Cloud accounting
Cloud accounting, also known as online accounting, is a model of accounting software where the application and data are hosted on remote servers and accessed via the internet through a web browser or mobile app. It operates on a Software as a Service (SaaS) model, where users typically pay a monthly subscription fee rather than purchasing the software outright.[1]
This approach contrasts with traditional desktop accounting software, which is installed on a single computer and stores data locally. Cloud accounting allows for real-time access to financial information from any device with an internet connection.[2]
Key features and benefits
Cloud accounting platforms offer several features that differentiate them from traditional software:
- Real-time accessibility: Users can access their financial data from anywhere, at any time. This allows business owners and accountants to view up-to-date financial reports without being in a specific office.[3]
- Multi-user collaboration: Multiple users, such as a business owner, a bookkeeper, and an accountant, can access and work on the same data simultaneously. This eliminates the need to transfer files and prevents version control issues.
- Automation: Many platforms feature automated bank feeds, which import bank and credit card transactions directly into the accounting ledger, significantly reducing manual data entry and speeding up reconciliation.[3]
- Data backup and security: The provider is responsible for data security and regular backups on their servers. This can offer greater protection than storing data on a local computer, which is vulnerable to hardware failure, theft, or damage.[2]
- Scalability: As a subscription-based service, it is easy for a business to upgrade its plan to add more users or advanced features as it grows.
Comparison with traditional accounting
The primary difference lies in how the software is deployed and accessed.
| Feature | Cloud Accounting | Traditional Desktop Accounting |
|---|---|---|
| Accessibility | Accessible from any device with an internet connection | Limited to the computer where the software is installed |
| Cost Model | Monthly or annual subscription (SaaS) | One-time upfront license fee, with costs for major upgrades |
| Data Backup | Automatic and managed by the provider | Manual; user is responsible for their own backups |
| Collaboration | Seamless, real-time access for multiple users | Difficult; requires sending files back and forth |
| Updates | Automatic and included in the subscription | Requires manual installation of updates and patches |
Notable providers
The cloud accounting market is dominated by several major software providers, including:
- Intuit QuickBooks Online
- Xero
- FreshBooks
- Sage Business Cloud Accounting
- Zoho Books
See also
References
- ↑ What Is Cloud Accounting?. PCMag. Retrieved 8 October 2025.
- ↑ 2.0 2.1 Cloud Accounting: What It Is, How It Works, Pros and Cons. Investopedia. 12 April 2023. Retrieved 8 October 2025.
- ↑ 3.0 3.1 What Is Cloud Accounting?. Forbes Advisor. 18 July 2024. Retrieved 8 October 2025.