Online accounting software

Transcription

1 Online accounting software Chartech software product guide 2015 edition BUSINESS WITH confidence icaew.com/itfac

2 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

3 Online accounting software Chartech software product guide 2015 edition

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5 Contents 1 Introduction 04 2 Benefits Advantages of the online approach Getting closer to clients Benefits for small and medium-sized businesses 07 3 Concepts The requirements for online access Software as a service Safety and security considerations 09 4 Choices Considering the options Before and after Supporting collaboration Considering costs 15 5 Risks and rewards Potential concerns Protecting your investment Fear and trust 18 6 Reviews of online accounting packages Aqilla Clear Books Accounting Intuit QuickBooks Online KashFlow Sage One Xero 30 7 Resources 32 ONLINE ACCOUNTING SOFTWARE 03

6 1 Introduction 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. 04 ONLINE ACCOUNTING SOFTWARE

7 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 Aqilla l Clear Books Accounting l Intuit QuickBooks Online l KashFlow l Sage One l Xero. 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. ONLINE ACCOUNTING SOFTWARE 05

8 2 Benefits 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. 06 ONLINE ACCOUNTING SOFTWARE

9 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 , phone and live chat. 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. ONLINE ACCOUNTING SOFTWARE 07

10 3 Concepts 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 ONLINE ACCOUNTING SOFTWARE

11 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 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 s 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. 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 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. ONLINE ACCOUNTING SOFTWARE 09

12 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 ONLINE ACCOUNTING SOFTWARE

13 4 Choices 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. ONLINE ACCOUNTING SOFTWARE 11

14 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); l accessibility and functionality for (Apple, BlackBerry, Android and Windows) mobile devices and availability of mobile apps; l accounting for non-profit entities; l availability (and range) of add-on applications; l bank reconciliation; l credit control; l dashboard views; l e-commerce including whether it is integrated or an add-on; l facility to import transaction data at set-up; l international functionality such as support for local sales taxes; l management reporting; l multi-company support; l multi-language and multicurrency facilities; l online banking including whether the bank data feed is automatic; l payroll; l point of sale; l purchase order processing; l sales order processing; l stock handling; l 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. 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. As well as checking out how good a fit the system is for a business today, you need to think about the future. l Does the system connect or integrate with other (on-premises and online) systems; how easily and how seamlessly? l 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? l Will the business or practice need specialist help with the initial implementation and configuration? l Will the system be able to meet the needs of the business as it grows? l If not, what is the upgrade path? l 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. 12 ONLINE ACCOUNTING SOFTWARE

15 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. 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, 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. l Does the service level agreement guarantee service uptime? l What system availability does the service level agreement guarantee and what comfort are the penalties likely to be in the event of failure? l How often and how long are scheduled maintenance windows? ONLINE ACCOUNTING SOFTWARE 13

16 Think carefully about support. l Is there a 24-hour help line you can phone? l What sort of online support is provided? l How is support resourced? l Where are telephone support staff physically located? l 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? l 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. 14 ONLINE ACCOUNTING SOFTWARE

17 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. ONLINE ACCOUNTING SOFTWARE 15

18 Discover how to do it at kashflow.com/seven 16 ONLINE ACCOUNTING SOFTWARE

19 5 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 ONLINE ACCOUNTING SOFTWARE 17

20 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. 5.2 Protecting your investment The issue of future proofing your investment is also a consideration. You need to know that your accounting system can grow in size and capabilities as and when the business requires it, whether it is an on-premises or online solution, but there are some significant differences particularly for small business users. Some online accounting systems are more scalable than others in terms of user numbers and functionality though shortcomings in the latter can increasingly be addressed with applications from elsewhere in the cloud ecosystem. 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 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 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. 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 18 ONLINE ACCOUNTING SOFTWARE

21 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 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. ONLINE ACCOUNTING SOFTWARE 19

22 6 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 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) ONLINE ACCOUNTING SOFTWARE

23 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. 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. 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. 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 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. CONCLUSION 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. 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. Over the seven years since its general release Aqilla has been available for % 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 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. ONLINE ACCOUNTING SOFTWARE 21