Most business owners would agree that managing finances and accounting can be an overwhelming task.
However, cloud-based accounting software solutions are revolutionizing financial management by automating routine accounting tasks while providing real-time financial visibility from anywhere.
In this comprehensive review, we will explore the top cloud-based accounting platforms suited for businesses of all sizes, spotlighting their key features, advantages and ideal use cases. You will discover how the right web-based accounting system can simplify operations, ensure compliance, and equip you with actionable insights to drive growth.
Introduction to Cloud-Based Accounting Software
Cloud-based accounting software offers businesses a way to manage finances and bookkeeping online through secure cloud servers instead of using desktop programs installed on individual computers. This software provides anytime, anywhere access to real-time financial data and collaboration capabilities not possible with traditional accounting systems.
Defining Cloud Accounting Software
Cloud accounting software performs all the key functions of standard accounting programs, including general ledger, accounts payable/receivable, invoicing, expense tracking, financial reporting, and more. But instead of installing software locally, it is accessed online via web browsers from any internet-connected device. Data is securely stored in the cloud, facilitating real-time collaboration across locations and devices.
Cloud Accounting Software Benefits
Key advantages of cloud-based accounting platforms:
- Accessibility - Remote access improves collaboration and financial oversight. Accountants can share real-time data with clients easily.
- Automatic Updates - No patches needed as the software is constantly updated on the vendor's servers.
- Data Integration - Seamlessly connect to bank accounts, POS systems, payroll and other business apps.
- Affordability - Lower startup costs and monthly subscriptions often cheaper than installed desktop accounting programs.
Cloud Accounting Software for Every Business
From micro businesses to enterprise corporations, today's cloud accounting systems scale to support organizations of all sizes and manage extensive accounting workloads. Key requirements are reliable internet connectivity and a willingness to master new technology. But the payoff can be massive productivity gains through streamlined financial processes.
Which is the best cloud-based accounting software?
QuickBooks Online is widely considered the best overall cloud accounting software. It offers a full suite of accounting features for small businesses, including invoicing, expense tracking, reporting, and more. Key benefits include:
- Intuitive and easy-to-use interface
- Robust mobile app for on-the-go access
- Scales with business growth
- Integrates with many business applications
- Automatic backups and updates
Xero stands out for its strong business performance tracking capabilities. It provides real-time financial and operational metrics to help businesses monitor their growth.
Zoho Books is an affordable, scalable solution suitable for small to mid-sized businesses. It can support unlimited users and transactions as a business expands.
FreshBooks is tailored to freelancers, contractors, and self-employed professionals. It makes billing, time tracking, expense management seamless.
Wave Accounting offers a full-featured free plan, making it the best option for small businesses on a very tight budget. Premium upgrades provide additional capabilities.
When evaluating cloud accounting platforms, be sure to consider the specific accounting, billing, reporting, and analytics needs of your business. Trying free trials can help assess whether the feature set aligns with your workflows. Partnering with the right solution can save considerable time on accounting tasks.
What are the cloud-based solutions for accounting?
Cloud accounting (or online accounting) has all the same functionality as desktop accounting, but moves the whole process to the cloud and expands upon it. There's no desktop application – you log in to an always-up-to-date online solution and all data is safely stored on a cloud server.
Cloud-based accounting software provides businesses with numerous benefits compared to traditional desktop accounting solutions. Here are some of the top cloud accounting platforms available:
QuickBooks Online
QuickBooks Online is one of the most popular cloud accounting solutions, ideal for small businesses. It provides core accounting features like invoicing, expense tracking, reporting, and integration with bank accounts. Key benefits include its user-friendly interface, mobile access, and abundance of 3rd party integrations. Pricing starts at $25/month.
Xero
Xero focuses on automation and seamless integration, making accounting tasks quick and painless. It suits small businesses with its extensive reporting, invoicing, expense claims, inventory, and multi-currency features. Top benefits are unlimited user access and over 700 app integrations. Plans start at $12/month.
NetSuite ERP
netsuite/">NetSuite ERP is a powerful end-to-end platform combining CRM, accounting, inventory and more, tailored for larger enterprises. It unifies business processes in one scalable solution. Key strengths include customization, business performance analytics and global cloud ERP. Subscription pricing varies based on needs.
