Traditional Accounting or Cloud based Accounting Which is better for your Business? Why?

The Accounting methods have been evolving and improving day by day. Right from the times of manual accounting which was maintained in a handwritten bookkeeping process, then came simple DOS based accounting softwares like Marg, Profit, Tally, Miracle, T.fat, Saral, Udyog, Busy which has a very simple interface and simple process which made accountants' life easier. Now we have reached a phase where there are cloud based accounting softwares are available like Zoho Books, Quickbooks, Focus, Xero.

Many entrepreneurs, accountants and Consultants are not aware about the latest technologies available with cloud. The cloud refers to servers that are accessed over the Internet, and the software and databases that run on those servers. Cloud servers are located in data centers all over the world. By using cloud computing, users and companies don't have to manage physical servers themselves or run software applications on their own machines. One must explore these latest technologies and upgrade themselves to make work easier.

Let us understand few terms and differences between traditional and cloud based accounting:

What is Traditional Accounting Software?

Traditional accounting Software requires you to have a dedicated hard drive where your software is installed and financial data is stored. The end user accesses their data through a desktop application that can’t be accessed from any other device or network.

What is Cloud Accounting Software?

Cloud Accounting Software Provides the same functionality as on-premise/traditional accounting software. However, cloud accounting software connects using the internet to run on remote servers. The end user accesses their financial data and works through a web-based interface, instead of an installed desktop application

Let us understand difference between Traditional accounting and cloud based accounting

Why should one consider  shifting to cloud based accounting ?

Work from anywhere with Internet connection

  1. Remote working is not a hurdle
  2. Auditors can conduct audit online as all the copies of invoices and supporting are attached in the software itself
  3. Enables paperless office

Helps to centralize data easily over cloud

User friendly

The cloud based softwares are made keeping in mind non accountants, which makes it easier for any layman to understand, operate and analyse financial information with a minimum support of the finance personnel

Secure information

Since data is saved on the cloud which is secured through various encryptions and takes regular backups, no need to worry about hacking, system crash or failure.

Software is consistently updated and improved based on new technologies with no extra cost or IT help.

Value for Money

Buying any accounting software requires a huge cost of hardware as well as software capital cost which will be a one time cost however it is huge. Whereas cloud based software gives an option of paying monthly on the basis of your number of transactions, features selected, number of users, versions, storage space etc. This is a cost effective way to minimize on huge capital expenditure

Save time with Automation and speed

  1. Invoice creation from software
  2. Direct mailing of invoices to customers
  3. Payment reminder to customers
  4. Accounts posting during invoice creation, no duplicate efforts
  5. Automatic Bank reconciliations
  6. One can set user permissions and authorizations

Real Time data update

  1. Direct linking of bank accounts i.e. all entries are automatically posted in books, only categorization to be done
  2. One can set rules for bank categorizations and the same will happen automatically
  3. Where bank cannot be linked, Excel, PDF import options are available

Integrations with other platforms

  1. Integration with marketplaces like Amazon, Flipcart etc
  2. Integration with Your website to pull the sales data directly into the software
  3. Integration with payment gateways like paytm, Google pay, RazorPay, paypal etc
  4. Integration with Biometric system, Barcode scanner for inventory

Easy Tax compliances

  1. Many cloud based softwares have a link with tax portals like auto data push on GST portals. Zoho Books provides this facility
  2. Softwares where there is no linkage with tax portals provides with ready reports which can be shared to your consultants or used for in-house returns filing
  3. E- invoicing compliant, automated E-way bills creation

Online Technical support is available

Cloud based softwares gives you a few days trial period free of cost, 15 days, 30 days etc.

Dash boards

  1. Cloud based softwares provide analytics and dashboards will enables the management to take decisions
  2. Dashboards like Accounts receivable, payables with drill down to the entry level, Stock reports, cash flow, Financial statements etc
  3. No need to ask for information from your consultants, can view the business overview real time basis

How to make a switch to the cloud?

  • After considering the features, costing and other factors management must decide a cut off date for shift from Traditional software to cloud based. Generally start of financial year is preferable to get data of one year at one place
  • Use the trial period to check the feasibility and features that you want to opt for
  • Provide training to your staff with help of online videos or software partners for smooth transition
  • One can also outsource the entire accounting, compliance and MIS activity to the software partners and can focus on core business operations. Like Zoho has a very good partner network having professionals who can manage 360 degree accounts, compliance and MIS through ZOHO

The above differences between the traditional accounting and cloud based accounting, features and benefits of cloud based accounting makes it clear that in today’s world with changing technologies and new innovations which can save time, effort and money, one must adopt the changes consistently to achieve growth. Thus Shifting to cloud base accounting shall be considered by the entrepreneurs to make the work more easier and user friendly.


There might be resistance for such a change, however this decision to shift will become easier if you understand and explore the options available in the market for cloud based accounting softwares. Select the best that fits into your organization's needs. ZOHO books is one of the best cloud based accounting software in India (being a Indian company having HO at Chennai) They also have many other products Zoho inventory, Zoho CRM, Zoho Invoice, Zoho One, Zoho Expense and many more.


Start-ups and SMEs have the most to gain from adopting Cloud accounting technology, to whom the flexibility and scalability are of particular importance. When business scales up one needs to have a complete operating system that can be integrated with other modules or departments. If from the beginning such integrations are available then the growth stage is easier.


The above article is our personal opinion and based on our experience with so many businesses. So start exploring your options and make the most out of it.


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