Online accounting software Chartech software product guide 2015 edition
BUSINESS WITH confidence
ICAEW’s IT Faculty provides products and services to help its members make the best possible use of IT. It represents chartered accountants’ IT-related interests and expertise, contributes to IT-related public affairs and helps those in business to keep up to date with IT issues and developments. The faculty also works to further the study of the application of IT to business and accountancy, including the development of thought leadership and research. As an independent body, the IT Faculty is able to take a truly objective view and get past the hype surrounding IT, leading and shaping debate, challenging common assumptions and clarifying arguments. For more information about the IT Faculty please visit icaew.com/itfac
ABOUT THE AUTHOR Lesley Meall is a freelance writer and editor specialising in business and technology.
© ICAEW 2015 All rights reserved. If you want to reproduce or redistribute any of the material in this publication, you should first get ICAEW’s permission in writing. ICAEW will not be liable for any reliance you place on the information in this publication. You should seek independent advice. All publications in the Software Product Guide series, including the product reviews they incorporate, are commissioned by the IT Faculty from independent authors. The overriding principle in selecting the products to be reviewed in each Guide is that the Guide must achieve broad and balanced coverage of the field. Subject to that overriding principle ICAEW may offer software houses the opportunity to pay for reviews of their products to appear in these publications. Drafts of the reviews are sent to the respective software houses for the sole purpose of checking factual accuracy, and this process is identical for all reviews, regardless of whether or not they have been paid for. ISBN 978-1-78363-347-0
Online accounting software Chartech software product guide 2015 edition
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Contents 1 Introduction
2.1 Advantages of the online approach 2.2 Getting closer to clients 2.3 Benefits for small and medium-sized businesses
3.1 The requirements for online access 3.2 Software as a service 3.3 Safety and security considerations
4.1 4.2 4.3 4.4
Considering the options Before and after Supporting collaboration Considering costs
5 Risks and rewards
5.1 Potential concerns 5.2 Protecting your investment 5.3 Fear and trust
6 Reviews of online accounting packages
6.1 6.2 6.3 6.4 6.5 6.6
Aqilla Clear Books Accounting Intuit QuickBooks Online KashFlow Sage One Xero
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06 07 07
08 08 08 09
11 12 12 14 15 17 17 18 18 20 20 22 24 26 28 30 32
When the first online accounting applications hit the marketplace back in the 1990s, the world was anything but ready for them. Many people saw the internet as a scary technological equivalent of the ‘Wild West’; broadband connections were scarce and costly, and very few businesses were in a position to exploit the online approach to accounting, even if they wanted to – and very few did. But things have changed significantly since then and many of the technological and psychological barriers to online accounting have fallen away. The internet has evolved from a network that connects millions of computers into the network of interactive computing platforms known as the cloud; this has spawned myriad pay-per-use and free online services, which we have embraced. Many of us now want to collaborate, communicate, share and store information using cloud-based software and services and a variety of different fixed and mobile devices. So, although some organisations still buy accounting software and install it on the hard drives of their own computer systems, increasing numbers are exploring the possibilities of online accounting. All of this has helped to create an expanding and competitive market for online accounting services, but choice can be a mixed blessing; exploiting the latest and greatest technology isn’t always straightforward. This guide aims to simplify and speed up the selection process by helping finance professionals to assess the potential benefits of online access to accounting software; whether this is provided from public or private clouds (see What’s in a name? on page 09); whether they are accountants who are business managers, accountants in practice, accountants advising business managers, or accounting practices that are interested in exploiting the online accounting approach to enhance revenue-generating opportunities and client services. In common with other cloud-based services, the online approach to accounting systems has many potential advantages, such as accessibility, flexibility, scalability, fixed costs and rapid implementation times. See 2 Benefits for more information. But nothing is ever perfect (and online accounting is no exception), so as well as considering the advantages of the approach, it’s important to pay attention to thornier issues such as information security and privacy. See 5 Risks and rewards.
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Not all online accounting applications have been created equal, and a system that’s right for business ‘A’ won’t necessarily suit business ‘Z’. Built-in features, add-on functionality from other online tools and service providers, levels of complexity, and pricing models all vary between products and suppliers. Accountants will need to consider a range of key selection criteria during the research and selection process, see 4 Choices. Among the many online accounting and bookkeeping systems available, offerings range from entry-level products aimed at sole traders and businesses with no bookkeeping experience, to more sophisticated systems aimed at businesses with in-house finance expertise. A selection is listed in 7 Resources, with a closer look at the following systems in 6 Reviews of online accounting packages: l
Clear Books Accounting
Intuit QuickBooks Online
No discussion of online accounting systems is complete without mentioning the underlying technology. Whether you are trying to understand terminology such as ‘cloud computing’ and ‘software as a service’ or grappling with broadband connections and browsers, you will find technical terms of reference and concepts explained in clear, non-technical language, in 3 Concepts. With the support of this guide, finance professionals who are considering online accounting should be able to approach the decision-making process from an informed position, with an appreciation of the pros and cons, practical considerations, and financial implications of the choices they make.
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Accountants have a history of exploiting information technology, and their enthusiasm for the spreadsheet helped to kick-start the personal computer revolution in the 1970s. But many finance professionals are as prudent with technology as they are with other people’s money and for a while they have watched from a safe distance while more adventurous accountants took a walk along (and sometimes over) the bleeding edge with online accounting systems.
2.1 Advantages of the online approach For some accountants there is still a yawning chasm between appreciating the potential of cloud-based applications and using them to manage something as sensitive as financial data. But the accountancy profession’s attitude towards cloud-based software and services is evolving fast and this is combining with developments in technology and economic pressures to make the potential business benefits more appealing. In an era where the electronic filing of statutory returns is the norm, online accounting seems less like a ‘big risk’ and more like an idea whose time has come. On a practical level, using the internet to access and maintain business accounting records can make tasks such as bookkeeping, accounts production, payroll administration – and the associated statutory compliance – much easier for everyone involved. Whether software and data are in the public cloud or private cloud (see What’s in a name? on page 09), the online approach can also eliminate many of the tasks associated with installing, updating and maintaining the hardware and software needed to run traditional ‘on-premises’ applications (from backups to system upgrades), and reduce the need for in-house IT expertise. All of this can have a positive impact in areas such as time management, productivity and flexible working practices. With accounts data stored on a third-party server, it can be remotely accessed anytime, anywhere, by any authorised individual with internet access and a browser, and accounts can be worked on whenever and wherever it is most convenient, using an everincreasing range of fixed and mobile devices. So those who need to can share information quickly and easily, which minimises the need for re-keying and the potential for input errors and misunderstandings.
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The online approach can also deliver financial benefits. Where you are effectively ‘renting’ software and data storage, the up-front costs are lower, and the associated monthly/yearly costs can be easier to predict and control. You can also add users for periods as short as one month, which can compare favourably with some desktop licensing models. How much you can potentially save will vary for each individual scenario – not least among those who opt to access online accounting functionality with the support of managed service providers (see Private clouds, page 09).
2.2 Getting closer to clients Perspective is everything, and some of the potential benefits of online accounting will rate higher with some users than they do with others. So accountants in practice, for example, will be pleased to find that they and their clients can work simultaneously on client data without worrying about incompatibilities if they are each using a different version of the accounting software. Practitioners can also exploit online accounting systems to take a more proactive approach to offering advice and services. It is easier for the accountant to spot when clients are going wrong or getting behind, because they can log onto the clients’ accounts at any time, and offer advice on key transactions. Therefore, online accounting can facilitate better bookkeeping support and help firms to develop stronger links and relationships with their clients. It can also create a basis for all sorts of revenue-generating opportunities, such as providing real time transaction and tax planning advice, producing timely management accounts from clients’ raw accounting data, and offering a range of virtual FD-type services. Some firms prefer the online approach so much that they are trying to gradually encourage all of their clients to make the transition to online accounting. Some accountancy firms already offer all of their services remotely – not face-to-face – using online systems for accounting, customer relationship management and other functions, while supporting clients using email, phone and live chat.
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2.3 Benefits for small and mediumsized businesses Businesses of all shapes and sizes can potentially benefit from online accounting, but the biggest beneficiaries are often the smallest organisations. Because it’s easier for practitioners to access the information they need to produce clients’ monthly management accounts, reports, annual accounts, and so on, they can also make any necessary amendments more easily. This can be a boon to small businesses as they no longer need to key in their accountants’ adjustments, or worry about what will happen if they haven’t done so accurately. And while accountancy firms may already have strong business continuity measures and information security procedures in place, many of their small business clients will not, so the online approach to accounting can offer big improvements in these areas too. Online accounting systems are also gaining in popularity with medium-sized organisations that are large enough to have their own in-house finance function or require the breadth and depth of functionality offered by an enterprise resource planning (ERP) system. These are now available from online pioneers such as NetSuite, traditional giants of ERP such as SAP, and many other providers. How much accountants, and the businesses they support, actually gain from adopting online accounting depends on many factors, ranging from their choice of service provider, through the system in use, to how extensively they allow this to influence the way they run their businesses. The potential is enormous.
