Traditional vs. Cloud-based Accounting Software: Which One is Right For You?

Choosing the right accounting software for your business can be a challenging decision. With so many options available in the market, it's important to understand the pros and cons of each system in order to make an informed decision. Two major types of accounting software that businesses can utilize are traditional accounting software and cloud-based accounting software.

Traditional Accounting Software

Traditional accounting software is an application that is installed on a computer or server and accessed locally. The data is stored on local devices or servers, and users have to be physically present at the location to access the software. The software is typically purchased upfront and is licensed either for a one-time payment or a recurring fee.

Some advantages of traditional accounting software are:

• Greater control over your data: With traditional accounting software, your data is stored on your local device or server, giving you greater control over your data.
• No internet required: Traditional accounting software doesn't require an internet connection, which can be helpful if your internet connection is unreliable.
• One-time payment: With traditional accounting software, you typically pay a one-time fee to purchase the software.

However, there are also some disadvantages of traditional accounting software:

• More expensive upfront cost: Traditional accounting software usually has a higher upfront cost because you have to buy the software outright.
• Limited accessibility: Because traditional accounting software is installed locally, users can only access it from the location where the software is installed.

Cloud-based Accounting Software

Cloud-based accounting software is accessed through the internet, and the software and data are stored on the provider's servers. Users can access the software from anywhere with an internet connection and typically pay a monthly or annual fee to use the software.

Some advantages of cloud-based accounting software are:

• Lower upfront cost: With cloud-based accounting software, you typically pay a monthly or annual fee, making it more affordable upfront.
• Accessibility: Cloud-based accounting software can be accessed from anywhere with an internet connection.
• Automatic updates: The software is updated automatically, so you always have the latest features without needing to manually update.

However, there are also some disadvantages of cloud-based accounting software:

• Dependence on internet connection: Cloud-based accounting software requires an internet connection, which can be problematic if your internet connection is unreliable.
• Data security: With cloud-based accounting software, your data is stored on the provider's servers, which means you must trust them to keep your data secure.

Conclusion

When it comes to choosing between traditional accounting software and cloud-based accounting software, there is no clear-cut answer. It depends on your business needs, budget, and preferences. Both traditional and cloud-based accounting software have their advantages and disadvantages, so it's important to carefully evaluate each option before making a decision.

At Flare Compare, we provide unbiased comparisons of different accounting software, so you can easily compare features and pricing of different systems. Contact us today to learn more about our services!

References

[1] Investopedia. (2021). Traditional Accounting System. https://www.investopedia.com/terms/t/traditional-accounting-system.asp

[2] TechSoup. (2021). Cloud-Based Accounting Software. https://www.techsoup.org/cloud-based-accounting-software