The top cloud accounting platforms provide anytime, anywhere access, integration, automation, reporting and scalability. They enable businesses to manage finances more efficiently. When assessing options, understanding unique features and pricing models is key to find the ideal fit. Evaluating leading vendors like QuickBooks Online, Xero and NetSuite paves the way to leveraging the flexibility of the cloud.
Is cloud-based accounting software safe?
Cloud-based accounting software utilizes rigorous security measures to protect sensitive financial data. Various safety precautions are implemented, including:
Encryption
Data is encrypted both in transit and at rest using industry-standard protocols like SSL/TLS. This prevents unauthorized access to confidential information.
Access controls
Stringent access controls like multi-factor authentication prevent unauthorized logins. Activity logging provides an audit trail showing who accessed what and when.
Backups
Automatic backups ensure data is regularly saved to remote locations. This guards against data loss due to hardware failure, natural disasters, or malicious attacks.
Physical security
Data centers have 24/7 onsite security including cameras, guards, biometric scans, and environment monitoring. This protects the physical infrastructure hosting cloud data.
While no system offers absolute security, cloud-based solutions enable businesses to leverage enterprise-grade security measures that would be prohibitively expensive otherwise. Regular audits and certifications like SOC 2 demonstrate continued diligence.
With thoughtful precautions, cloud accounting platforms offer safety comparable to or exceeding that of traditional on-premises systems for most small businesses. Concerns should be addressed case-by-case based on specific needs.
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What are the disadvantages of cloud accounting?
Adopting cloud-based accounting software does come with some potential drawbacks that businesses should consider before making the switch.
Security and Compliance Risks
While cloud platforms often provide robust security measures, storing sensitive financial data in the cloud can present cybersecurity and compliance risks if not managed properly. Businesses must ensure proper access controls, encryption, and security best practices among staff. Regulated industries may need to verify that the cloud accounting provider meets necessary compliance standards.
Reliance on Internet Connectivity
Unlike traditional desktop software, cloud accounting platforms rely on consistent internet access. Any connectivity issues could temporarily impact access or performance. Firms should have contingency plans for potential disruptions.
Ongoing Costs
There are no large upfront licensing fees for cloud accounting tools, but it does require a continual software subscription cost. If these recurring fees are not budgeted for properly, it could catch some businesses by surprise. The pricing model also means that features, integrations, and customizations may cost extra.
Data Ownership Concerns
While uncommon, some have concerns about storing financial information to the cloud provider's servers and could prefer keeping data in-house. Cloud agreements should clearly outline data ownership and portability policies in case a company ever wishes to switch providers.
Limited Customization and Add-Ons
Many cloud accounting platforms provide integration support for popular third-party apps. But companies requiring highly customized modules or niche add-ons may find the options for cloud systems more constrained compared to traditional on-premise software.
By weighing the advantages against the potential risks or limitations, businesses can determine if cloud-based accounting aligns with their budget, security needs, and customization requirements. With the right provider and proper precautions, most find that cloud accounting delivers tremendous efficiency and productivity gains.
Comprehensive Review of Top Cloud-Based Accounting Solutions
This section provides detailed reviews of some of the top cloud accounting software solutions on the market, tailored for businesses of various sizes.
FreshBooks: A Leading Choice for Small Businesses
FreshBooks is one of the top contenders for best cloud accounting software for small businesses. Its core features include:
- Invoicing: Create, customize, send, and track invoices easily. Set up recurring invoices automatically.
- Expenses & Time Tracking: Log billable hours and expenses. Use the mobile app to track on-the-go.
- Reporting: Generate key financial reports with one click. Monitor income, expenses, profitability over time.
- Integration: Seamlessly connect to payment processors and dozens of business apps.
Key Strengths
FreshBooks shines when it comes to an intuitive, user-friendly interface tailored to non-accountants. It makes core accounting tasks like invoicing, expense tracking, and reporting easy and even fun to do for small business owners and solopreneurs.
The array of integration options is also a huge plus, allowing users to connect the tools they already use into one cohesive system centered around FreshBooks.