For some accountants there is still a yawning chasm between appreciating the potential of cloud-based applications and using them to manage something as sensitive as financial data.
3.1 The requirements for online access If you need to fly to India on business or send a parcel to Ireland do you purchase your own plane or set up your own international distribution network? Of course not. Buying these outright is much too expensive, so you take a more economical approach and pay a small amount each time you use either of them. Meanwhile, the airline and the courier take care of developing and running the services, handling manpower, maintenance, logistics, security and so on. Although this isn’t a perfect analogy, at the simplest level, the same model is used to provide online access to accounting facilities – and various other software and systems. The days are long gone when the only way to acquire software was to buy it and the only way to access it was to install the ‘on-premises’ application on the hard disk of your computer. Now that the ‘software as a product’ model has been joined by the software as a service model (see What’s in a name? on page 09), you can pay for systems on a ‘per use’ or subscription basis, and even take advantage of free access to some software and systems – and apps for mobile devices. To exploit this approach you need an internet service provider (such as BT) to act as gateway between your computer system and the internet; you need a telecom line to do it over, a device with internet access to do it from, and a web browser (such as Firefox, Internet Explorer, or Safari) to do it through. (It is worth noting that not all online accounting systems play well with all browsers or all mobile operating systems – see 5.1 Potential concerns.) You also need a broadband connection or a dedicated leased line – the faster and more reliable the line, the better.
3.2 Software as a service Software as a service (SaaS), which is pronounced ‘sass’ (like mass), is a model for delivering (or deploying) software, and it utilises all of these tools, plus the internet, to provide access to software. Because the software applications live on the servers of thirdparty providers, they can relieve you of the burdens associated with day-to-day maintenance, technical operation, support, and the relentless upgrade cycle – as well as some of the burdens of business continuity and disaster recovery planning. 08
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3.3 Safety and security considerations Despite our increasing comfort with all things cloudbased, some still see the fact that their data resides with a service provider as more of a weakness than a strength, because of the control issues it raises and the safety and security dilemmas it can potentially create. Each of you will have to weigh up the ‘pros and cons’ for yourself and (if appropriate) your clients. If you have ever used a free email system such as Gmail or Yahoo!, then you have already experienced the SaaS approach, and some of its advantages and disadvantages. In the case of online accounting systems, the service provider stores your accounting data in a database on remote servers, in the same way as Google stores your Gmail emails on servers at a remote data centre. So the service provider takes responsibility for the safety and security of your accounts data – which can be a lot less scary than it seems. Clearly, you cannot trust just anyone to take care of your sensitive private data. A good provider of online accounting systems will have the technology resources, operational procedures and technical expertise to guard your data much better than you could ever hope to. Data will be encrypted during transfer between your point of access and the service provider, stored at a secure data centre, and regularly backed up. You can read more about this, and the need for ‘due diligence’ in 5 Risks and rewards. Private clouds Some large organisations have transformed their data centres into private clouds that provide on-demand access (online and offline) to the software and data on them – and some use public cloud services too in an approach known as ‘hybrid cloud’. Some managed service providers take a similar approach to providing ‘on-demand’ services. Sometimes the software and hardware used is owned by the managed services company and used by multiple clients; in some scenarios it’s the service provider’s hardware and their client’s software; in others both the hardware and the software belong to the client. So terms, conditions, benefits and challenges all vary too.
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It’s a route to online accounting software that some small businesses and practices prefer. Perceived benefits include: more control over data integrity/ security, fixed costs, the personal touch and support and advice that extends beyond discrete applications. Cloud computing is developing fast and constantly expanding. Keep a watchful eye on its evolution and learn more from the ICAEW IT Faculty’s Cloud Computing – A Guide for Business Managers. WHAT’S IN A NAME? FROM SOFTWARE AS A SERVICE TO MANAGED SERVICES ‘The cloud’ began its technology life as a metaphor for the internet. Although the term is still used this way (rightly or wrongly), as the internet evolved from millions of connected computers into an interactive computing platform, the metaphor evolved into ‘cloud computing’. The most widely used and well-known manifestation of cloud computing is software as a service – think free email accounts (such as Yahoo!), micro-blogging services (such as Twitter) social networking sites (such as Facebook), and online accounting systems (such as those in 6 Reviews of online accounting packages). But cloud computing describes a range of computer resources that are delivered ‘as a service’ over the internet, in a dynamically scalable (or elastic) form that can expand or contract to meet demand, and in addition to SaaS this includes infrastructure as a service (IaaS), and platform as a service (PaaS). All of these are usually provided and managed by third-party service providers, who make them available on a pay-as-you-go (and sometimes free) basis to anybody with the wherewithal. These services are provided from what is generally refered to as the public cloud. But their success has inspired private cloud services too.
Every day over a 1000 users across 21 countries account for over 206 billion pounds worth of business with Aqilla The most capable multi currency and easy to use accounting and business solution in the world
World Class Cloud Based Accounting 10
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The number of bookkeeping and accounting systems available online is growing, so accountants are not short of systems to choose from. They range from basic cashbook systems, through multi-ledger systems, to full-blown ERP systems. Some offerings are aimed at small business users with basic bookkeeping needs and little or no bookkeeping experience. The more fully featured systems have been designed for multiple users with finance expertise, and may be aimed at organisations with more complex multi-site or multi-country set-ups, so the need for training and support, or specialist help with implementation and set up or integration with other systems, can all vary widely – as can the associated costs. There can also be wide variations between the amount of functionality that is made available via tablets and smartphones and apps. Online offerings vary widely in many other respects too. Some of the available systems provide access to their own proprietary accounting software that is available only online; some established software vendors have built web offerings that are different from their desktop products, and some offer online access to systems for which there are also desktop versions – though connectivity and integration between the online and offline versions varies. There are systems that provide a cashbook (for business users) and full-blown double-entry bookkeeping (for their accountants); some systems are aimed at specific vertical market segments and some offer accounting software with integrated payroll – though many don’t, and functionality varies among those that do. Payroll is an area so complex that it merits its own guide for accountants (in business and in practice). See Choosing payroll software and services, provided by ICAEW’s IT Faculty. On a superficial level, you can tell a lot about what sort of system you are dealing with from the home page of the supplier’s website. For example, go to e-conomic.com and you will find a multicurrency online accounting system that is available in English and in many other languages; at Brightpearl.com the focus is on multi-channel retail; while FreeAgent.com focuses on freelancers and small businesses. But when you are choosing an online accounting system it will pay to do your research and look beyond the obvious choices.
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4.1 Considering the options All of the systems available are going to handle basic bookkeeping, but there is no ‘one-size-fits-all’ solution, and there are lots of variations in terms of available features, ease of use, pricing models, upgrade paths, and more. You can make yourself a spreadsheet detailing requirements such as: l
ability to import and export data to and from other software tools and specialist systems (it’s important to establish if the connectivity is bi-directional);
accounting for non-profit entities;
availability (and range) of add-on applications;
e-commerce – including whether it is integrated or an add-on; facility to import transaction data at set-up; international functionality – such as support for local sales taxes;
multi-language and multicurrency facilities;
online banking – including whether the bank data feed is automatic;
point of sale;
purchase order processing;
sales order processing;
As well as checking out how good a fit the system is for a business today, you need to think about the future. l
accessibility and functionality for (Apple, BlackBerry, Android and Windows) mobile devices and availability of mobile apps;
However, there is no substitute for personal experience, so watch the online demos and get a hands-on feel for the systems by taking advantage of free trial offerings.
VAT – you should establish if it supports cash and invoice accounting, the flat rate scheme, and the VAT Mini One Stop Shop (VAT MOSS).
In the same way as you would select an on-premises application you will need to draw up a features shortlist – or a number of features shortlists – depending on whether you are looking for an online accounting system that can meet the needs of one company, a range of small businesses or small and medium-sized businesses, or a series of applications that can be used to meet the needs of a diverse range of clients.
Does the system connect or integrate with other (on-premises and online) systems; how easily and how seamlessly? Can data be exported in a format that can be imported into a spreadsheet, a desktop accounting program, or any other specialised online or offline application? Will the business or practice need specialist help with the initial implementation and configuration? Will the system be able to meet the needs of the business as it grows? If not, what is the upgrade path? What is the exit route if the system proves unsatisfactory?
