One of the golden rules of business is to keep your operating costs lean, and a downturn in the economy puts this more sharply into focus than at any other time. While it may seem surprising, a change of accounting software can have a significant positive impact on a company's bottom line.

Understandably, many people are reluctant to consider changing software suppliers because they've got used to the software they're using or their accountant has recommended it, and for time-strapped SMEs it can be hard to find the time to research and test new systems.

However, the change does not have to be painful and if it saves you money, enables a better way of working with your accountant and brings business benefits, such as growth and profitability, then surely it's worth investing the time? Looking first at the cost, price comparisons show that small businesses can save up to £600 on the basic cost of their accounting software by choosing an online solution instead of traditional packages such as Sage, Quickbooks and IRIS.

Online accounting software can be accessed cheaply and easily through a standard web browser and internet connection. There's no technical installation, no distribution costs and no packaging because the software provider manages it all centrally. Looking after all their customers in one place and not having to support lots of distributed software means that their underlying costs are lower, which is passed on via a low monthly subscription rather than the old-fashioned large up-front fee to purchase the software.

The central service also means that upgrades and back ups are totally covered your firm will always be on the most up-to-date. Online accounting eliminates the cost and time associated with having to manage software, which even for small businesses can easily add up to several thousand pounds annually in hardware, software and people's time.

David Wall, managing director of a small company called LogBuy that uses e-conomic's online solution, said: "It amazes me that UK businesses don't embrace the internet as much as they could. We've always fully believed in the importance of hosted systems for our most business critical functions; it's an efficient and secure way of working - if ever our own server were to go down I can be confident that our business will keep running."

Another advantage of online accounting over traditional accounting packagesis that it provides the perfect platform for facilitating co-operation between business owners and their accountants. Only one in ten small businesses are fully satisfied with the relationship they have with their accountant, according to a survey conducted by the UK200 Group and Clydesdale Bank.

If the accounting process could be made more efficient, then the accountant would be able to reduce the time spent simply getting the books up-to-date and spend more time providing meaningful management reports that offer value-add to the business. To achieve this, both parties need to be able to see and share varying levels of financial information at the same time.

With online accounting, everyone works on the same accounts and always has access to the up-to-date picture. There's never any need to send files back and forth or travel between offices simply to update the accounts. Questions can be answered easily over the phone and the bookkeeping can be performed by the most appropriate and cost-effective person, whether it be the business owner, a bookkeeper or the accountant. The business owner has the added reassurance of knowing that the accountant can easily see what's happening and answer questions, which helps ensure that costly errors don't occur. Communication is vastly improved and the accountant has more time to analyse the data and provide value added advice.

Arguably the biggest barrier to change for most small firms is the time it takes to get up and running with a new accounting system. But the very nature of online software means that it has to be easy to get started and intuitive to use, otherwise users would just walk away. All small business owners need to do is assess their accounting system and evaluate whether a move to online accounting would save their firm money.

For more information on online accounting visit www.e-conomic.co.uk [1]