Comparison: Cloud Accounting Software
More and more Australian restaurants are replacing traditional desktop accounting software with CrunchTime software. Here we will take a look at the top 3 solutions for small business.
Most traditional desktop bookkeeping solutions have a tendency to trip small businesses into a number of traps, including:
- large up-front pricing, with ongoing maintenance costs that can often result in use of the software beyond its meaningful life
- lack of automatic integration with other ‘front of house’ systems, such as point of sale, membership or inventory systems (leading to something known as technical debt)
- repetition of manual data entry (such as employee/supplier/customer details, invoices and transactions)
- little support for multiple users, and difficulties in collaboration (with your bookkeeper/accountant or other team members)
These challenges driven the rapid adoption of cloud accounting software through a desire to reduce IT costs, simplify maintenance and increase integration/functionality. A recent study by MYOB also found that it’s users were increasingly looking for access to their data from any device/location.
While your options are many in the cloud accounting space, today we take a look at the top 3 in the Australian market:
The rapid growth and adoption of newcomer Xero has been simply amazing. It is currently the market leader for online accounting software in Australia boasting 147,000 Australian customers as of September 2014.
Unlike the majority of its competitors, Xero is a purely cloud-based solution that focuses on collaboration and operational efficiency. The platform mitigates many manual processes and reduces the need for the re-keying of data wherever possible. For example, Xero can draw data from automatic bank feeds, and with adaptive rules can automatically match transactions to account codes to greatly simply the reconciliation process.
Xero are also incredibly active with their partners, and drive engagement through a number of activities including roadshows, conferences and webinars to garner feedback and drive product development. They also have a very active developers program, which is why their add-on’s network surpasses all others.
Key points to consider:
- Live bank feeds and advanced transaction matching greatly simplifies account reconciliation
- Easily manage user access, which means online collaboration is a breeze
- Powerful invoicing system including support for multiple currencies and online payments
- Extensive range of add-on’s that integrate with Xero to enhance functionality (think Point of Sale, inventory, job scheduling, and much more…)
- Employee portal to allow them to submit timesheets and leave requests, print payslips and more
- Not always the most cost-effective solution depending on your usage model
- The current version of their mobile app is not at the same level as some others
- Starter plan: $25/month, limited team users, transactions, invoices and bills
- Standard plan: $50/month, includes up to five team members and unlimited transactions, invoices and bills
Note: As a Xero partner, Business Wise often have access to special promotional offers (only available when we create the account – not you, so be sure to contact us first).
MYOB has long held the crown of desktop accounting software in Australia, but was slow to make the move to the cloud – presenting an opportunity for competitors such as Xero to exploit. Their first attempt at cloud accounting was luke warm at best, but the competitiveness of the market has led MYOB to re-assess and re-invest significantly – to the tune of $40M in 2014 alone!
This investment has resulted in a much more mature suite of cloud services, including:
- MYOB Banklink is the simplest offering, which connects with a large range of financial institutions to pull bank transactions. It supports transaction coding and basic reporting, but cannot handle things like invoicing or payroll.
- MYOB Essentials is an easy to use online accounting solution that includes the core features small businesses require. It is online only, with a new revamped interface and available for less than $1 a day.
- MYOB AccountRight provides more powerful accounting, with business management capabilities, inventory and advanced reporting. It is also possible to use online of offline, presenting unique opportunities for those in areas with poor internet services.
MYOB is also (at the time of writing) the only vendor who has been confirmed SuperStream ready. If you employ 20 or more employees this may be a deciding factor for you. For everyone else, it would be very surprising if the other vendors discussed here did not meet the 30 June 2016 deadline.
Points to consider:
- Many SME’s will require the more expensive AccountRight product
- While there are some standouts, the add-on community is poor in comparison
- Inbuilt OCR function in MYOB Essentials for importing bills is excellent
- Mobile app superior to some competitors
- Optional MYOB PayDirect allows you to accept credit/debit card payments on your smartphone
- MYOB Essentials starts from $29/month
- MYOB AccountRight starts from $43/month
As of May, 2014, QuickBooks Online was the global leader in online accounting software claiming 624,000 subscribers – no small feat, especially despite its tendency to attract the ire of accountants and bookkeepers not satisfied with its non-conformity with traditional accounting standards.
While QuickBooks users will generally appreciate the simplified interface (and excellent mobile/app versions), it’s not without its quirks – particularly during the initial setup. There are some key items that are easy to get wrong at this stage which can be very difficult to fix later on, and new users may benefit from professional assistance.
The product suite includes:
- Simple Start is the base product, and limitations include support for cash accounting only – not accruals, and you can only enter bills as you pay them.
- Essentials adds two more users, more reports, a graphical company snapshot, reoccurring items (for example, repeating invoice each month), bill management (so you can see upcoming payments), and multiple currencies.
- Plus includes five users, even more reports, inventory tracking, more automation, budgeting, and support for multiple locations.
So to some extent you need only pay for the features you need.
Key considerations for your organisation:
- Simplified interface promotes ease of use
- Often criticised non-conformity with traditional accounting standards
- Global business that is not overly focused on development for the Australian market (e.g. only basic super/BAS support)
- Very competitive pricing
- QuickBooks Online Simple Start is $15/month
- QuickBooks Online Essentials product is $25/month (manage bills, automate invoicing, currency conversion)
- QuickBooks Online Plus product is $35/month (track inventory, create budgets, compare business performance)
Note: All products currently include a FREE payroll add-on.
Which is Right for You?
Australian small businesses are currently spoilt for choice when it comes to finding a cloud accounting solution. As you’ve now seen, there is no “one size fits all” with each possessing its own pros and cons. Still apart from cloud accounting, your business surely needs video surveillance solution, as data security is the biggest issue for each company. Arcules solutions are designed from the cloud down and ground up to provide you with actionable intelligence.
We typically find Xero to be the most flexible, and its hard to ignore the strong and ongoing engagement with customers and partners. Their open API means the potential to integrate with other systems is amazing – we recently had a client connect another web service (and not an official add-on) in a matter of hours – simplifying his otherwise complex invoicing process and saving hours of work each month.
MYOB has long been a staple of the industry, and their plans for 2015 suggest that they are back on track to deliver a competitive cloud solution. They have a broad range of service offerings, and proposed services like MYOB PayDirect are very exciting. Could they ever be our #1 preference again? Watch this space!
You might find it unusual given its global dominance, but we very rarely recommend QuickBooks (and in fact perform many migrations to other platforms). While the interface is excellent for many users and the pricing very competitive, we typically find that the upfront savings are overshadowed by long-term inefficiencies.
We recommend that you do as much research as possible before deciding – watch videos, attend webinars, perhaps even start some free trials – but ideally discuss your individual situation with your accountant or bookkeeper to ensure you get the most appropriate solution for your needs.
Need help evaluating the suitability of these cloud accounting tools for your business? Our experienced consultants are available to help. Call us on 4922 6128.