Cloud Accounting: Simplify Your Business Finances with Ease

Published Monday 26 January 2026

Table of contents

• What is the cloud?
• What is cloud accounting software?
• Cloud accounting vs traditional accounting
• Limitations of traditional accounting software
• Benefits of cloud accounting software
• Is cloud accounting secure?
• Make the switch to cloud accounting with Xero
• FAQs on cloud accounting software

Key takeaways

• Implement automated bank feeds to eliminate manual data entry and save hours of bookkeeping each month by connecting your bank accounts directly to your cloud accounting software.
• Utilise real-time collaboration features to allow your team and advisors to access the same live financial data simultaneously from any device with internet connection.
• Prioritise cloud accounting providers that offer bank-level encryption, 24/7 monitoring, and automatic backups to ensure your financial data remains more secure than traditional desktop software.
• Apply the straightforward migration process by choosing a provider, transferring existing data, connecting bank accounts, and inviting team members to complete your switch to cloud accounting within one business day.

What is the cloud?

The cloud is a network of remote servers that store and manage data online, accessible from any device with internet connection. You're already familiar with the cloud if you use internet banking.

Every time you check your account online, you're accessing data stored in the cloud. This eliminates the need to store everything on your computer or rely on a single hard drive for access.

What is cloud accounting software?

Cloud accounting software is accounting tools hosted online that you access through your web browser instead of installing on your computer. This software follows a software as a service (SaaS) model.

Unlike traditional accounting software, cloud accounting requires no installation or maintenance on your computer. You can securely access your financial data anytime, from any device, making collaboration and real-time updates simpler.

In the case of cloud accounting, you keep your business books online. That includes records of income, expenses, assets and liabilities, so you can access and update them from anywhere. Most systems come with tools for quoting, invoicing, managing bills and more.

Learn more about what cloud accounting software can do.

How cloud accounting software works

Cloud accounting software works by following these simple steps:

1. Subscribe to online accounting software: Choose a cloud-based provider and create your account
2. Move your books online: Transfer existing financial data to the cloud platform
3. Access from any device: Use any web browser or mobile app to view your accounts
4. Connect your bank account: Enable automatic transaction imports to eliminate manual data entry

This automated process saves hours of manual bookkeeping each month.

Cloud accounting vs traditional accounting

Traditional accounting software keeps your financial data on a single desktop computer. This can make it difficult to access information when you're away from the office or collaborate with your team and advisor. To share data, you often have to send files back and forth, which can be slow and insecure.

Cloud accounting software, on the other hand, stores your data securely online. This means you can log in and see your real-time financial position from any device with an internet connection. It allows for seamless collaboration, as you, your team, and your advisor can all work with the same live data at the same time.

Limitations of traditional accounting software

Traditional accounting software limitations include outdated data, single-user access, and complex maintenance that restrict business efficiency.

Common problems include:

• Outdated information: Data isn't always current or accurate
• Single-computer access: Software only works on one device, requiring USB transfers
• Limited user access: Only one person can use the software at a time
• Backup complications: Costly and complex data backup processes, often neglected
• Expensive upgrades: Time-consuming and difficult software updates, unlike automatic cloud updates that can seamlessly integrate new reporting requirements without manual intervention.

Benefits of cloud accounting software

Cloud accounting software helps you automate tasks, work with others in real time, and use stronger security so you spend less time on bookkeeping and more time on your business.

Key advantages include:

• Automated data entry: Bank transactions import automatically, eliminating manual input
• Real-time collaboration: Work with your advisor or team from any location
• Advanced security: State-of-the-art protection safeguards your financial information
• Centralised data: All financial information stored securely in one accessible location

Running your business accounts online provides these measurable advantages:

• Automatic data import: Bank transactions flow directly to your books, eliminating hours of manual transcription
• Real-time financial visibility: View your current financial position at any time
• Multi-user collaboration: Team members and advisors can access accounts simultaneously
• Zero maintenance: No software installation or updates required, with automatic data backups
• Custom dashboards: Track who owes you money, upcoming bills, and cash flow status in one view

Is cloud accounting secure?

Cloud accounting security can often be stronger than traditional software because it uses encryption, round-the-clock monitoring, and off-site backups.

Security advantages include:

• Strong security: Reputable providers use bank-level encryption and other security measures
• Disaster resilience: Data remains accessible during natural disasters, fires, or hardware failures; for instance, after an earthquake closed a major office, hardware limitations made remote working extremely challenging, a risk that cloud infrastructure mitigates.
• Professional monitoring: Dedicated security teams monitor threats 24/7, a key benefit since a 2019 review found many organisations struggle with detecting and responding to cyber threats on their own.
• Instant recovery: Access your data from any internet-connected device immediately

Make the switch to cloud accounting with Xero

Switching to cloud accounting involves these straightforward steps with professional support available:

1. Choose your provider: Select a cloud accounting solution like Xero
2. Migrate your data: Use step-by-step guides or professional migration support
3. Connect bank accounts: Link existing accounts for automatic transaction imports
4. Invite your team: Add advisors and team members for collaborative access
5. Start managing finances: Access real-time financial data from any location

Most providers complete the setup process within one business day.

Ready to make the switch? Get one month free and get started today.

FAQs on cloud accounting software

These frequently asked questions address common concerns about implementing cloud accounting, keeping it secure, and the features it offers:

Is cloud accounting software secure?

Cloud accounting services typically use encryption, secure servers, and regular backups, similar to online banking. This helps protect your data, even if a device is lost or damaged. By controlling login access, you choose who can see your information.

How do I switch from traditional accounting software to cloud accounting?

First, choose a cloud accounting provider, then sign up for a subscription. Transfer your existing financial data by importing your account balances and past transactions, and connect your bank feeds so transactions arrive automatically. From there, you can manage your books anytime online.

What features should I look for in cloud accounting software?

Look for essential tools like automated bank feeds, invoicing, bills tracking, secure multi-user access, real-time reporting, and automatic updates. These features make it easier to stay on top of your finances anywhere you have an internet connection.