Potential Weaknesses
While feature-rich for early-stage businesses, FreshBooks lacks some advanced capabilities like inventory management and deeper customization options offered by platforms like QuickBooks or Xero.
It also focuses specifically on small businesses and solopreneurs, so larger or enterprise organizations would be better served by more scalable solutions.
Ideal Customer Fit
FreshBooks best serves bootstrapped small businesses, solopreneurs, freelancers, and micro-businesses with simpler needs. Those who want an easy-to-use and affordable cloud accounting solution will find FreshBooks to be a leading choice.
Xero: Versatile Cloud Accounting for Growing Enterprises
Xero is one of the most versatile cloud-based accounting software solutions on the market today. Let's analyze its breadth of capabilities to understand its positioning as both one of the best options for small businesses as well as best cloud-based accounting software for large businesses.
Flexibility for Business Growth
A major advantage of Xero is it can scale up with a business. While it offers an easy-to-use platform perfect for small business owners without an accounting background, it packs enterprise-grade features like more advanced reporting, multi-currency support, and robust inventory management.
This makes Xero uniquely positioned to grow with a business, avoiding the need to migrate to different software as operational needs evolve. For enterprise users, Xero provides features on par with solutions like NetSuite or Sage Intacct.
Ecosystem Integrations
Another major selling point is Xero's ecosystem of over 800 app integrations, rivaling QuickBooks Online. Users can connect the other tools they use to centralize operations in Xero.
Potential Drawbacks
Xero's advanced customization does come with a steeper learning curve. The multitude of features may also make it overwhelming for solo entrepreneurs used to simpler software.
There are also some limitations around payroll capabilities, though Xero is actively improving on this front.
When Is Xero the Right Fit?
For growing small businesses that want to prepare for the future, Xero provides an attractive cloud accounting solution. The same goes for larger companies that want the connectivity of an extensive app ecosystem. Those after easier software may want to evaluate
Criteria for Choosing the Best Cloud Accounting Software
Cloud-based accounting software offers many benefits over traditional desktop accounting solutions, including improved collaboration, real-time reporting, and accessibility from any device. However, with so many options on the market, how can you determine which solution best fits your business needs? Below are the key factors to consider when evaluating cloud accounting platforms.
Essential Accounting Features in the Cloud
When choosing a cloud accounting system, the first step is ensuring the software provides your business's must-have accounting capabilities. These generally include:
- Invoicing: Automatically generate professional invoices, accept online payments, and manage outstanding invoices from customers.
- Expense tracking: Log employee expenses, link receipts, process reimbursements, and categorize spending for accurate financial reporting.
- Budgeting tools: Create budgets across departments, compare actuals vs. plans, and adjust forecasts based on business insights.
- Financial reporting: Customizable real-time reporting on profit and loss, balance sheets, cash flow statements, and other key financial reports.
Reputable solutions like QuickBooks Online, Xero, or FreshBooks offer these essentials and more. Focusing your initial software evaluation on core accounting features ensures the system can handle your day-to-day financial workflows.
User Experience and Ease of Use
In addition to accounting capabilities, cloud software needs an intuitive user interface for rapid staff adoption. Employees are more likely to consistently use solutions that are easy to navigate from the moment they log in.
Key characteristics of user-friendly accounting systems include:
- Clean dashboards: Personalized homepages with at-a-glance financial insights and shortcuts to frequently used functions.
- Responsive design: Ability to use the software seamlessly across desktop and mobile devices.
- Unified navigation: Consistent layout, menus, and navigation between modules to support efficiency.
- Contextual help: Embedded FAQs, chatbots, or support links for self-service troubleshooting.
Prioritizing UX simplifies training, promotes daily software usage, and enables extracting value from your new accounting platform.
Mobility and Real-Time Access
Modern businesses don't just operate from traditional offices - employees also need accounting access via mobile devices when travelling or working remotely. Evaluating software flexibility and real-time financial visibility is key.
Capabilities to allow anytime, anywhere accounting access include:
- Native mobile apps: iOS, Android, and even Apple Watch apps to check balances, log expenses, or approve invoices from anywhere.
- Web access: Use all accounting features directly within mobile or desktop web browsers for flexibility.
