Cloud vs. Desktop Accounting Software: Which is a Better Fit for Your Business?
Updated: Mar 31

Companies have two options when choosing accounting software: they can either use a cloud-based system or a desktop system. In recent years, many businesses have begun to migrate from desktop software to the cloud. Cloud-based software offers finance teams the ability to manage accounting from anywhere, on any device. As businesses become more mobile, they need to upgrade their systems and processes from on-premises software to cloud solutions such as Xero or QuickBooks Online.
What is desktop accounting software?
Before the advent of cloud computing, most accounting software was installed on individual computers. This can be inconvenient, as it limits your access to your data and requires software updates and backup procedures.
What is cloud accounting software?
Cloud accounting offers all the same functionality as desktop accounting, but it is hosted online and can be accessed from any device. The platform is always up to date, and all data is stored on the cloud. Most cloud platforms will also have an open API, which means third-party software can connect with your system to provide further value.
What are the differences between desktop and cloud accounting software?
Cloud accounting and desktop accounting differ in many ways. These include user, pricing, accessibility, data backup, reporting capabilities, and more. The table below compares the two options:
​ | ​Cloud Accounting Software | Desktop Accounting Software |
Users | Multi-user access allows you to collaborate with your team and advisors seamlessly. | Only one user can access it at a time. |
Pricing | Affordable subscription rates are based on the number of users and features required. | A one-time hefty fee is required for the license, plus an additional cost for upgrades. |
Accessibility | Anytime, anywhere access from any device with an internet connection. | Software must be installed on specific computers, so employees must take their computers with them when working remotely. |
Data backup | Data is automatically backed up 24/7. | Backups are manual and require user intervention. If the company's computers break down or caught in a fire, their data could be lost. |
Security | Cloud providers use advanced encryption and access control to prevent unauthorized users from accessing your data. | Companies must take extra appropriate precautions such as installing firewalls, and anti-virus software and making sure they are up-to-date to protect their data, and credentials from breaches. |
Report | Cloud software packages provide extensive, customizable reporting to meet the needs of specific businesses and regulations. | There is a lack of financial reports, and these reports do not allow for much customization. Often, it is necessary to export data to spreadsheets to complete custom reporting and analysis. |
Automation | Cloud accounting software automates time-consuming manual processes such as custom reporting and reconciliation. | A manual process, with little to no automation. |
Integrate with third-party applications | Seamless integration with other cloud-based applications provides real-time data across your business. | Data must be manually transferred. Integration with other applications may be limited. |
Ability to share | Because data is stored in the cloud and centrally managed, companies can provide external accountants or other authorized parties with only the data they need to see. | Sharing data is a time-consuming process. Users must manually export the data and then manually share it with a third party. |
Update frequency | The software is auto-updated every 3-6 weeks with new features, security patches, and bug fixes. Users do not perform any action. | The software is updated annually or when a forced migration is required. If there is a bug or software update, you'll need to purchase a new version to install. The software updates will also need to be performed on every computer that is installed with the accounting software. |
Why Cloud-based accounting software is best?
Cloud-based accounting software delivers all the functionality and reliability of a desktop accounting system, but with additional benefits that only online technology can provide. If you run a business and are looking for a more efficient way to manage your finances, here are some reasons why cloud accounting is worth considering.
Cloud accounting software enables you to view your business's key numbers anytime, from any location with Internet access.
Real-time reporting can be achieved by keeping your bookkeeping and bank reconciliation up to date. The current financial position of the company is immediately visible.
The software is hosted on the web, so there’s nothing to download or install and you can access it from any computer. All your data is automatically backed up.
It offers real-time feeds to your bank accounts, allowing you to link your banking directly with your accounting.
Allow multiple users to access company financial data simultaneously, so that everyone has real-time access to the same information.
Data sharing can be made more secure.
You always have the latest version of the software.
Leading cloud solutions offer APIs, other apps, and suites of business applications to give businesses a more comprehensive, real-time view of the business, helping companies better forecast revenue, profit, and cash flow.
You can file your GST return and record your tax payment. Your GST payable stays up to date.
Problems with desktop accounting software
In addition, businesses have experienced several drawbacks when using desktop accounting software. The following are the disadvantages of desktop accounting software:
There is a lack of up-to-date data in the system.
It works only on one computer and data must be transferred manually from one location to another, such as on a USB drive—neither of these practices is secure or reliable.
The software allows only one user at a time.
Not compatible with tablets or mobile phones.
Installation and updates must be done manually.
Need to purchase additional anti-virus and firewall for each computer and make sure they are updated just to keep data safe.
Get up to 50% Productivity Solutions Grant (PSG). Also, enjoy up to $10,000 SkillsFuture Enterprise Credit (SFEC) if you’re eligible.
QuickBooks Online and Xero are both popular cloud accounting software options, but you should choose the one that best fits the needs of your business.
You may be eligible for a Productivity Solutions Grant (PSG) from Xero or QuickBooks Online. The PSG supports companies keen on adopting IT solutions and equipment to enhance business processes. From 1 April 2023, the maximum level of support will be up to 50%.
Furthermore, the SkillsFuture Enterprise Credit (SFEC) encourages employers to invest in enterprise transformation and employee capabilities. Eligible employers will receive a one-off S$10,000 credit to cover up to 90% of out-of-pocket expenses on qualifying costs for supportable initiatives, over and above the support levels of existing schemes. SMEs in Singapore can use this credit to train their employees on cloud accounting software.
Conclusion
Many companies are switching from desktop to cloud accounting because of the global transition to remote and hybrid working. Cloud accounting software not only offers real-time access to financial information, but it also provides more comprehensive features and greater flexibility than desktop accounting, allowing businesses to better manage their growing operations.
Acc Pro (Singapore) is a pre-approved vendor under Productivity Solutions Grant (PSG). Our services have helped Singapore SMEs to do their accounting online and digitalize their operations. Contact us today.