4.2 Before and after How were you maintaining accounts before coming to an online system, and what might you need to do after the system you are choosing now? both also need some consideration. If, for example, you want to import data from an existing accounting system or a spreadsheet, you will find varying degrees of support, depending on the service provider. Some service providers offer a free import service but restrict you to just bringing over names and addresses, while others will support the import of as much historical data as you like, for as many previous years as you like – usually for a price. This can be a significant issue for many businesses, not least because of the need to retain access for up to six years’ VAT records. Before making any commitment you also need to consider your exit route – and this depends on a number of scenarios. If you are moving on because the system has proven unsatisfactory, and you want to move on to an alternative accounting system, the ease with which you can do this will, to some extent, depend on your destination.
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All online and on-premises accounting applications offer different facilities when it comes to importing data from other systems, and there may be scenarios where you need the services of a data conversion expert or service to get your data from the old system into a format that can still be accessed. Those who need to move on because the business has outgrown the system will face a number of options, depending on which service provider they have selected. Some online accounting systems are impressively scalable when it comes to accommodating increased numbers of users. Meeting the changing needs of growing businesses can be trickier. However, the widespread availability and uptake of cloud-based software and services is making additional functionality increasingly easy to find. The websites of many online accounting software providers now include links to others providing add-ons for all sorts of functionality: from cash flow forecasting or customer relationship management (CRM) systems, to receipts and expenses processing tools and services. Tools such as application programming interfaces (APIs) and pre-built connectors (for specific software applications) are making it easier to loosely couple or fully integrate different online systems and their data. However there are degrees of ease. For example, because FinancialForce.com was built on the Force platform (created for and by Salesforce.com) it is relatively easy to connect it to other apps that were also built for the Force platform. It is also worth noting that although some cloudbased add-ons for online accounting systems will work with some desktop systems, most cloud software has been created to work with other cloud software. Equally, it is not automatically any easier to connect or to integrate different online software applications and their data than it is to connect or to integrate different on-premises systems and their data.
and no potential for add-on features or applications, until and unless the basic product is enhanced (which happens frequently with many online systems). Some provide a potential upgrade path by offering multiple variants, but with equally fixed feature sets; some offer one application that can be tailored to meet the needs of different users; some offer a modular approach that mirrors more traditional applications; some offer an ‘entry-level’ online system and provide growing businesses with an ‘on-premises’ upgrade path. There can be scenarios where traditional ‘on-premises’ providers may seem to have an edge. It may not go down well with SaaS purists, but if a small business outgrows its cashbook system and needs to move on to a proper ledger system, or move from an entry-level system to a mid-range system, they may find this easier if their service provider has a foot in both camps. However, there are clearly benefits to choosing an online accounting system that is part of the mushrooming cloud-based ecosystem of software and services. The relative strengths and weaknesses of established service providers and new market entrants need considering. While it would be short sighted to dismiss a service provider simply because they are new to the market, it would be imprudent not to factor this into the decision-making process. But online bookkeeping and accounting software from established desktop providers can offer less functionality and be more difficult for non-accountants to use than systems that have been developed by cloud-based start-ups. It is worth doing some ‘due diligence’ and looking into the background, ownership, financial strength, and longevity of the suppliers on your shortlist. Before you make a choice, it’s also a good idea to look at the service level agreement on offer, and ask yourself, and the service provider, some difficult questions. Does the service level agreement guarantee service uptime?
What system availability does the service level agreement guarantee and what comfort are the penalties likely to be in the event of failure?
So the extent to which a system can be ‘customised’, ‘connected’ and ‘extended’ to meet existing or future needs will vary significantly. Some service providers offer a single system variant with a fixed feature set,
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How often and how long are scheduled maintenance windows?
Think carefully about support. l
Is there a 24-hour help line you can phone?
What sort of online support is provided?
How is support resourced?
Where are telephone support staff physically located? How many end users does the service provider need to support?
For many potential users of online accounting systems the biggest barrier to adoption is the safety and security of data – or the perceived lack of it. So this is an area that all businesses should pay specific attention to. In particular they should do the following. l
Find out what the service providers’ backup provisions are. How often do backups take place? What sort of business continuity plans are in place? Get references from the service provider and make contact with existing users.
You have to be sure that you and your clients are going to be happy putting business critical data and processes in their hands (see 5 Risks and rewards). Choosing the ‘right’ system from the available online offerings is in many ways similar to selecting a traditional application. It’s a multi-faceted and potentially complex decision-making process, and how well the system meets your needs will be determined, to a large extent, by how well you and the service provider understand them. Cloud providers that hail from the UK can sometimes be better at meeting the needs of UK businesses. Some cloud providers of bookkeeping and accounting software are better than others at providing external accountants with the tools they need to work efficiently and effectively with clients who are using these systems.
4.3 Supporting collaboration Some providers of the more grown-up and fullyfeatured online accounting systems (rather than bookkeeping systems) are primarily intended for use by organisations that are large enough to have their own in-house finance function. Therefore, they
are less concerned about functionality for external accountants than vendors of online accounting systems that have been developed with the relationship between the business and its external accountant in mind. Because of the close working relationships that many practising accountants have with their small business clients they need to be able to share accounting data. Many providers of online accounting systems have designed offerings that support this collaboration, and others have added this functionality as the benefits of doing so became apparent. As far as the mechanics are concerned, all online accounting systems have the potential to exploit the internet to enable the accountant and the client to share data, and work more closely together, but beyond this there are many differences. Many online accounting service providers offer practitioners a ‘control panel’ which provides an overview of their ‘online accounting’ clients from which they can access their accounting data. A single log-in for access to all clients and their accounting data and dashboard interfaces is increasingly the norm. As you will see in the product overviews in 6 Reviews of online accounting packages, these can provide practitioners with some useful (and time-saving) administration, processing, and reporting facilities. But not all online accounting systems have been created equal, and with at least one of the offerings out there, accountants can only look at their client’s data by opening a series of new browser windows. Different practitioners will have very different priorities. One firm may want to find a system that could potentially be used to service all of its clients, while another firm will opt to service clients of different sizes and with different levels of bookkeeping and accounting expertise with a range of online accounting systems. Some banks provide their business customers with online accounting software so this may be a consideration. Some firms will be comfortable encouraging their clients to use a system that has integrated payroll, while a firm that offers clients a payroll bureau service may see this as a potential conflict of interest.
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4.4 Considering costs One of the big selling points of online accounting applications is that they allow you to effectively ‘rent’ access to software and systems, and the various prices and pricing structures look good alongside the annual maintenance charges of ‘on-premises’ systems. But as with any rental agreement the devil is in the detail. Some base their charges on the number of users, some factor in the number of transactions, and the way that they do this can vary. Some charge a one-off fee. You can sign up to some subscription services on a monthly basis (and leave at any time without losing money), but you can also be quoted a monthly subscription charge, and then asked to commit to an annual contract. As the cloud ecosystem expands, more and more add-on applications and functionality become available, and the way that users are charged for these varies too.
There is no ‘one-size-fitsall’ solution, and there are lots of variations in terms of available features, ease of use, pricing models, upgrade paths, and more.
Among service providers that have a partner plan for bookkeeping and accounting firms that want to offer online accounting to clients, there is a great deal of variety. Some suppliers have created plans that are multi-tiered: some of these are free; some base costs on the basis of the number of clients using their online accounting system; some provide varying levels of functionality at different price points; the amount of marketing and support available to practitioners varies, even with a single service provider; some offer inducements to encourage practitioners (and their clients) to opt for a particular service provider. All prospective users of online accounting systems should do a very careful assessment of what a subscription buys. Some providers offer a range of free and paid-for add-ons and other services, and some offer free storage space which can be put to good use, if you can use it for anything you like, so check. Find out exactly how much of everything is included in the subscription and establish what sort of additional charges you can expect if you exceed this. You really need to do your sums properly before you make any commitment.
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Discover how to do it at
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Risks and rewards
The potential benefits of online accounting systems have been covered in 2 Benefits, but it’s important to consider some of the potential – and perceived – problem areas too.