- Real-time reporting: Financial reports and dashboards update continuously as new transactions are entered for up-to-date insights.
The ability for staff to contribute accounting data in real-time via mobile improves financial accuracy and supports better informed business decisions.
Summary
When transitioning accounting workflows to the cloud, concentrate your software evaluation across three main dimensions: essential accounting features, ease of use for driving adoption, and real-time mobile access for remote workforces.
Prioritizing solutions that check these boxes will ensure your business selects the best cloud accounting platform aligned to current and future operational needs. Staff will have the tools and visibility required to manage finances more effectively.
Top 10 Features to Look for in Cloud-Based Accounting Software
Based on the latest market trends, we'll provide readers with our shortlist of the most cutting-edge, valuable capabilities to prioritize in an accounting platform purchase for 2023.
Leveraging AI for Accounting Automation
Cloud-based accounting solutions now integrate artificial intelligence and machine learning to automate repetitive accounting tasks like data entry and report generation. This enables accounting teams to significantly improve productivity by reducing manual work and human errors.
When evaluating accounting software, look for AI features like:
- Automated data capture from invoices, receipts, and other documents to eliminate manual data entry
- Predictive analytics to generate financial forecasts and provide recommendations
- Natural language query functions to get answers and insights through conversational dialogues
- Personalized process automation based on frequently repeated accounting workflows
Prioritizing these AI capabilities can free up staff to focus on high-value strategic initiatives that drive business performance.
Configurable Cloud-Based Billing Software
Flexible cloud billing software allows you to customize invoices to match your unique business needs. Key features to look for include:
- Customizable invoice templates to represent your brand identity
- Ability to tailor payment terms and due dates for different clients
- Options to group items or services in item libraries that simplify billing
- Capability to generate recurring invoices for subscription-based offerings
- Choice of billing models like per unit pricing, project-based, or value-based
Solutions with robust configuration options provide the invoicing control and efficiency needed to streamline processes as business needs evolve.
Streamlining Payments with Vendor Payment Automation
Manually processing vendor payments is time-consuming and prone to errors. Modern accounting platforms integrate with banks to digitize and automate accounts payable workflows.
Key payment automation capabilities to prioritize include:
- Direct bank data feeds to sync vendor, payment, and balance details
- Rules-based payment processing to pay invoices due, enforce limits, etc.
- Bulk payment disbursements to simplify large volumes of payments
- Process tracking
Summing Up: The Best Cloud Accounting Software Shortlist
To conclude, we will provide a high-level comparison of the solutions reviewed and offer our recommendations on the best cloud accounting software options for different business types and needs heading into 2023.
Top Pick for Small Business Agility
Our recommendation for an affordable but powerful solution tailored to early-stage, growth-focused small businesses is QuickBooks Online. With its intuitive interface, robust feature set, and affordable pricing tiers, QuickBooks Online gives lean teams the core financial tools they need to manage invoices, expenses, payroll, and reporting in one centralized platform. The seamless integrations with other business apps also make QuickBooks Online ideal for automating workflows as small businesses scale.
Overall, QuickBooks Online strikes the best balance between usability, flexibility, and value for high-growth small businesses looking to manage finances simply and efficiently in the cloud.
Ideal Cloud-Based Accounting Software for Large Enterprises
Our choice for an enterprise-grade global platform able to unify financials across entities as companies expand is Oracle NetSuite. As a seasoned solution for complex organizations, NetSuite excels in consolidating financial data across locations and subsidiaries while ensuring full compliance and visibility into performance.
With its flexible, customizable reporting, Oracle NetSuite empowers large enterprises to tailor dashboards and business intelligence to meet the needs of multiple stakeholders. The extensive ERP capabilities also position Oracle NetSuite as a "one-stop shop" for organizations seeking an end-to-end cloud platform to sustain growth.
The Most User-Friendly Cloud Accounting Interface
Our selection for the solution with the most intuitive interface to enhance user adoption across non-accounting staff is Xero. With its clean, simple dashboard focused on day-to-day business financials, Xero makes the key tools accessible for the entire organization. Features like automatic bank feeds, mobile access, and the ability to attach notes to transactions directly also facilitate collaboration between accountants and non-finance employees.
