If you live in our world, you must have heard about online accounting solutions - apparently is all the rage. Its new, it’s advanced, it’s simple to use and it looks good. So shouldn't you jump on the online accounting wagon? Let’s try to figure it out together.
Don't they all look the same?
There are certain benefits to online accounting solution, if these are important to you - than definitely consider doing it. But before you do, please remember there are many disadvantages so make sure you make an informed decision.
Let’s look at some of the key features and points of difference when choosing an online solution:
- Global Access
Using an online solution means you can access your data from anywhere, you just hop onto the website from your local internet coffee shop and start reconciling your accounts, or you can log onto your account from the hotel's reception computer while on vacation in Fiji and create invoices? Does this make sense? I didn't think so.
Most people will do their bookkeeping at their office or home location every day or every week and most people have laptops.
- Cost of Ownership
If you decide to go with an online solution you would be asked to pay a monthly fee for the right to log on to the website, use the software and store your data. You're not buying a perpetual license to use it. Most of these website will quote you a monthly cost which ranges from $25/month to $75/month depending on the features you need. The average is about $600 per year; think about it you're going to pay $600 every year for this service. The cost of a desktop application with similar features is about $200 to $300 FOREVER.
- No Install & Upgrades
When you use an online solution you don't have to install anything on your computer and you never need to upgrade it - that's a good thing! It will save you an hour a year.
- Online Backup
This is a critical point, backup is the most important thing you must do to protect your company data, you put a lot of time and effort in entering this data and correcting it and you don't want to lose it if your hard drive crashes or your laptop is stolen. When you use an online solution they take care of this for you, a GOOD online service will have good backups you can trust. When you use a desktop application the backup is as good as you make it. Luckily there are free tools like www.dropbox.com which makes it extremely easy to have the same level of backup on your desktop.
- Functionality & Performance
Web technologies have had major improvements over the past few years and websites are actually quite interactive these days with Web2.0 technologies. But ask a web application what it wants to be when it grows up? A desktop application is the answer. Think about it, even your internet browser is a desktop application.
Websites are based on html data going back and forth between your computer and the web server on the other side of the world, on the way it goes through your home network, your ISP gateway, routers, firewalls, more routers and international links until it gets to the server (in fact it will go though at least 15 different hops before it gets there)
So when you put in your invoice data and you click save, there is a slight chance the connection was lost and that you've just lost your data. If it never happened to you - you're lucky. In fact some bookkeeping tasks are quite repetitive, you have a bunch or parking receipts from the past two weeks you want to enter, do you really want to wait for this web page to save and load after each one?
We've done some testing to prove this point and found that online accounting solution are 200% slower than a desktop solution under ideal condition (for the online solution :-) )
This one is a matter of personal choice and how you feel about having your data secured by the vendor, they sure do everything they can to secure that data and It is highly unlikely that this data is going to be breached. But it is still on a public website that holds the data of hundreds of thousands of businesses. Can you imagine how many people are trying to hack into the online banking systems of big banks? Would they tell you if it was breached?
Compare it to the security of your own laptop; breaking into your desktop computer is easy. I'm sure a good hacker can get to your files in minutes. But why would he care? So while your bookkeeping data file is not tightly secured (in most cases) it is as secure as your documents or pictures.
Hopefully you’ve gained another perspective on this whole ‘new wave’ of accounting solutions. It might be great for some kind of businesses but it is definitely not for everyone. The fact that a piece of software runs on a web server does not make it any better. So before you decide on your next accounting solution remember to take into account cost of ownership, features, performance and security.