Overview of Cloud Accounting

Over the years, the growth of the accounting industry has been linear to the development of accounting software. According to Fluidly, 88% of SMEs require the implementation of cloud-based systems in their data storage.

When it comes to desktop accounting software, it is installed directly into a personal computer. This means both the accounting system and all of the business’ accounting data resides within one’s desktop or laptop. The application can either be for free or a one-time fee. Usually, desktop accounting software has a limitation of users that can access the software at the same time and will impose an additional charge for each additional user. Furthermore, some desktop accounting software will require the main user of the software to be on while other internet users are accessing it.

The main difference between cloud-based accounting software and desktop accounting software lies in their data storage. Cloud accounting software allows more users to access the system at the same time. The only requirement for users to access the cloud accounting software is the internet connection. It is believed that the first cloud accounting software was NetLedger which is now known as NetSuite and this was launched in 1999. The software was first launched to aim at those larger organizations that had multiple offices around the world. Using the cloud technology, it enables them to work in their respective location on the same data in real-time.

There are several advantages to adopting cloud accounting software. The first advantage is its flexibility. As most cloud accounting software is website based, there is no download needed and can be easily accessed through mobile phones or tablets at any given time. Moreover, some cloud accounting software also provide mobile apps for the convenience of users. This brings flexibility to the work of a team especially during this COVID19 period where people are encouraged to work from home. In addition, it will make collaboration easier and will further improve the accuracy of the accounting book. Most cloud accounting software is an open platform. This enables them to be integrated with all the software applications that provide API to make a connection. The rise in integration with required software will lower the risks of accounting errors as all the relevant financial information is all linked. The Singapore government is even encouraging SME companies to switch over to cloud accounting software.

On the other hand, cloud accounting software does bring some inconveniences to the company. The main disadvantage of using this type of software is to have an internet connection as a prerequisite in order to access the software. When a user has an unstable internet connection, cloud solutions can seem slow, and it might hinder users from viewing all the information in real-time. Secondly, as most cloud accounting software is on a subscription basis, the price of cloud accounting software is typically higher compared to traditional desktop accounting software. The company will be charged either a monthly or yearly subscription fee. Once the company stops paying the subscription fee, they will lose access to their account book and data due to the outstanding payments. Hence, cloud accounting software might not be suitable if the company only requires one or two users to access the accounting books.

Recently, on 9 November 2020, The Monetary Authority of Singapore (MAS) announced the launch of a S$35 million Productivity Solutions Grant (PSG) for the financial services sector. The fund will be used to assist smaller financial institutions adopt digital solutions for more streamlined data reporting to MAS. Within the pre-approved managed service solution providers, some cloud accounting software is listed as part of the provider as well. Not to mention, there are other grants, for instance, Start Digital, that was launched in January 2019 to help new SMEs start their business right with foundational and competitively priced digital solutions. These digital solutions contain accounting, HR-management system & payroll, digital marketing, digital transactions, and cybersecurity.

References

Singh, S.K. (2013, September 8). 3 Popular Cloud Accounting Software for Singapore Businesses Compared. Retrieved from TechInAsia: https://www.techinasia.com/3-key-cloud-accountingsoftware-compared What is Cloud Accounting Software. Retrieved from FreshBooks: https://www.freshbooks.com/hub/accounting/cloud-accountingsoftware#:~:text=Cloud%20accounting%20software%20– %20also%20known,and%20returned%20to%20the%20user Depper, K. The History and Future of Cloud Accounting. Retrieved from Hartley Fowler Chartered Accountants: https://hartleyfowler.com/blog/the-history-and-future-of-cloud-accounting/ (2020, September 2). How Cloud Accounting Keeps Your Business Nimble in the New Normal. Retrieved from Straits Times: https://www.straitstimes.com/business/how-cloud-accounting-keeps-your-business-nimble-in-thenew-normal Everitt, J. (2020, January 15). Desktop or Cloud Accounting Software – Which Should You Use in Your Business? Retrieved from Busy Continent: https://busycontinent.com/desktop-or-cloud-accounting-software-which-should-you-use-in-yourbusiness/#:~:text=Desktop%20accounting%20software%20is%20installed,within%20your%20deskto p%20or%20laptop.&text=You%20downloaded%20an%20application%20to,could%20use%20it%20as %20needed.

(2018, October 24). Government Grants for Companies in Singapore. Retrieved from GuidemeSingapore: https://www.guidemesingapore.com/in-the-news/2018/government-grants-for-companies-insingapore Smallwood, S. (2018, August 3). Cloud Accounting and Security - Is It Safe to Move My Data to the CLoud? Retrieved from Fluidly: https://fluidly.com/blog/cloud-accountingsafety/#:~:text=Cloud%20applications%20use%20encrypted%20connections,yes%2C%20cloud%20a ccounting%20is%20safe.