The main purpose of this report is to see whether the accounting software systems are effective or not. In order to do this a number of research methods are needed to investigate what is the difference between cloud accounting and traditional accounting systems, the benefits of the software systems and the limitations to these. A survey was created to find out the main reason and benefit of these systems and it was found to be the accessibility is highly regarded and easily used.
Secondary research was conducted to find out any limitations of the software as well as some questions included in the survey. It was found that there are a few limitations, including, security threats and internet accessibility. Overall, cloud accounting is highly regarded in the business and accounting world, and it would be recommended that any firm go ahead with investing in the software as it is very useful.
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Traditional accounting software needs a company to have a hard drive where the software is installed, and data is recorded on it. The user accesses their data through an app on their desktop, which cannot be accessed from any other device, which restricts a person’s mobility. Companies are responsible for maintaining the servers and increasing their own storage capacity with investing in new servers. Software needs to be updated manually too. It is very secure as companies have control over who access their financial data.
Cloud accounting software can be accessed from anywhere if an internet connection is provided to log in to the accounts. It allows accounting teams to access each other’s documents and files, with them all being in the one place. Costs are usually monthly or annually and this includes as much storage as needed. It also provides automatic software updates.
There are various types of cloud accounting software out there for companies to buy according to the needs of their business. Xerox offers a wide range of accounting features including invoicing, payroll, financial statements etc. Tasks are done in an automated style. There is an app available to smartphone users. There are different packages available to choose from depending on the type of business you have.
QuickBooks offers a program which businesses can use to manage sales and expenses and keep track of day to day transactions. It can be used for invoices, paying bills, reports, tax filing etc. QuickBooks offers a free 30-day trial of a fully functional version of the software. It is used to generate month and year end financial reports. There are different packages available to choose from depending on the type of business you have and what features you need.
Sage accounting systems are computerised packages that have several different features to process a company’s finances. The system collects data, classifies it and then summarises it to let the user see their financial information in a simple way. Sage systems can print out invoices, updating customer and supplier records, making payments, automatic update of the general ledger, valuation of stock, VAT returns etc.
As per Appendix 1, of the people surveyed for this report, 73% of them use cloud accounting opposed to 27% of those who use traditional methods. Two-thirds have previously used or still use both. Sage was the most common cloud software, with Xero coming in second place and QuickBooks coming last. Just over half of people surveyed said that they would not consider changing cloud accounting software. There were a various number of benefits to using the software, with two-thirds stating it is easily accessed/easy to use.
Others said it was cost efficient easy to share with others in the workplace. However, one stated that there were no benefits to the software. 23% of those surveyed would change the need for internet to access the files and 38% said that they wouldn’t change anything about the software. When asked whether they thought that the software is effective in what it does, 73% said that they preferred cloud accounting, whereas 27% said that they preferred traditional methods.
Accounting software systems can be improved in many ways, however not having the right accounting software in the first place is the costliest. It will need a sufficient amount of time investment in order for businesses to set up the solution. Not only will it take time to set-up, but it will also take time to implement.
Overlays can be put in place to generate the reports needed, this can be done instead of using spreadsheets which in turn, will save more time in the long run. By implementing new systems, instead of the traditional accounting systems, you will be able to eliminate double-entry, costly hardware if a cloud accounting software is chosen and time consuming and challenging spreadsheet work.
Despite the benefits of accounting software, there are also a number of limitations associated with the software. One of the limitations to the software is the training that is needed at the beginning of implementing the system into a workplace. This requires time, which is highly valuable. As the software needs internet in order to work, everything is done online and therefore fraud is an issue if a program is poorly protected as hackers can access all files.
Therefore, to protect your software, extra costs may be needed to secure it. As technology is quickly evolving, companies may need to pay extra costs once a year to update their system. As per Appendix 1, two-thirds of the people surveyed believed that there were limitations to the software. Of those who thought there were limitations, 40% considered internet access being required a limitation, 50% thought that the security issues are a limitation and the remainder thought that cost is one.
Most people who use the accounting software, prefer it to the traditional methods. Of those who use cloud accounting, most use Sage, which could be due to the services that it offers and the prices of each package. As some don’t believe that there are any limitations to the software, this can be seen as a major advantage to the software along with the easily accessible files and the software being cost efficient. Overall, improving the software is a main concern, as to develop and move forward, things have to change along with time.
The set up and implementation of the software is believed to be somewhat difficult and could be improved on. However, once everything is set up, it is easy to use. Hacking into the software is the main limitation associated with it, as it is all stored on the cloud, it isn’t as protected as it would be on a hard drive.
I would recommend that anybody that needs accounting software should go for a cloud software system. Sage seems to be the most used by accountants, according to the survey that I had prepared. Cloud accounting also has more benefits than it has limitations, with a main limitation being the requirement of internet, which is easy to find anywhere nowadays. Overall, cloud accounting is the newer technology in the accounting world, and it is highly regarded all over the world by businesses.