Use of appropriate modes of heat transfer in finite element modelling simulations of laser cladding and powder deposition is important for enhancing the reliability of the predicted results. An important contributory mode is melt pool convection, whose influence on residual stress generated during laser cladding process is the focus of this work. In this paper, an anisotropic enhanced thermal conductivity approach is used to analyse the three-dimensional thermo-structural characteristics of laser cladding and powder deposition of Inconel 718 on EN-43A mild steel substrate using finite element techniques. Compared with experimentally measured values, the results of the analysis indicated an over prediction in melt pool profile and size as well as higher peak temperatures from ignoring melt pool convection effect in finite element modelling of the process. With claims relating to the short nature of the duration for the solidification of a deposited clad, ignoring melt pool convection continues to be a common practice in modelling investigations of the laser cladding and powder deposition process. However, owing possibly to its resulting higher peak temperatures, the results of this investigation have portrayed the practice to cause higher residual stress prediction within the interior of the deposited clad and particularly around the interface, which is crucial location for the effective performance of a deposited clad.