5.1 Potential concerns One of the perceived benefits of online accounting systems is that users are not responsible for the installation, upgrade and maintenance of ‘onpremises’ software, but it is worth remembering that this could have a downside. When you are running packaged software on your own systems you get to choose if and when you upgrade, whereas with SaaS you generally have no choice (though some service providers offer an alternative). If a SaaS provider makes an upgrade that introduces a new version of the system that has ‘teething troubles’ or changes functionality in a way that has a negative impact on your business, you will need to know what your options are. Not all online software works well with all browsers or all browser versions, so firms and their clients may need to ensure that they are using the latest version or its predecessor. Similar challenges may arise with different operating systems and different versions, particularly with tablets and smartphones and apps. The ease with which authorised people can share data has a potential downside. For every business that provides their bank and other investors with open access to live accounting data and uses it as a way of improving and strengthening their relationship (or maintaining liquidity), there will be a business that is horrified by the possibilities that this could create. As the electronic filing of statutory data becomes ever more mandatory, some may also be concerned that HM Revenue & Customs will eventually want to access businesses’ live accounting data directly. Banking is one area where businesses and the accountants who advise them will need to make some very careful judgment calls. Businesses’ bank data can now be automatically uploaded (electronically) into both online and on-premises accounting systems, but specialist service providers and online accounting software providers use different approaches, and individual providers use different approaches for different banks. In some scenarios, after the initial
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bank feed is set up, the bank feed data is passed into the accounting software automatically: it requires no action by the software user/bank account holder and they do not need to submit their bank user credentials or login to refresh the data. However, there are other approaches. Some online accounting software requires the user to manually update the bank feed (not necessarily a ‘big issue’), but it may require the user to submit their bank login and credentials to get a data refresh, and this information is sometimes stored on the servers of the online accounting software provider, which can be a ‘big issue’. So establish what the software provider’s position is on legal liability and check the bank’s position too with regard to fraud and other unfortunate incidents. Some banks provide data feeds using a secure platform provided by Yodlee. Credentials are shared, but they are passed directly into Yodlee’s secure platform which then securely passes the bank transaction data back to the accounting software. Bear in mind that authentication methods vary; some banks use simple user name and password authentication, but an increasing number require secondary authentication using, for example, a PIN device, which requires the user to key in a unique, one-off code every time they request a sync between bank and accounting software.
the question of how long some of the newer entrants to the market will be around can’t be ignored, particularly in the current economic climate, when funding sources are scarce even for thriving longestablished businesses. The market for online accounting systems is becoming progressively more densely populated in the UK, as new and overseas entrants join the party. There has already been some consolidation and more is to be expected. Some commentators believe that in certain instances, market entries have been prompted by investors who are keen to see their business bought by larger, more established providers, so at some point in the future there could be good news for some providers and their users and bad news for others; though no matter which service provider you opt for you are taking a chance, of sorts.
5.3 Fear and trust
5.2 Protecting your investment
It is understandable that some accountants are uncomfortable with the idea of valuable and sensitive accounting data being stored on somebody else’s hardware, accessible only over the internet. At one time, the banking analogy was a popular (and convenient) one for putting these concerns into context. But while we are increasingly sceptical of assurances that our money is safe in the bank and guarantees that we can get access to it any time we like, we are becoming less sceptical about the risks associated with cloud-based accounting software and data.
Nonetheless, risk assessment and management is a complex area, and most businesses’ attempts to try to assess, measure and prepare for it are doomed to failure. If the credit crunch, terrorist attacks and our increasingly unpredictable weather have taught us anything, it is that the unthinkable can happen, and that when it does, most of us will be woefully unprepared for it. So the risk assessment exercise you perform before opting for an online accounting system should, in theory, be thorough and extensive.
The issues relating to established versus new entrants are many and we dealt with some of them in 4 Choices. Established is not automatically more stable or financially secure, any more than new is automatically more cost-effective or innovative. But
In practice, most businesses simply are not in a position to ensure that it is any such thing. Even if you put enormous amounts of time and effort into listing all of the possible risks, prioritising them on the basis of factors such as which are most likely and which
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would be most bothersome, and then taking steps to prevent, minimise and mitigate them, your data will never be 100% safe and secure with an online service provider. Equally, however, it would not be totally safe if it were stored on your own hard disk on your own premises and backed up daily using your own tape drive, as it will still be at risk from human error, equipment failure, fire, flood and many other threats. You can check that the service provider is using 128-bit encryption and Secure Sockets Layer (SSL) protocols during data transmission. You can read its assurances that it is storing your data on a server system with multi-tiered firewall protection and no external drives, USB-ports or printers, which is housed in an environment where employees have been carefully screened and physical security is controlled by a biometric access system. Then you can confirm that similar security levels can be found on the service provider’s backup site, and ask for a detailed description of their business continuity and disaster recovery plans. But the bottom line is, that unless you check all of these logical and physical procedures yourself, you are going to have to trust your service provider – and if you can’t do this, then maybe online accounting systems are not for you.
WHAT THE USERS SAY ‘Online accounting is the way forward, because it fits well with the way many small businesses operate,’ says one sole practitioner. ‘I’m the closest thing we have to an IT department,’ says one accountant, ‘but I handled the transition to cloud accounting software for a hundred-user system.’ ‘We see the market in terms of small, specialist clients and larger clients,’ says the operations director with one big firm that is offering its clients a choice between three different online accounting systems. ‘Accountants should look carefully at the pros and cons of SaaS before they jump in’, says one accountant who already has, ‘because it is not right in every scenario for every business.’ ‘I used an online integration tool to connect my online accounting system and an e-commerce system, but when I needed to add credit card processing I asked the experts.’ ‘I have full access to my accounting history online,’ says one small business woman, ‘and because my accountant can also access the system directly the whole process is transparent, and problems are easy to sort out.’ ‘We used to email data to the accountant and get nominal journals faxed back for us to process,’ says the accounts manager for a firm of architects. ‘Doing our accounts online saves time at both ends and reduces the need for paper filing.’ ‘I know that my accounting data is backed up onto someone else’s server every day,’ says one business user, ‘but I only feel secure if I know that we have done our own backup too.’
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Reviews of online accounting packages
6.1 Aqilla TARGET MARKET Aqilla is a fully functional accounting system aimed at mid-market organisations that are large enough to have their own finance function. It’s a multi-company, multi-currency system, with multijurisdictional tax functionality and it supports a range of language variants including English, French, Russian and Chinese (simple and complex characters).
COST There is an initial £100 administration fee to establish each instance (as a legal entity). Ongoing subscription charges are determined by the type of user and the type of entity: they range from £10 per month for each ‘Core Service User’ (accessing only document entry, enquiry and report tabs) up to £50 per month for each ‘Pro Service User’ (with full system access, subject to their role and permissions). Monthly charges rise to £70 for an ‘Enterprise Pro’ user for complex multi-company groups and those using inventory control functionality. Subscriber numbers can be increased or decreased on a monthly basis, given the 30-day minimum contract period. Service costs are explained clearly in the pricing section of the Aqilla website.
USER BASE Aqilla has over 600 subscriber organisations, including a number of complex multiple entities in the private, public and non-profit sectors. It has been part of the UK government G-Cloud framework since 2013. Although most Aqilla subscriber organisations are UK-centric, it is used in 21 countries and by a number of international organisations with multi-country operations. A few accountancy firms act as partners and provide Aqilla to medium-sized clients in vertical markets such as hospitality.
CONTACT DETAILS W aqilla.com T +44 (0)20 7098 9881
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OVERVIEW Aqilla was founded in 2006, when Colin Christianson and Hugh Scantlebury decided to build on their decades of experience in the business software sector and develop a cloud accounting solution. The result is a grown-up accounting system for mid-market organisations that want a system which can meet the finance needs of a broad range of users, in the finance function and beyond. So Aqilla focuses firmly on financial management, not bookkeeping – whilst the clear and straightforward presentation of the website is reflected in the product.
it offers batch processing and analysis and full multidimensional reporting, querying and analysis (at summary and detailed level). Because Aqilla uses a single unified ledger, it’s easy to analyse documents or transactions as they are entered; reports on actuals can be produced live, at any stage of the month, and the amount of time required for reconciliation is minimised.
A series of clean, uncluttered views provide easy access to the workhorse functionality of Aqilla, which includes multiple ledgers, cash management, order fulfilment, project costing, inventory control, business intelligence (BI), budgeting and forecasting, financial analysis, bank integration and automatic reconciliation, expense processing and more. All of this is presented in a way that makes Aqilla feel intuitive to finance and nonfinance users, as the technical complexity of journals is hidden beneath the surface. Built-in document management and workflow are used to simplify and streamline complex processes and transaction schedules.
Aqilla is a multi-company, multi-language product, with multi-currency capabilities, that offers the sort of functionality a medium sized company might be looking for from a serious accounting system (without the complexity that can sometimes be associated with this). It’s hard to criticise when it comes to analysis and reporting facilities, as these are extensive. Migration facilities are more comprehensive than those offered by many other providers of online accounting systems.
