.

These network specialists were hard to find and expensive. A whole new industry has been created based only on the installation of accounting software which generates large revenues from small businesses. Although this sounds good for job creation it is an extremely costly affair for the business owner and takes away money from the business that could have been spent more wisely on other aspects.

Maintaining Desktop accounting software is a nightmare

Sadly, the challenges with the running of the desktop accounting issues don’t only stop there.  Maintenance of the computer system is required especially when there are server software updates or general windows updates on individual computers. In my case like most small businesses, I made use of various ages of old and new PC’s with different versions of Windows. My range of computer hardware expanded as and when I needed it. From a financial point of view, it was impossible to upgrade all my computers at once. Most small businesses don’t have the luxury to upgrade all their computer hardware at the same time.

I also found that the desktop accounting software that was running fine at one stage suddenly started to give errors and stopped working.  In most cases, it was caused by conflicts between windows updates and the accounting software versions. I then had to obtain the updates from the accounting software provider and the whole process started again of getting the installation specialist out. The net result being more expenses and costs for the business that eroded my profitability.

The challenge regarding running the desktop accounting software becomes a problem and a full-scale project that you have to manage with disaster recovery and other fail save tools. I have seen cases where the business owner took a few shortcuts in an attempt to save money that has gone horribly wrong. On the other hand, I have seen cases where the business owner has contracted network accounting specialists on a retainer to do installations, updates and weekly checks on the maintenance of their accounting software. I have also seen network specialists employed full time just to ensure the accounting software operates smoothly.

Considering the cost of computer hardware

Computer hardware is not as expensive as before but it is still costly to buy the hardware and the software for multiple

users that operate on a server. Not all business owners are network specialists and these services need to be obtained at a price. Disaster recovery strategies need to be designed and implemented. Coupled with proper back-up procedures of the business site. The costs add up to this aspect of the business.

A small to medium-size business can operate virtual software online without any of these headaches and at a fraction of the cost. Google Drive is an example of such a solution that works well. Combine a virtual server with cloud accounting and you can save money and spend your business time more wisely on growing your profit.

We have only covered what is required to run the accounting side of businesses with the associated outflow of funds, time and energy. There are other aspects of the businesses apart from accounting that needs attention. Business owners or managers can find themselves in a position where they are more involved in running the accounting side than the actual running of the business. This shift of focus away from actually growing the business is a classic example of working for your accounting and your accounting not working for you. The accounting side of the business is important and should not be neglected but the business is heading for disaster when there is not enough money, time, and energy spent on the actual business of providing the products or services and growing the profit of the business.

Working from multiple locations

Not only big businesses operate from different locations these days. Small and medium-sized businesses now also have to deal with working from different geographical locations. Many employees need to work from home. People need to access the business server to perform much-needed tasks. Access to the accounting software most likely will be required for tasks like issuing of invoices or updating of stock. Access to the server is being given to these employees via the internet anyway. The logistical and access problems associated with desktop accounting software can easily be overcome with online accounting. All that is needed is an internet connection.

To get back to the article, “The Worst-Kept Secret about Quickbooks Online” the author says that we are not choosing a cloud application but that the decision of desktop vs.  Cloud accounting is made for us by companies like Intuit who own QuickBooks. I disagree with this argument because cloud accounting actually saved me and my business like thousands of other entrepreneurs.

Cloud accounting saved me time from ordering accounting software packages and waiting for it to arrive. Or to drive around to find the right version of accounting software for me or my clients.

Once receiving the software it had to be installed on all the computers of the business and we had to get it to work. Getting desktop accounting software installed and properly working sometimes took days and a lot of manpower costs. It became even more expensive in cases where it could not be installed by my team. The focus on getting desktop software to work took away time from other more pressing things that needed to be taken care of. Cloud accounting solved all hardware and software networking issues. I could sell the server and end the very expensive time-based computer networking contract.

Cloud accounting gave easy access to all my employees as they could login from anywhere. As they could easily login from anywhere on any device I saved money on computer hardware because I didn’t need such powerful and fast computing capabilities. I only needed a fast internet connection.

Cloud accounting clients can give accountants access to their books to provide quick assistance when needed without the need for us to travel to them. This is a cost-saving to businesses with money that can rather be spent on growing their business.

Employees that work from home can work flexible hours. They save money and time traveling to work. Cloud accounting results in a more motivated happy workforce. Best of all I could also work from home.

Cloud accounting software providers make money

The author suggests in his article that Cloud accounting companies make an enormous amount of money. He suggests that the reader must do the maths. I think the maths of my business and the profitability of my business is the most important and more important than calculating how much money my service providers are making. On the contrary, those companies’ shares are publicly being traded and can be bought. It may be an ideal company to invest in.

The author warns the readers that cloud accounting is enforced upon us. Cloud accounting companies have been forced by the market to develop solutions for mobility. The wide application of cellphone apps in all businesses spread to accounting as well. Accounting software companies had to come up with solutions that fit the needs of accounting users and their mobility. They have responded really well with mobile applications that are included with online accounting software subscriptions at no additional charge.

Cloud accounting is the best thing that happened to the accounting industry

The best thing that happened to me and my business was when I was introduced to the Sage cloud accounting. Moving to the cloud did not only made my business more profitable it had a positive effect on the productivity and general well being of everyone involved.

In my opinion Cloud accounting software is far superior to Desktop accounting software.

 

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Louis Munro

Louis Munro is the founder of The Fun Accountant and a qualified Chartered Accountant (SA). He holds 2 post-graduate degrees in business and accounting and a Cloud Accounting enthusiast. Read More about Louis Munro. 

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