over the last week I have started to look at getting a online book keeping solution for my practice and clients. I have looked at sage oneed, quick books and zero. All have their pros and cons and I have asked the sales/support team various questions, however I cannot find the answer to what happens to the data when you stop paying the monthly fee?
so 3 scenerios:
1) sole trader is on their own online book keeping system and uses it for 3 years. then they either retire or closes the business and stops paying the monthly fees. The accounts are prepared and all is well, until 2 years later there is a tax investigation and HMRC ask to see the accounts data.
how does this client get that data? can he get that data? and at what cost? and yes reasonable working papers are kept and a odd copy of the nominal ledger,etc are kep for the accountants working papers (so this could be usd)
2) client uses the accountant's discounted price service where the accountant bills the client. The client leaves the accountant and then wants a copy of that data. by this time the accountant has already informed client that they have cancelled the monthly subscription and has advised the client that they need to deal directly with the book keeping supplier.
I have seen recent threads where the hand over of book keeping data is an issue and am now starting to wonder whether this has some bearing on things. my thoughts are legally the accountant is suppling the client licence and that there is potentially a legal claim against the accountant for stopping the continence of the data.
3) Ltd company client goes into liquidation and not paying accountant. again accountant stops paying monthly licence and then the liquidator asks the accountant for accounts data.
As I see it, it would be nearly impossible after the monthly fee is stopped to access the data. is this correct? are the commercial companies required to store the data for 6 years following deactivation of service and how in the event of necessity can this data be retrieved at a future later date or is it simply that the client must continue to pay for the service to ensure compliance and safety? in much the same way as accountants do with run off PII insurance.
many thanks.
Related resources
Replies (13)
Please login or register to join the discussion.
Finger on it!
You have put your finger on one of the weaknesses of SaaS (Cloud) solutions.
Some of these will allow you to download your data in common file formats which can be opened on a PC eg in Excel.
That, in effect, is your local backup solution and your means of 'archiving' the data if you wish to cease payment.
Captain
Thanks for the very rapid reply
I will look into this one and can now ask the sensible question to the customer support team of the software providers.
I guess from a safety net position it would be wise as an accountant to do this at least annually for existing clients and every time one of the above occurs.
I can only answer
the questions from the perspective of a Xero user.
There is an option to switch over to a restricted subscription for £2 plus VAT per month. That means that you can keep live access to the data for six years for £144 plus VAT. I think that's reasonable, others won't. You can also export all reports including the general ledger and invoice reports into Excel, pdf or Google docs if you don't want to keep a subscription going.
On the specific scenarios
1 - switch to the £2 per month option, if not for a full six year then until the enquiry window has passed. I know that Xero does not delete the data straight away, and can give access again if the subscriptions for the missing months are paid . Or export the data as above.
2 Personally I wouldn't switch off the subscription without clarifying the position with the client. If they want to keep the data, it's easy to switch the subscription so that they pay it direct.
If it's what i call an internal subscription, then I'd download the data, VAT reports etc ans pdfs before switching off.
3 When the liquidator is appointed, I write to ask if they want to keep access to the data, and tell them what it will cost. I wouldn't switch off without downloading the necessary reports
We've had all three situations with clients and it hasn't caused any problem at all.
On the question of data retention, I'm sure that Gary Turner has been on the forum to explain Xero's policy on data.
We just take reports
For all our clients on cloud software, we just pull off all relevant reports and save them as pdfs or csv files. Normally that's just the P&L, BS, and a full nominal ledger. We already tell clients to take pdfs or csv files to support their VAT returns, so they should have those handy. For more complex jobs, say with an extensive purchase ledger, then we'll take off reports of purchase invoice listings, purchase ledger payments listings, allocation reports or audit trails, etc.
If the client did their "books" by hand, they'd have these documents, so taking electronic reports is just the same.
I think the main risk is that some clients/accountants don't take reports at all, i.e. they just take the figures from the screen and rely on the live system for analyses etc. But the cloud risk is the same as desktop risk of not taking data backups.
Good "housekeeping" in either cloud or desktop systems is needed to cover all bases. That means backups and/or taking relevant reports as you go along.
Export everything possible for all three scenarios before the subscription ceases. If the client is paying, the onus is on them to do so (with your guidance).