There’s a lot of customisation available for views and functionality, which simplifies initial configuration and the addition of new users going forward. Unique views and data rights can be easily configured and controlled for each Aqilla user: for example, the administrator can set role permissions, add new users, create new data sets, and so on just by filling in a few boxes. So a user’s rights may provide access to all features and all data, or be restricted to one or two functions.
Aqilla will offer sufficient breadth of functionality for many complex multi-company set-ups spanning multiple tax jurisdictions, as it provides local tax functionality for 24 countries. It is not an all-singing all-dancing enterprise resource planning system; but its tried and tested RESTful application programming interface (API) enables it to be connected to other systems such as CRM, payroll or project management. Like any system there are pros and cons, which may be in the eye of the beholder. For example: all Aqilla’s enterprise class data centres are in the UK; its mobile access is browser-based rather than app-based so although all functionality is available from all mobile devices, some screens may feel less easy to navigate as device size shrinks.
When a user logs in a ‘home screen’ dashboard presents key data and charts and graphs showing information that’s most important to them at that point in time. Data may relate to information inside Aqilla or be drawn from the internet and other external sources. Aqilla features built-in BI capabilities: Smart KPIs such as bank balance, aged debt and liquidity ratios; Smart Tasks monitor workflows of documents awaiting completion or approval; Smart Events (date-driven tasks) are traffic-lighted to reflect what requires the user’s attention – whether that’s a quarterly VAT return that’s due to go to HM Revenue & Customs, or a month-end process such as the approval of time sheets or authorisation of expenses claims. Navigation is via drill-down and a series of tabs for reports, journals and documents (which look as they would in real life), so users can quickly and easily find commonly used documents such as purchase orders and sales invoices. The built-in intelligence of the product is apparent throughout: the system knows by expenses type whether it’s VAT or non-VAT, for example. It also has a built-in ‘Smart Search’ facility that can, for instance, provide the correct codes for product descriptions. It’s clear that Aqilla has been designed to facilitate the fast and accurate processing of transactions, and to simplify management routines and repeat processes. As well as utilising document management and workflow ONLINE ACCOUNTING SOFTWARE
Over the seven years since its general release Aqilla has been available for 99.9997% of the time. It describes its offering as ‘Software as a Service plus Service’ to characterise the consultancy and implementation support available and the focus on building and sustaining personal relationships with customers that reflect their individual (and often very different) needs. The UK help-desk provides this via email and over the phone, and whilst there’s no online chat, the people at Aqilla actually know all of their customers. All of which should help Aqilla to continue attracting the sort of mid-sized organisation that can be put off by the one-size-fits-all approach of some online accounting systems. 21
6.2 Clear Books Accounting TARGET MARKET Clear Books Accounting, Clear Books Payroll and Clear Books HR are aimed at small businesses ranging from the simplest sole trader to VAT-registered small businesses with more complex needs. Clear Books Pro gives external accountants access to all three systems plus specialist tools to help them work with their Clear Books small business clients. Clear Books is also cloud accounting provider for the Santander iBusinessHub, a range of bundled cloud applications the bank makes available to its small business banking customers.
COST There are two subscription levels for Clear Books Accounting: ‘Together’, for the non-limited and non-VAT registered, costs £9 per month; ‘Together+’, for limited companies and VAT-registered businesses (and including access to integrated online payroll and HR for one employee, plus automated bank feeds), costs £20 per month. Clear Books Accounting is available free to students. Clear Books Payroll monthly subscriptions cost £2.50 per employee and the minimum plan includes two employees. The bureau version for accountants costs £200 per year, for up to 250 clients, each with up to 250 employees. Subscriptions for Clear Books HR cost £2.50 per month and the minimum plan includes two employees. All of these subscription levels (for Clear Books Accounting, Payroll and HR) support unlimited users and free UK-based telephone, email and live chat support (Monday to Friday). Clear Books Pro is available free to accountant partners, who also get discounted rates on the subscription charges for their clients who are Clear Books users. All Clear Books products are available free for a trial period.
USER BASE More than 8,000 small business customers and accountants use Clear Books software. Most of these are in the UK, but Clear Books is expanding internationally, and opened its first overseas subsidiary in the Netherlands in 2014.
CONTACT DETAILS W clearbooks.co.uk T +44 (0)800 862 0202 Clear Books Accounting is accredited by ICAEW.
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OVERVIEW Clear Books was founded in 2008 by chartered accountant Tim Fouracre and Fubra Ltd (a web-hosting and advertising company). Since then, both Clear Books the company and Clear Books Accounting software have expanded: the system now offers cloud software for accounting, payroll and human resources (HR) and the company employs over 40 people. Fouracre’s accounting background and his experiences establishing and growing Clear Books give him insight into the needs of the owners and entrepreneurs who use Clear Books software to manage their businesses, and the accountants who use Clear Books Pro to collaborate with their Clear Books clients. Clear Books Accounting is well-named: extensive use of tabs and drop down menus saves time by making it easy to navigate and gives the screens a less cluttered feel than some other cloud accounting systems. The Together and Together+ editions of Clear Books Accounting both offer multi-currency support for bank accounts, quotes and invoices (and users can automate recurring invoices); everything is covered when it comes to paying bills (with features such as recharge and purchase orders and a range of options for customers to pay, including direct debit). Both systems can be easily customised to control the functionality users can access. Most cloud accounting systems now boast some sort of automated bank feed and Clear Books is no exception. Automatic imports are mechanised using Yodlee and are free to Together+ subscribers. VAT functionality is also available only in Together+, but it includes support for the VAT Mini One Stop Shop (VAT MOSS) for invoices (the system provides the correct VAT percentage after the user inputs the country) and reporting. The range of reports in both Together and Together+ is comprehensive and includes budgeting and planning, cash flow, dividend vouchers, P11D, profit and loss, and a customisable dashboard showing the most important information. Accessibility and ease of use extend to the mobile apps (for Android and iOS), which provide selected functionality, ranging from capturing expenses to creating a quote or sales invoice – and the accounting system remains easy to find your way around on a tablet or smartphone. There are some welcome time-saving features such as a grid input screen for batch data entry and accountants will probably appreciate the templates for pre-defined charts of accounts for certain types of client and industry. Another nice touch is the ability to compare the standard VAT scheme with the Flat Rate Scheme, which could have money-saving potential for some businesses. Clear Books Accounting automatically shares data with Clear Books Payroll. This can support unlimited employee numbers and is not limited to just weekly and monthly pay periods, but fortnightly, four weekly, quarterly and annual payroll periods (unlike some cloud payroll software and services). There’s also industry-specific functionality such as for the Construction Industry Scheme; with support for salary sacrifice schemes, directors’ NI, and some other functionality not universally available in all cloud payroll applications or services. It lacks any pension autoenrolment functionality, but this is in the pipeline. ONLINE ACCOUNTING SOFTWARE
Another feature that separates Clear Books from the cloud small business accounting crowd is Clear Books HR – and its self-service functionality. After setting up user permissions, employees can view all of their personal information and request time off online; managers can approve or decline this with the click of a button; both can view absences, including holidays, illness and appointments. Employees and managers can use Clear Books HR to upload and share documents such as contracts and CVs – and managers can set up automated weekly emails to communicate with the team about important approaching dates. Clear Books Pro gives accountants single login access to Clear Books Accounting (Together+), Clear Books Payroll and Clear Books HR (and they receive a 40% reduction in the subscription rate on these products when they provide them to clients). Accountants have an overview screen for all of their Clear Books clients, plus tools to help the firm set-up and manage its Clear Book clients, such as templates for charts of accounts and role-based permissions, which can be customised for individual clients and users. Firms can co-brand the software with their own logo and company information.
CONCLUSION You don’t have to be an accountant to use Clear Books Accounting, but if you are, there is plenty of functionality and specialised time-saving tools to help you manage your Clear Books clients efficiently, across all of the integrated applications in the Clear Books ecosystem – which is growing. In addition to cloud software for accounting, payroll and HR, Clear Books has other cloud products under development, including its systems for customer relationship management plus final accounts production for microentities (which integrates with Clear Books Accounting) and both are freely available as beta test versions. Clear Books suite provides all of the functionality most small business and their accountants will need to run their businesses and collaborate with each other more easily and effectively – and there are lots of add-ons to meet more specialised needs. Clear Books may not have the longevity of some more established providers of cloud accounting software, but it has won a number of awards based on the votes and feedback of its users, and during 2013–2014, when Clear Books raised over £1.5m through two rounds of crowdfunding, more than 1,000 small business and self-employed customers of its cloud software chose to invest in the company. 23
6.3 Intuit QuickBooks Online TARGET MARKET Intuit QuickBooks Online is aimed at small businesses, ranging from sole traders and start-ups to medium-sized businesses with dozens of employees and more complex needs such as the ability to handle multiple currencies. Partner firms also range from sole traders to larger multi-site firms. Intuit is an international player and QuickBooks Online is available in many languages and handles sales taxes for many countries.
