Each of these has advantages and disadvantages. But here’s the problem – there isn’t really a ‘best’ option.
Instead, all of these options will be the best for different companies or even the same company but at different stages of its development.
There’s a cost to setting up a system
For every system, there is a cost of setting up.
For the manual system, this cost is very low. All you need to do is use Excel, make up an expenses template and print it out. If you want a free version you can make up your sheet on Google Sheets and get staff to fill in the sheet online. Totally free and can be set up in probably no more than half an hour.
If you are going to set up an on-premise system, you’ll need to pay IT professionals to install it and you’ll probably need to dedicate someone to configure it to your specifications.
And for an all-singing and dancing cloud solution, there will be time needed to properly configure the main system and your workflows.
If you work in a two-person company then the time and expense of setting up the latter two systems probably make it not worthwhile and so it makes sense to suffer the inbuilt inefficiency of the manual system.
And this leads us neatly on to the answer to the question.
It’s all about what works for your company
If you work in a company that has a lot of people that claim expenses then it is likely that a manual system is going to be a major cause of stress. It will take a lot of working hours to manage and will require a lot of people to do different tasks.
Consequently, putting in an electronic method of managing expenses makes sense and that’s where the decision about cloud vs on-premise comes to the fore.
The differences between cloud and on-premise
10 years ago, on-premise expenses systems were the norm and they do have some excellent advantages.
If you buy software and install it on your own server then you are in control. Often, they can be customised to your requirements and you remain in control.
For example, if there are upgrades released then you can decide when you take the system offline to do this.
It’s also important to remember the thorny issue of GDPR. Although the UK has left the European Union this piece of legislation has now been passed into UK law and so we’ll need to continue to comply.
An on-premise system keeps its data locally and as the owner of the software and hardware, your company is in charge of security and so you can have confidence that it is excellent.
Generally, the software is really only available in the office or where your staff connect remotely through VPN and this works fine where you have staff that are office-based but might go out to meet clients or occasionally work on site.
Software in the cloud is owned and managed by the providing company and your company just pays to use it. Think about renting a room in someone’s house.
You can store your stuff in the room, and they might even let you decorate it. You don’t have to go through the problem of buying the house, or setting up the central heating or paying the mortgage.
But of course, if the owner decides to change the cooker in the kitchen then you have no say and once you leave you need to take your stuff with you.
Cloud is the same. You use the system or app and you store your data on a remote server. You might be able to change parts of the system to look a bit more like yours and initial configuration is generally much less onerous than with on-premise solutions.
Connectivity is better too as most of these systems work through a specialist app or an internet browser so for companies that have people out in the field who rarely visit the office then they are ideal. But of course, this all depends on whether your staff have good internet connectivity wherever they are and unfortunately this is not always the case in the UK and some other parts of the world.
But conversely, you are to a greater or lesser extent at the mercy of the software provider.
They will choose when to do updates so if you are using something that is from a company based in a different timezone, your expenses system might be unavailable at an inconvenient time and if they decide to change how a part of the system works then you just have to accept it.
You also need to make sure you are using a company that complies with GDPR or its international equivalent. You are not in control of security so it is important to choose a company that has a great reputation and uses all of the class-leading security techniques.
Cloud-based systems are great for businesses that have a large amount of staff who are working away from the office as they can connect from virtually anywhere.
Another massive benefit for cloud is that it is totally scalable.
A system can be set up for a company that might have 20 people who claim expenses and as each new person comes on board, more licences can be bought allowing the business to expand without having to replace its whole system.
So is a cloud-based expenses system the best for you?
For smaller companies, it is probably better to stay with a manual system. The time and expense required to set up a system are often not worth it when you are only dealing with one or two claims a month.
But if you are in a company that is expecting to grow rapidly then it is often a better idea to get an ‘over specced’ system that is way better than you need so that you don’t have to upgrade and go through the pain of changing later on.
In this case, I’d say cloud would be best as the entry cost is often lower (no servers to set up) and generally the licences are sold on a ‘per user’ basis meaning that the monthly charge is small in the early days.
If I was writing this piece ten years ago then there would have been a valid argument as to whether cloud or on-premise was the best option.
Today, connectivity is much better than it used to be and cloud systems have developed massively.
There would have to be some significant reasons why I wouldn’t recommend a cloud system, especially from a well-known company with excellent security.
The answer has to be that the choice of the cloud for your system comes down to your own particular needs.
If your company is spending a lot of time processing expenses manually, or if you have a system that just isn’t working for you then it’s probably time to have a look at what a great system like Access Expense can do for you.