The History of Cloud Accounting Software
Cloud accounting is one of the most innovative and groundbreaking advances in the history of accounting software. The cloud has changed everything about how we take care of our finances, but there’s a lot of history behind it. Let’s take a look at how cloud accounting came to be.
Accounting in the beginning
The history of accounting is a long one that began with simple receipts and ledgers. It has evolved from more complicated systems like double-entry bookkeeping to what we use today – cloud accounting software.
Until recently, accountants and finance professionals were historians of sorts, sifting through historical data to come up with a picture of where you’ve been. In other words, it wasn’t until after you recorded your sales that you could go back through them (reconcile) and prepare an accurate balance sheet for your company’s owners or shareholders.
Modern cloud-based accounting software includes tools that let you view performance in real-time, but also allows for forecasting and future modeling to aid in decision-making!
Pre-cloud History of accounting software
Cloud computing is a relatively new technology, but software programs have been around since the 1960s.
The first program to automate accounting functions was written in 1965 at IBM’s Research Laboratory. This program ran on an IBM System/360 computer exclusively for internal use by IBM employees; it was not available to customers or made publicly available until 1978 when it was marketed as a “stand-alone” product under the name Commercial Financial Statement Preparation System (CFSPS).
In 1979, Cleveland State University programmers released their first version of what would become Peachtree Accounting, which they sold through mail orders later that year.
Within a few years, sales were taking off, and in 1987 they founded Peachtree Software Inc., which was one of the world’s largest providers of general ledger systems for decades. The company was purchased by ERP giants Sage in 1998.
In 1986, Intuit released its first TurboTax tax preparation software on floppy diskettes for DOS computers. This eventually became one of Intuit’s most successful lines after Quicken’s personal finance software was introduced in 1990.
In 1993 Microsoft launched Windows NT 4 with some basic accounting features built into Windows Explorer, such as “Money” which allowed users to track their bank accounts online at CompuServe — a feature that became defunct after AOL bought out CompuServe (AIM) in 1998 due mainly because AOL did not want competition from another internet service provider besides itself.
By the mid-2000s, cloud computing was beginning to create buzz, but many didn’t trust the availability/hardiness of the technology, nor the security of it. The rapid growth of not only front-end technology but also tech infrastructure, plus the blossoming of Web 2.0, all set the stage for the hyper-scaling of cloud-based accounting software.
Rise of cloud accounting
Cloud accounting software is the latest evolution of accounting software. While traditional desktop-based systems have been around since the 1960s, cloud accounting software has offered a much more efficient and secure way to do your accounting.
Let’s take a look at how the rise of cloud accounting software has taken hold in recent years:
- In 2010, there were only 6 million users of cloud-based applications. By 2017, there were 200 million users globally!
- By 2022, over 90% of companies were using cloud platforms, with 60% of all corporate data stored in the cloud.
Accounting in the cloud
Cloud accounting is a type of software known as Software as a Service (SaaS). Your company’s financial management software is hosted by the vendor, not installed on your computer. You access it using a web browser.
- 78% of small companies were using cloud accounting in 2020. (Accountancy Age, 2020)
- 58% of businesses used accounting software to meet the needs of their clients. (Sage Practice of Now, 2020)
- 82% – small businesses who used cloud accounting. (Sage Practice of Now, 2020)
- 52% – enterprises who used cloud accounting. (Sage Practice of Now, 2020)
- 67% of accountants preferred cloud-hosted accounting solutions over on-premise accounting software. (Flexi, 2021)
- Cloud-hosted accounting software reduced operating expenses by up to 50%. (Flexi, 2021)
- Businesses that switched to cloud accounting have experienced a 15% boost in revenue. (Flexi, 2021)
Cloud accounting is the future of accounting. It has brought about a new era for accountants, bookkeepers, and small businesses alike. While it may not be perfect, it’s certainly here to stay.
If you’re curious about the gains and improvements your business could see by deploying a cloud-based accounts solution, reach out to our team of experts, who can guide you through a personalized demo and discuss the platforms that best suit your needs.