COST The single-user Simple Start version of QuickBooks Online costs £7 per month; QuickBooks Online Essentials costs £15 per month for up to three users; QuickBooks Online Plus costs £25 per month for up to five users. All three versions of QuickBooks Online offer integrated payroll functionality (powered by PaySuite) for up to 60 employees. Payroll is free until 31 July 2015 then costs £1 per active employee, per month. Intuit provides free support via the phone (between 08:00 and 20:00, Monday–Friday) and using online chat (between 09:00 and 17:30, Monday–Friday). It also makes many help articles, videos and webinars available online (for accounting and payroll) and a thriving QuickBooks Online user community offers Q&A type support and insight.
USER BASE QuickBooks Online has more than 430,000 small business subscribers and more than 1.3 million users worldwide. It is available in over 45 languages and has customers in 160 countries including its home (and biggest national user base) in the US. In total Intuit has more than 60 million customers worldwide, 45 million of them in the cloud.
CONTACT DETAILS W intuit.co.uk/quickbooks T +44 (0)808 168 9533 QuickBooks Online is accredited by ICAEW.
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OVERVIEW Intuit has been around since 1983 when the founders Scott Cook and Tom Proulx launched their personal finance product Quicken. They soon followed this with their first bookkeeping package for small businesses. Intuit is now an international company with more than 8,000 employees generating more than $4.5 billion in annual revenue and QuickBooks is an established and dominant force in the desktop and online markets for small business accounting products in its home market in the United States and many other countries, including the UK. QuickBooks Online Simple Start, Essentials and Plus all provide bookkeeping tools for: tracking cash flow, expenses and sales; creating quotes and estimates and producing invoices (which businesses can customise with their own company logo); automating the import of bank account data; and managing Value Added Tax (for the standard, cash and flat rate schemes). Certain functions are unlocked for use as users move up from Simple Start to become ‘Essentials’ and then ‘Plus’ subscribers. For example, the ability to schedule repeat items such as invoices, handle multiple currencies and track currency gains and losses, and to see a snapshot showing the state of a business on a single screen, all kick in from ‘Essentials’ upwards. There are lots of automated (and customisable) reports available at this level, but ‘Plus’ adds many more – along with features such as tracking and billing for employee time, real time stock management, plus budgeting performance management tools. Comprehensive, fully integrated payroll functionality is available from within all versions of QuickBooks Online. The integration simplifies initial set up (information such as company name and trading address is automatically carried over into payroll) and payroll processing (accounts are automatically updated after a payroll run so that current liabilities include payroll clearing, tax and national insurance). The payroll system is easy to navigate and use. Calculations are all automated. Creating reports is straightforward and making submissions such as Real Time PAYE Information (for HMRC) is as simple as pressing a button. Like many online accounting systems QuickBooks Online is part of a growing ecosystem of other cloud-based services that can add value to the data it collects – though levels of connectivity and integration vary between add-ons. These include software and services such as Receipt Bank (for extracting data from expenses receipts and invoices), Transaction Pro Importer (which can be used to import transactions and lists from Microsoft Excel into QuickBooks Online) and electronic invoicing (using structured messages) from Tradeshift. A simple summary view inside QuickBooks Online shows all of the add-ons a user signs up for. Intuit Pay enables QuickBooks Online subscribers to securely accept credit and debit card payments using their computer. A free Intuit Pay app for tablets and smart phones can be used with a wireless Intuit Pay chip and PIN reader (for which there is a charge) to take payments on the go. QuickBooks Online subscribers can also use apps for Apple (iOS) and Android tablets and smart phones (BlackBerry devices are not supported) to access limited functionality such as managing customers, estimates, invoices, payments and sales receipts. QuickBooks Online is also accessible via mobile browsers on Apple iOS, Android and BlackBerry mobile devices. ONLINE ACCOUNTING SOFTWARE
A free QuickBooks Online Accountant version connects bookkeepers and accountants to their QuickBooks Online clients, so that practitioners can access client data and use accountant-specific tools to analyse, work with and update it. After joining Intuit’s free Cloud ProAdvisor Programme, practitioners get access to free training, certification, specialist advice and support, plus a range of tools that have been designed to help firms enhance their client services and administration – as well as free access to QuickBooks Online Plus. This version of QuickBooks Online Plus provides all of the standard features and additional functionality for practitioners. These features include a single view of all client data, tools to work with large data sets (batch processing transactions and invoice processing, for example), access to a number of accountantonly reports, and the ability to assign tasks and set deadlines. All of this can be made available to an unlimited number of bookkeepers and accountants in the practice, each with their own unique user sign in.
CONCLUSION The three different versions of QuickBooks Online mean that there will probably be one that suits most micro and small businesses. Many of them will appreciate Intuit’s efforts to maximise the visual appeal of the online product, make it mobile device friendly, and minimise the initial set-up work (much of this is automated) and the amount of ‘accountant speak’ they need to grapple with. However, you can’t please all of the people all of the time, and those who come to QuickBooks Online after becoming familiar with a desktop variant of QuickBooks may feel as if the navigation is less intuitive than they are used to. Making some facilities easier for inexperienced users and non-accountants may slow some seasoned practitioners down a little until they become familiar with QuickBooks Online; but as it is primarily aimed at small business people, not bookkeepers or accountants, this is perhaps to be expected. There are lots of reasons to recommend this cloud bookkeeping software to small businesses, including a saving on the standard monthly charge for as long as they are signed up for QuickBooks Online via their accountant, who also has access to plenty of admin tools and other incentives to encourage them to use QuickBooks Online as the foundations on which to build a cloud practice.
6.4 KashFlow TARGET MARKET KashFlow and KashFlow Payroll are aimed at small and medium-sized UK businesses ranging from freelancers, contractors and other sole traders, to growing UK organisations and limited companies with more complex needs – and the external accountants and bookkeepers who typically work with them. It is part of IRIS, a specialist supplier of business software for small and medium-sized businesses and accountancy practices.
COST KashFlow ‘Starter’ edition for low-transaction businesses costs £5 a month; the ‘Business’ edition for growing organisations and limited companies supports multiple users, unlimited multi-currency invoices and bank transactions, for £10 per month; the ‘Business + Payroll’ edition adds integrated KashFlow Payroll for up to five employees from £15 a month, with additional charges for higher numbers. Free email support is provided. The automatic bank feed service (powered by Yodlee) is free, as is PayPal integration. There is no minimum contract period and monthly subscriptions can be stopped at any time for all editions of KashFlow. However, KashFlow Payroll has a 12-month minimum contract period. Membership of the KashFlow Connect Partner Programme is free. Members of the partner programme get priority telephone support and a dedicated account manager.
USER BASE Over 33,000 businesses use KashFlow and around 2,500 use KashFlow Payroll. Almost 5,000 accountancy practices use at least one solution from the IRIS cloud suite to collaborate and connect with over 213,000 subscribing SME customers.
