Online Accounting Software - Safe, Secure, Access Anywhere

The right accounting software can have a huge impact on efficiency in business, particularly so in small businesses. Improving cash flow is one of the most important goals of all companies, yet some accounting software actually hinders rather than improves efforts to chase up debtors.

Advantages of Online Software vs. Traditional Packages

Online accounting software has many advantages over traditional packages. Number one is probably cost: a small monthly charge for online software is a lot more manageable for small and medium sized companies than having to pay a large upfront fee for software that needs to be updated every so often.

Access is advantage number two. While you usually have to be in your office to access your traditional accounting software, with online accounting software you can access your company's financial records safely from anywhere in the world. This can be crucial when you're pitching for a renewal contract and are unsure how much a client has spent with you over the last three years or when you want to chase up a difficult debtor in person, demonstrating to them on your laptop's screen how long they take to pay you each month, thereby illustrating why you may not be able to extend their credit terms or allow them favourable discounts as a result.

Another advantage of online accounting software is that you're always up-to-date with the latest version of the software. This is done automatically by the provider and you don't have to take out time to install new software.

Disadvantages of Traditional Software

The main disadvantages are the cost, the time it takes to install new updates and the fact that once purchased, you're pretty much stuck with it until you can afford to buy something better.

Most online accounting software can be cancelled with a month's or, at the most, three months' notice, allowing you to try something different free of charge for a 30 day trial period and then cancelling your contract with the existing provider, once you're happy the new online software is performing better than the online accounting software you used before.

What should you look out for?

Firstly, will your business generate a high number of invoices every month? If so, you'll need online accounting software that produces clear, concise invoices and excellent statements for customers to understand and act upon.

Secondly, if you deal in different currencies, you'll also need software that can handle more than one currency.

Thirdly: be sure that you understand the accounting terminology used by your software provider. Most traditional and online accounting software providers assume wrongly that everyone performing the task of the accounting function within a company is also a trained accountant with full knowledge of that profession's terminology. This is, of course, nonsense and where the majority of traditional and online software providers fall short of expectations.

The truth is that most small companies cannot afford to hire a fully qualified accountant or bookkeeper; therefore, the accounting function is carried out by someone who will know what cash flow, profit and loss mean - but not necessarily what debentures, depreciation or forecasting signifies. You should avoid packages that hide behind jargon and packages that make your life difficult by being inflexible when it comes to correcting mistakes, raising out of the ordinary invoices or issuing credit notes to your customers.

It's wise to evaluate the various online accounting software packages available before deciding which one best fits.