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What’s cloud accounting and is it right for your SMB

A small business owner in a home office uses cloud accounting software to manage his bookkeeping on his laptop.

Accounting is an ancient trade. For as long as there have been money and commerce, there have also been books to keep. So, every time you’re struggling with invoices and calculations for your small business bookkeeping, remember that your entrepreneur ancestors probably faced similar issues in days of yore. And, they didn’t have as many sophisticated technological tools to help them go about it. 

A major development in the field came in the 15th century when Italian mathematician Luca Pacioli published a guide on the double-entry bookkeeping system. It was an instant revolution and the method quickly spread worldwide.

It’s still being used today but digital technology has pretty much replaced the physical pen, paper, books, and ledgers. Cloud accounting is a more recent development embraced by many companies, especially small and medium-sized businesses (SMBs), for its flexibility, relatively low cost, and ease of use. 

In this article, we’ll explain what cloud accounting means, cover its benefits, and why it’s probably a good fit for your SMB.

Cloud accounting explained

Cloud accounting refers to performing bookkeeping functions using software that doesn’t store data locally on the computer it is accessed from. Instead, the data is stored remotely on servers owned by the company that develops and markets the software. The data is accessed online through a username and password.

This model is used by many software-as-a-service (SaaS) companies (including Melio) in various fields. Accounting is just one of them. Examples of cloud-based technologies you’re probably already using are email, AI bots like Chat GPT, and file hosting services, like Dropbox, iCloud, or Google Drive. None of these services are stored on your computer but you can access them by signing in from any device, as long as you’re connected to the internet. 

Popular cloud accounting services include QuickBooks Online and Xero. Incidentally, they also sync with Melio’s business-to-business (B2B) payment platform. This means your books will always be aligned with your accounts payableAccounts payable (AP)Accounts payable is an accounting term that refers to the outstanding bills or invoices for goods and services already provided to your business but that you haven’t yet paid for. and receivableAccounts receivable (AR)Accounts receivable is an accounting term that refers to all the money customers owe your business for products or services billed for, but not yet paid for.(AP and AR).

The benefits of cloud accounting software

You probably already know that there are better ways to manage your books than a spreadsheet. Bookkeeping software offers automation solutions for repetitive tasks, reminders, and integrations with additional tools for bill pay or payroll management, to name just a couple of examples.

But, cloud accounting offers even more benefits. Here are some of the most prominent advantages cloud accounting services have over locally installed software.

Secure and encrypted

With cloud services, your data is encrypted and password-protected to ensure it’s only available to authorized users. This helps ensure you are compliant with privacy and data protection regulations as well as reduces your risk of fraud and identity theft.  

Even if your hardware (your laptop, phone, or tablet) is stolen or otherwise breached, with a cloud service, you can remotely revoke access to specific users or devices as needed. Since the data isn’t stored on the device, you can quickly ensure it stays out of the hands of unauthorized or malicious users.

Accessible from anywhere

As long as you have internet access, your books are with you wherever you go. Even if you’re traveling or otherwise away from your back office, you can always access your information and ensure it is in tip-top shape.


Cloud-based services are typically less expensive than locally installed software. They are subscription-based so there’s less commitment and you’re only paying for the period you’re using them. 

Since all the data is stored remotely you won’t need to buy expensive equipment such as storage servers or high-performance computers just to keep the software running.

Furthermore, a cloud service typically requires less training and can be used within minutes after a short sign-up process.

Automatic updates

Unlike local software, with cloud-based solutions you don’t need to worry about updates that may affect your security. You just get the most recent version every time you sign in.

Is cloud accounting a good choice for your SMB?

To figure out whether cloud accounting is right for your small business consider the following characteristics of SMBs and whether they apply to you:

  • Small businesses don’t always have an accountant or a dedicated bookkeeper so they need a way to handle their own books without a degree in finance. 
  • They need a cost-effective accounting solution that will not have a negative impact on their cash flow
  • They can’t afford to make a large investment that will tie them down to a specific service as their needs are flexible.
  • They don’t have the time or financial resources to set up hardware, go through rigorous technical training, or install local software.

If you recognize your business in any of these statements, it’s definitely time to consider shifting to cloud accounting.

Cloud accounting and Melio sitting in a tree…

Cloud accounting offers the same features as traditional accounting software for a fraction of the price. It also requires less onboarding and no hardware upgrades, making it a great fit for small businesses. 

You know what else is a great fit for SMBs? Melio. A B2B payments platform built specifically to accommodate the AP and AR needs of small businesses. Melio also syncs perfectly with the most popular cloud accounting services so your financials are always up to date on both platforms. 

Sign up for Melio today to start the sync and keep your head (and books and ledgers) in the cloud. 

*This blog post is intended for informational purposes only and is not intended as financial advice.
**Melio does not provide legal, tax or accounting advice, and you should consult with a professional advisor before making any financial decisions.