CONTACT DETAILS W kashflow.com T +44 (0)844 844 9644
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OVERVIEW In 2013 IRIS acquired KashFlow, which was set up in 2005 by Duane Jackson (with financial support from the Prince’s Trust and the former Secretary of State for Trade & Industry, Lord Young of Graffham). Being part of IRIS puts KashFlow at the centre of an extensive suite of software and services that can be used to automate small business admin tasks (such as bookkeeping and payroll); integrate with products in the IRIS range of software and services which enable practitioners to automate aspects of their practice (from accounts production to taxation); and enable small businesses and their external bookkeepers or accountants to collaborate more easily and efficiently. KashFlow began with invoicing, then evolved into a system with much broader functionality: from basic bookkeeping tasks such as logging receipts and invoices and keeping track of customers, to more demanding tasks such as accounting by project/department and managing asset depreciation. all three versions – ‘Starter’, ‘Business’ and ‘Business + Payroll’ – provide core bookkeeping and accounting functionality: some features kick in with the ‘Business’ version (such as multi-currency invoicing and automated repeat billing and purchasing); ‘Business + Payroll’ does what it says on the tin. The wide range of add-ons – from business analytics to e-commerce and more – reflect the comprehensive API which allows the software to be connected to other systems. KashFlow was developed to automate and simplify record-keeping for small businesses with little or no knowledge of bookkeeping – and this shows. Navigation is straightforward, ‘accountant-speak’ is avoided and complex functionality can be concealed. Automation is used to simplify potentially complex tasks. For example, the system calculates the target bank reconciliation balance and flags transactions already in KashFlow as pre-reconciled. Users can review, approve or amend pre-ticked transactions before completing the reconciliation. The automatic bank feed feature includes auto-matching rules that suggest the best matches for these transactions among existing invoices and purchases recorded in KashFlow. The dashboard screen that users see when they log into KashFlow shows a ‘snapshot’ of how the business is performing with a ‘Financial Overview’ and other charts and graphs. Businesses can easily customise the dashboard to show the most important information, to arrange the dashboard layout, and select the types of chart or graph used to present information. Like all KashFlow screens, the dashboard is optimised automatically for different devices, so it is easy to find what you are looking for whether you are viewing it from a smart phone, tablet, laptop or a desktop computer – without the need to download any apps. The option to see the current period VAT liability in the dashboard ‘Financial Overview’ at every login is a nice touch – as is the advance warning given to non-VAT registered businesses if they are approaching the VAT threshold and may need to register. VAT record-keeping and reporting is a worry for many small businesses so anything that reduces this is welcome. KashFlow offers comprehensive VAT functionality, with support for Cash Accounting and the Flat Rate Scheme, plus support for the VAT Mini One Stop Shop (VAT MOSS) reporting needed by even the smallest supplier of digital services to EU customers. ONLINE ACCOUNTING SOFTWARE
KashFlow Payroll can be used to manage weekly and monthly pay cycles for an unlimited number of employees, companies and payment schedules. The system is easy to navigate, with plenty of contextsensitive help. It even boasts some self-service functionality for employees, who can log in and check their own payslips. It includes a range of standard and personalised reports; it automates the handling of realtime information (RTI) submissions (including their online filing) and assessment and communications for workplace pension auto-enrolment. Integration means that relevant financial data is automatically posted into KashFlow after each payroll run. There are also plenty of special tools for practitioners. From their KashFlow Connect dashboard, they can setup and customise the KashFlow accounts of individual clients, then access and manage all client accounts from this single portal using Client Manager, which provides access to tools designed to make it easier to work with clients, manage multiple accounts, and develop the practice. Online collaboration is further supported by IRIS OpenSpace, a private, secure, ‘file sharing’ facility that clients and practitioners can use to upload, store, approve and share documents with each other. Both KashFlow Connect and IRIS OpenSpace are ‘white label’ products which can be customised by the accountant with their own practice logo and colours.
CONCLUSION Integration and collaboration are fundamental parts of the (expanding) suite of IRIS cloud (and non-cloud) software and services which KashFlow and KashFlow Payroll are part of, and this has the potential to save practitioners significant amounts of time, reduce the likelihood of errors and improve client services. KashFlow Payroll (previously IRIS OpenPayroll) integrates seamlessly with KashFlow, which also integrates with the IRIS accounts production software. More specialist cloud products and services are in the pipeline. KashFlow was appealing enough to attract hundreds of bookkeepers and accountants even when it used to charge them a hefty annual fee to join its partner programme. As it is now part of IRIS and membership of the IRIS KashFlow Connect Partner Programme is free, many practitioners will probably find KashFlow even more appealing – whether they are already using IRIS software in their practice or looking for an end-toend offering that will allow them and their clients to make the most of cloud-based software and services. 27
6.5 Sage One TARGET MARKET Sage One and Sage One Payroll provide simple online bookkeeping, accounting and payroll software for small and micro-businesses, ranging from sole traders with UK-only customers and no employees, to businesses with more complex needs such as multi-currency and VAT compliance for trading overseas. The Sage One Accountant Edition provides practitioners with tools to view and manage multiple Sage One client accounts and payroll data online. Sage One is available in the UK and 14 other countries.
COST Sage One Cashbook (with support for cash-based accounting) costs £5 per month and £2 per month for users introduced by their accountant; Sage One Accounts (which adds functionality such as invoicing and VAT management) costs £10 per month; both versions are for single users. The multi-user, multi-business Sage One Accounts Extra adds features such as multi-currency and international VAT compliance and costs £20 per month. Sage One Payroll costs £5 per month for up to five employees; £10 per month for up to 10 employees; £15 per month for up to 15 employees. Businesses that subscribe directly to Sage One Cashbook, Accounts, Accounts Plus and Payroll can take advantage of a 30-day free trial (thereafter, contracts are monthly). If an accountant is paying for a subscription on behalf of their clients, there is no free trial period. Sage One Accountant Edition is available free to accountants who are members of the Sage Accountants Network (a subscription of £0.99 per month includes various online resources and services). A Sage One Accountant Edition subscription costs £0.99 per month for accountants who are not members of the Sage Accountants Network. All Sage One editions include unlimited transactions and free 24/7 telephone and email support.
USER BASE Sage One has more than 47,000 UK subscribers. Around 6.2 million companies use Sage products and services across 100 countries.
CONTACT DETAILS W uk.sageone.com T +44 (0)845 111 6611
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OVERVIEW Sage was founded in Newcastle in 1981 by print entrepreneur David Goldman (who wanted a fast way to generate quotations for prospective customers), computer expert Dr Paul Miller (who was exploring ways to streamline business processes, including bookkeeping), and his student Graham Wylie (who wrote an accounting software programme which could estimate the cost of the print company’s jobs and manage its basic accounting). Today, Sage is a global company and its specialist software and services for businesses and accountancy firms are used by around 6.2 million companies in 100 countries. The three subscription levels for the Sage One cloud accounting system provide different functionality. Sage One Cashbook offers a quick and easy way to keep basic records for accounts, customers and clients; bank activity (such as drawings and recording cash deposits into the bank); there are some simple reports such as a cash flow and a summary of sales, expenses and profit for the month or year to date. Cashbook users can’t create invoices; this feature kicks-in with Sage One Accounts, along with other invoice and payments functionality. Subscribers to Sage One Accounts (or Accounts Extra) can raise unlimited invoices (unlike some cloud accounting systems) and doing this (and emailing them) is simple. UK VAT functionality is available in Sage One Accounts: it supports the main UK small business schemes, including Flat Rate; however, traders using the VAT Mini One Stop Shop service (VAT MOSS) will need Sage One Accounts Extra. Sage One Accounts has more reports than Cashbook, such as the balance sheet, and a basic dashboard summarises information on sales, expenses, profit, unpaid invoices, bank balance, and when the next VAT return needs filing. Sage One Accounts Extra provides more functionality, access for multiple users (and tools to control what they can see and do), and the capacity to manage multiple ventures (from a single log in). International trading is supported: users can produce quotes and invoices and record sales and purchases in multiple currencies; exchange rates are calculated automatically, as is VAT. Additional reports in Accounts Extra include cash flow forecasts and an audit trail, and performance analysis can be done based on a range of variables (such as department or sector). All three versions of Sage One integrate with Sage One Payroll, with automatic posting of relevant pay run data into accounts, not manual input. Sage One Payroll covers all the basics – such as automated PAYE and NIC and RTI submissions. One area that separates it from some other small business cloud payroll systems is its pension auto-enrolment functionality. Sage One Payroll already supports NEST (National Employers Savings Trust), NOW Pensions, and The People’s Pension – welcome news for those trying to stay ahead of their staging date. Sage One Accountant Edition gives practitioners a range of tools to help them customise Sage One for their clients and manage their multiple Sage One clients – using a single client summary screen that provides an overview for clients using all three versions of Sage One. Like other similar offerings, the Sage One Accountant Edition lets practitioners customise charts of accounts, enter journal transactions, and run reports that aren’t
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available to their clients (such as the balance sheet and trial balance for Cashbook clients); and data can easily be output to spreadsheets and systems such as Sage Accounts Production and Sage Accounts Production Advanced. At the end of 2014, Sage claimed a first when it delivered Sage Final Accounts Online, which is free for use with ‘connected’ Sage One business subscribers. It’s a workflow-based tool with built-in compliance for sole traders, partnerships and small limited companies (FRSSE 2015), which integrates with Sage One Accounts to create an end-to-end solution: from online bookkeeping to producing and filing annual (autotagged and iXBRL-compatible) accounts at Companies House. It’s worth noting that it can also be used for non Sage One clients.
