Hi
I'm looking into accounting software for a new start up which will have a small number of employees. I have been looking at Xero and Sage One as well as Sage Instant Accounts as I wanted to keep the costs as minimal as possible but also allow the functionality to grow over time. I am liking the sound of Xero so far due to the fact that it sounds like it can really help to keep the bookkeeping costs down by importing the bank statement making purchase invoices very quick to enter and the software memorising common transactions but as I've only used a small number of accounting packages I'd be grateful for any advice.
Thanks in advance
Replies (9)
Please login or register to join the discussion.
I do not know Xero so cannot comment on it.
However a consideration for the Client would be employment of future users. Training costs can be significant. With a more widely used system you have the advantage of more book keepers being already familiar and possibly less scope for error with a reduced learning curve.
However not the main consideration by any means.
Cloud or local
I think one of the main considerations is 'cloud' versus 'local' software.
Xero is cloud based - meaning an ongoing monthly subscription. For sage, you purchase the software and then buy support packages if required. The costs are probably similar - but with Xero you have no up front cost.
Also, on cloud software your accountant can log into your live data and make corrections in real time, rather than sending backup disks etc and then having to post journals back into your own version.
The newer systems probably have the edge on usability for inexperienced users.
How many bank transactions are you expecting? I wouldn't chose a system just on the basis that it imports the bank file. You will still need to annotate and review each line etc,
Accounting system for a UK start up: what I learnt
Hi Lucy, I have used SAGE instant and Line 50 for years. For the last three years I have used FreeAgent for four clients all successful start-ups. that grew quite quickly and changed their business models considerably. I have spent a lot of time running trials of MRP systems. I haven’t yet assessed Xero. I have as a result of this experience become a fan of cloud based systems despite the usual reservations about backup and security. However here is what I now know to ask before picking a system. (i) is the client revenue stream going to be service or product based? (ii) If product based is this retail/web based or business to business based.? (iii) if service based do you need job costing? (iv) will your revenues and expenses and bank accounts be in GBP or a mix of currencies? (v) will the client need branch accounting? (vi) how do you want your source documents filed, do you want to go paperless from the start. What is great in FreeAgent is bank feeds (for participating banks) otherwise using QIF downloads, the “guessing transactions” feature that you rightly suspect will save lots of time, attaching electronic pdf files of source documents to each transactions (the VAT inspectors love this and this is what sealed the deal for me), easy VAT reporting, job costing and the dashboard for cash management and the ease of invoicing. It is very very easy to use, costs about 150-200 a year. and so good for small service businesses who don’t need multi currency functions, consolidation, branch accounts or sophisticated inventory features. FreeAgent may not be the solution for your client but you should get all the features I have just mentioned above. as a minimum for whatever system you buy in. All cloud systems give you free trials and you should really test how their help functions work in practice. I really would not buy into a system that did not allow unlimited phone support. If the client brings in revenue by selling via the web especially E bay and Amazon then consider buying into one of the specialist MRP cloud based systems with a finance component and using it for despatch and product planning as well. SAGE instant is great if you want to tailor the chart of accounts and reports to your exact requirements the cloud systems don’t let you do this, however if you hire someone who knows SAGE they ought to be able to pick up FreeAgent or Clear books or any of the many others quite quickly. I am going to a demo of Xero next week and if you are interested I will let you know my comments.
Xero
I recommend all of my start up companies go onto Xero. It is relatively easy for non-accountants to use. The ability to import a bank statement is also fabulous. Can't comment on Sage One as I've never used it.
Cloud systems in general (Xero, etc.) also have the advantage of the accountant being able to access the client's data (and if necessary correct) on an ongoing basis. It can be a nightmare swapping non-cloud data backups (Sage Instant / Line 50' etc.) particularly if you each have different versions.
Agree give them a go
I've been using FreeAgent (via Iris OpenBooks) for 3 years now and have been using Xero for 3 clients for 6 months and in line with GreenFigures's comments you can do no better than trial both systems (and others) to see which fits best.
FreeAgent is designed by and for non-accountants and my clients (mainly service sector) have loved it, really easy to learn and, despite some good attempts, they find it hard to make a mess of it. As mentioned it is based around project accounting and so if a client handles costs & invoicing on a project/job basis it should fit well. It also comes with RTI compliant payroll, tax calculations, mileage rates and time recording.
Xero is more traditional, in many respects, in as much as it suits businesses that would suit Sage/QuickBooks deskbound programs and is more debit & credit, if you know what I mean. There are loads of add-ons from 3rd party providers, say if you wanted job recording, otherwise it has a departmental type analysis system called Tracking where you can track, cost centres, regions or people for income & expenditure.
For me its main benefit is in transaction processing and handling, ie if there are lots of transactions then Xero is less time consuming to enter up and will, for example, accept input from excel files.
The personal expense claim handling is, compared to FreeAgent, pretty naff and clients who have not had much experience of bookkeeping will need quite a bit of hand holding.
There are many other Cloud products out there to try. I haven't recommended desk-bound accounting software for years. The ability to share and monitor the work in the Cloud beats the old stuff hands down.
Xero support
I've been using Xero for three and a half years now. I've only needed to contact support twice in that time - one for a "how do I do this" sort of query, where I go an answer within hours. The other related to an issue with client data where we had to give them access to the data to deal with a rogue posting. That took about two days from start to finish, which I think was excellent considering that they had to look at the problem, work out what had happened and fix it.
They have support people in the UK, New Zealand, Australia and the US. My understanding is that if it's a bit quiet locally they'll look at queued queries from other territories/
My assessment of Xero
Hi Lucy
You asked me to let you know how my assessment of Xero went. Essentially I agreed with Paul Scholes and like him I will in future definitely offer clients both systems plus SAGE: I would really encourage startups to use cloud based systems. Xero does everything that FreeAgent does and as he said it might be easier for someone who has worked with SAGE. I think in addition its currency features are very good and if this is likely to be necessary I would definitely choose Xero.
You mentioned support. The phone help features for FreeAgent are in my opinion superb but I haven’t needed to use them for months. For Xero I believe that it is possible to request a call back if you prefer phone support.
Let us know what you do do. Best of luck.