Not such a big deal, it's the same as moving from one cloud provider to another.
Ditto
I too download CSV files suitable to back up the final accounts, eg TB, P&L, Balance Sheet, debtors/ creditors, full General Ledger (generic) and also, if the system allows it, a complete transaction dump, ie a list of every transaction that took place in the year.
The thing is that I have always done this, even in the old Sage/QB days, not trusting that we'd have the right version (or even the software) to open data 5 years on.
Also remember this is not your data it's the client's and so the provider should actually require the client's permission before doing anything with it, especially deletion, and I know, for example, that CB hang on to theirs for several years, even after a subscription has been stopped.
Choice of software
Further to the above, I've based my choice of cloud software (and desktop before that), on ease of reporting and range of reports available.
There've been quite a few cloud options I've rejected because of poor reporting and one of my three preferred options is one I'll only suggest for a particular type of simple business because it's reporting is relatively poor, but adequate, but it has other features that make the compromise worthwhile for some small, simple clients.
Reporting ease is one of the reasons I chose QBO as one of my cloud alternatives. No other cloud system comes close so I offer it despite some fairly serious flaws in other aspects of it as other systems simply don't do what it does which is a deal breaker for some clients.
Unfortunately, many online systems (and desktop for that matter) make reporting hard work and time consuming. Sadly, they're written by modern programmers who havn't understood the need for reports and have written them on the basis of screen-look only!
Good reporting and reports taken off the system and stored securely mean you don't need to keep the subscription going after your need for the live system has stopped.
Xero freezes and retains data
When a Xero subscription is stopped, we archive the data associated with the subscription and store in the event the customer returns in future and wishes to reactivate or access historical records. There's a small one-off charge for defrosting and restoring archived data on cancelled subscriptions.
Gary Turner
Managing Director, Xero
@garyturner
Kash flow keeps it indefinitely
I've got ex-clients who used KF and they are still on my dashboard, 2/3/4 years after the subscription stopped. I can't access the data but it's still there. If I re-activate the subscription, then it's all available again. Actually, they're quite a pain as they clutter the dashboard, but easy enough to sort by date expired to get them out of the way.
Freeagent is the same - ex-clients still on my dashboard from a couple of years ago. But, whether intentionally or not, I can access old data without re-subscribing as I can easily change it to active, access the data, and then revert it back to inactive. As long as I click it back to inactive before the next billing date, no charge!
@Ken re Kashflow old subscription data
I've got ex-clients who used KF and they are still on my dashboard, 2/3/4 years after the subscription stopped. I can't access the data but it's still there. If I re-activate the subscription, then it's all available again.
Have you tested this Ken? I asked Kashflow and they just said they hold on to it for six months.
I know with Clearbooks you can download a full backup of the system (useful if importing a large volume of data which goes haywaire - easy to restore to the original position).
All the clients we provide cloud software to are using Clearbooks. My plan would be to take a full backup so if they wish/need the data in the future they can sign up and restore the data.
On reflection I'm not sure how wise a plan this is (only hypothetical as it's not happened yet) given that a 2 or 3 year old backup might not be compatible.
Surely the best bet is to take reports of P&L, BS, sales ledger, purchase ledger (summary & detail), fixed asset register, etc and if possible a complete audit trail of all transactions (if this is possible).
Something we do as a matter of course is regularly export all items from Receipt Bank to pdf to ensure there is a local copy of all invoices where clients have gone paperless and rely on RB.
Xero export options
I see that there are various data export options in Xero which include the following:
General Ledger [nominal ledger] : MYOB Accountahts Office and Sage HandiLeder
General Ledger and Chart of Accounts: APS Accounting (XPA)
Trial Balance: CCH ProSystem fx Engagement
Forbes Accounts
Keytime
Lacerte Tax
Tax ACT
Trial Balance and General Ledger: IRIS
Some of the above names appear unfamiliar, and with Xero being based in New Zealand perhaps some of these options are for packages not generally marketted or available in the UK.
I've not tried any of the above export options.
When VAT returns are prepared / finalised I export the data to Excel, as I regularly do for key Nominal Ledger accounts from time to time. Regarding Nominal Ledger data export to Excel so far as I can see this is a time-consuming one account at a time process rather than a whole Nominal Ledger in one instruction process.