CONCLUSION The Sage One suite is part of a vast Sage ecosystem of products for accountants and small businesses, available for the desktop and the cloud – where the options are growing. Cloud offerings include Sage 200 Online (which brings together sales, service and financial information) and the customer relationship management system Sage CRM. Users of Sage 50 Accounts can access it online using Sage Drive. So there is lots of scope for businesses to change and grow without leaving Sage. By the end of 2015, the company aims to provide its suite of tax functions via the cloud too. However, at the time of writing (March 2015) there was a glaring omission from Sage One: automatic bank feeds. As these are almost the norm now in cloud accounting systems, not having them may put off some small business users. However, automatic bank feeds have already been rolled out to Sage One users in some overseas regions and they are expected in the UK by May 2015. Sage software has been around a long time and many people react to it like Marmite – with love or hate. The Sage One range may confound some expectations and reinforce others – though not in the ways people might expect. Non-accountants whose eyes glazed over at the complexity of more traditional Sage accounting products will probably appreciate the comparative user-friendliness of Sage One; seasoned bookkeepers and accountants may pine for something more familiar. Whether or not you like Sage One will be largely a matter of personal preference.
6.6 Xero TARGET MARKET Xero is aimed at small businesses ranging from start-ups and sole traders to companies employing around 20 staff, and those with multi-currency accounting needs – and the external bookkeepers and accountants who work with them. Members of the Xero partner programme are typically small to mid-sized firms with a few up to hundreds of clients; Xero also has a strategic partnership with KPMG. Xero focuses on English speaking countries.
COST The monthly subscription for the ‘Starter’ version is £9 which covers up to five invoices and five bills per month and allows the reconciliation of up to 20 bank statement lines; at £20 the ‘Standard’ version offers unlimited invoicing, bill payment and bank reconciliation, plus payroll for one employee; for £30 per month the large version adds full multicurrency features to this, along with payroll for up to 10 employees. All three subscriptions are for unlimited users within a single organisation. There are also two lower-cost editions for accounting firms costing from £2 per month per client. An automatic once-a-day bank feed is available from HSBC (£3 per month per account), RBS (£3.50) and NatWest (£3.50). Silicon Valley Bank provides a free feed; free feeds are on the way from Metro Bank and Santander; numerous bank and credit card feeds are also available through Xero’s use of the Yodlee platform at a monthly cost of £3.50 for each account. There is no charge for external accountants to join Xero’s partner programme, which is structured into a number of tiers determined by the number of clients the firm has (this also determines the discount on Xero business subscriptions). Xero’s cloud-based Practice Management and Xero Workpapers are free for firms with 25+ clients. There is no minimum contract period, and monthly subscriptions can be stopped at any time.
USER BASE Xero has more than 400,000 subscribers globally, with more than 60,000 in the UK. Xero has over 13,000 accountant partners in more than 100 countries, many of them are in Australia and New Zealand, with more than 3,000 in the UK.
CONTACT DETAILS W xero.com T +44 (0)800 085 3719 You can sign up for a free trial on the Xero website. Xero is accredited by ICAEW.
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OVERVIEW From the beginning Xero was designed with the needs of both small businesses and their accountants in mind, thanks to the company founders: technology entrepreneur Rod Drury, and accountancy practitioner Hamish Edwards. Just one year after it was founded (in 2006) it went for an initial public offering in its home country New Zealand, and then set its sights on the wider world. There are now more than 400,000 businesses using Xero in more than 100 countries, and more than 13,000 accountant partners are using it to work more closely and effectively with their clients. Xero is definitely easy on the eye – and finding your way around it is more intuitive and less demanding than some other bookkeeping and accounting systems. One of its strengths is that it makes all of its features, functionality (and the associated context sensitive help) available in a way that allows users to use (and learn how to use) as much or as little as they are comfortable with. Screens are not cluttered with unnecessary information or ‘accountingspeak’. A dashboard with clearly labelled tabs helps users to easily find their way around and terminology tends towards being ‘plain English’: accounts receivable is money coming in, for example. There’s even a popup warning from the system during manual journal posting and editing, advising the inexperienced user to leave general ledger management to an accountant or bookkeeper – who has a more technical perspective. Small business users will appreciate easily customisable quotes and invoicing (with automated repeat billing); debtors and creditors share a single contacts database; and Xero offers fully integrated payroll functionality in some versions. With guidance from the system, just a few steps are needed to configure payroll – assigning a bank account, setting up the pay calendar, and adding tax information for the company and its employees. A payroll-specific mobile app is being developed which will provide admin features for managers and enable employees to submit requests for leave and view their history for leave and pay. There are plenty of reports, and the business basics are topped off with some appealing additional features. Unusually, Xero includes a fixed assets register and tools to manage depreciation. It has recently upgraded inventory to provide complete tracking of the quantity and value of products being bought and sold. It supports standard Value Added Tax and flat rate reporting – unlike some online accounting systems. It also offers expenses management functionality, with approval and authorisation workflow, part payment of claims, and automatic claim reconciliation. The mobile app Xero Touch (for iOS and Android), allows you to photograph receipts and attach the image to a claim, as well as creating and sending invoices, checking bank balances, and staying on top of outstanding customer debts. Touch doesn’t provide all of the functionality you can get from the full browser-based version, which works well on a range of tablets with supported browsers; functionality is limited on smart phones. Xero was the first online accounting system to integrate bank feeds. Various banks now offer once-a-day automatic bank feeds into Xero; other automatic bank and card updates can be mechanised (from within
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Xero) using Yodlee (and can be manually refreshed as required). Charges for this service vary. Xero also offers fast cash coding, which speeds up data entry. The range of cloud-based third party add-ons for Xero is extensive and expanding: it includes software for billing, cashflow forecasting, CRM, inventory management, PayPal and mobile payments; though it should be noted that levels of connectivity and integration vary. Xero also offers free tools for accountants to help with the development and day-to-day running of the cloud side of a practice, working with and managing clients (using Xero) more efficiently. The ‘My Xero’ dashboard makes it easy to find information on staff, education and tools, subscriptions and billing, and the home page shows a list of clients and the status of each account. But it is those with 25-plus clients who get the most significant benefits from partnering with Xero: they get free access to Practice Manager and Workpapers, which are key to the efficiencies that Xero’s integrated Practice Studio can deliver. Practice Manager pulls information from Xero meaning that, for example, contact details and tax returns are always up-to-date; workflow management tools speed up tasks such as job tracking, quoting and invoicing, and a work in progress manager with its own dashboard further streamlines tasks; custom filters speed-up decision making; there are plenty of report templates and custom reports are simple to build. Each firm can set up its own approach to year-end compliance using Workpapers, and because you can access client data and use a secure online portal for communication, it is easier for the firm to take control of and prioritise compliance tasks and workflow.
CONCLUSION Looks aren’t everything but Xero is easy on the eye and it is easy to navigate (as is its entire website). Because Xero’s integrated online accounting and payroll tools also integrate with My Xero, Practice Manager and Workpapers, and the data flows seamlessly between them all, there is enormous potential for small businesses and their external bookkeepers and accountants to work more efficiently. a well thought-out offering, Xero demonstrates how powerful an online accounting system can be when it is part of an integrated and connected ecosystem. If you looking for an online solution that can enable a more collaborative approach to client services and streamline compliance and support, Xero should definitely be on your shortlist. 31
There are many service providers and software developers offering online accounting solutions and hosted versions of traditional ‘on-premises’ applications. the following list is not complete, but it does provide the web addresses for a cross section of the many available. Accounts anywhere Accounts IQ AccountsPortal Aplicor Aqilla Arithmo Brightpearl Clear Books e-conomic FinancialForce FreeAgent Inrax KashFlow Liberty Accounts Liquid Accounts Microsoft Dynamics MyBusiness Netsuite Online 50 QuickBooksOnline Sage One SAP Cloud for Financials Twinfield WinWeb Online Office Xero Xledger
www.accountsanywhere.co.uk www.accountsiq.com www.accountsportal.com www.aplicor.com www.aqilla.com www.arithmo.co.uk www.brightpearl.com www.clearbooks.co.uk www.e-conomic.co.uk www.financialforce.com www.freeagent.com www.inrax.com www.kashflow.com www.libertyaccounts.com www.liquidaccounts.com www.Microsoft.com/uk/dynamics www.mybiz.co.uk www.netsuite.co.uk www.online50.net www.intuit.co.uk/quickbooks uk.sageone.com scn.sap.com/community/cloud-financials www.twinfield.co.uk www.winweb.com www.xero.com www.xledger.co.uk
The following links will take you to the websites of just a few of the accountancy firms that are offering online bookkeeping and accounting services to clients and prospective clients. www.accountingservicesonline.net www.ascotdrummond.co.uk www.gloverstanbury.co.uk www.inniaccounts.co.uk www.orange-balloon.co.uk www.thewowcompany.com
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