It’s been a long time coming, writes Nigel Harris. Microsoft began developing the concept back in 2001, devoting 12 months just to conceptual stuff, finding out what users and their advisers wanted and getting the design right. Coding started in 2002 and the US version was launched in 2005. Along with the US release of version 3, Microsoft Office Accounting 2008 has finally hit these shores. Should we, as finance professionals, get excited? Is this going to change the face of small business accounting in the UK?

I have had a good look at the new program over the last couple of weeks and I have to say it’s impressive. The name tells you why – this is Office Accounting 2008. It’s no coincidence that the US release had to wait for the Business Contact Manager (BCM) add-in for Outlook, which was first released in 2003. Accounts and BCM share the same database, and while you can run Office Accounting 2008 on any PC running XP or Vista, when you see it running alongside Office 2007 it’s pretty awesome.

Versions and prices
Office Accounting 2008 comes in two flavours. Office Accounting Express is a free download available from www.msofficeaccounting.co.uk [1]. This is a permanent policy, not a limited offer. This version includes all the accounting functions – sales (including quotes), purchases, bank, 20 pre-defined reports and Office integration. Microsoft has included an integrated PayPal option which enables you to add a PayPal link to electronic invoices and then import PayPal payment details back into Accounting. Online bank statements in OFX format can be imported.

VAT accounting includes cash or invoice accounting and is well controlled by the locking of transactions once a return is finalised. Backdated transactions are automatically picked up on the next return.

For £149.99 you can upgrade to Office Accounting Professional, which gives you:

For the time being Professional users have to install the Express download and then upgrade it. Next year a retail version should be available on CD.

Additional users can be added at £149.99 per user or a three user licence is available at £399.99, which is the normal multi-user intallation Microsoft envisages. However, the software should support up to eight concurrent users and given the choice of SQL Server as the underlying database system it should be quite robust in any multi-user environment.

Express users can upgrade to Professional by buying a £149.99 product key – the full software is already included in the Express installation, it just has to be unlocked. Microsoft is promising Professional users a smooth upgrade to the Dynamics product line (via a Microsoft reseller).

Payroll is available in the Professional Plus edition at £249.99, which includes a one year subscription to the payroll service from April 2008 – payroll is free for the remainder of 2007-08, including end of year returns and online filing. The software already has HMR&C accreditation. The clever aspect of the payroll option is that while data is held on your PC all calculations are done anonymously online so tax tables don’t need to be stored on the local PC, thereby removing the need to update them.

In use
Installation, even from CD, is a surprisingly long exercise. If you go for the download option it will obviously take even longer. The process installs .NET Framework 2.0 first if you don’t already have it, followed by MS SQL Server 2005 Express. Minimum hardware is quoted a 1GHz processor with 512 MB RAM and 2 GB hard disk space running Windows XP SP2 or Vista, but I would suggest you have at least 1 GB RAM and plenty of disk space to guarantee an acceptable speed. Be prepared for SQL Server to slow down your PC generally, so if it’s a bit slow already it may be time to upgrade!

A data migration wizard is currently included for Sage Line 50 v11 and v12 and Sage Instant Accounts v12, plus a very powerful import tool from Excel for new users with extensive data already on Excel that they need to have access to from within the new software. This could also be used to import data from other accounting packages if it is exported first in CSV or Excel format

The look and feel will be quite familiar to most accountants. Notice how Office Accounting uses the same navigation pane as Outlook.

The reporting options are extensive, easily customised and the further export facility to Word or Excel makes what looks like a very basic accounts package into an extremely powerful reporting engine. Don’t be fooled by the price and target market – this is a very highly specified package.

The customisable home page dashboard is extremely flexible and provides a far better single, real-time management overview than other accounting packages which offer a ‘dashboard’ view. Individual elements can be added or removed, and the selected items can be extensively customised so that, say, sales or purchasing departments can be given their own tailored dashboard which emphasises data relevant to their particular function. Here’s a typical home page:

Enhanced Microsoft Office integration
One of the key features is the close integration with Office, with maximum benefit coming from Office 2007 including Outlook with Business Contact Manager. Accounts shares the same database as Business Contact Manager, which means that invoices can be prepared from quotes in BCM without even opening Accounting and a single customer and supplier list can used across an organisation by accounts, sales and administration staff. Wizards are supplied for quotes, invoices, orders etc and these can then be easily exported for final formatting in Word or output in the body of an email or as Word, PDF or XPS files. Financial data can be made available to Outlook users who do not need to have Accounts installed to view and drill down on reports. All lists and reports can be output to Excel, complete with formulas and formatting. There are even some pre-prepared pivot tables for advance data analysis!

Here is an example of live financial data from Office Accounting being displayed in Outlook on a PC that is not actually running the accounts program:

For accounting professionals
For accountants the Accountant Transfer is included in both versions. This effectively locks the user’s data at a chosen date – transactions can still be entered for later dates, but the user cannot edit or add data on or before the cut-off date. The accountant can then review and amend the data, post year end journals, etc and then return the data and the two versions are merged on the user’s system. Data is not version-dependent as it is with packages like Sage, so the accountant doesn’t need to be using the same version of Office Accounting as his client.

If an accountant has multiple clients using Office Accounting (and Microsoft hopes you will very soon!) you can manage them from a centralised dashboard, which includes a payroll centre for managing multiple payrolls. In addition, firms can create their own charts of accounts for clients in a particular trade and make these available to them.

Members of the soon to be launched Microsoft Professional Accounting Network – which requires them first to pass a certified Microsoft examination – will be added to an accountants database which users can access from within the program. They will also be able to customise the software for their clients, adding menu items and tools to link direct to their own website.

What next?
The established US site - (don’t be misled by the English accent! Is that Ed from Extreme Makeover Home Edition?) gives an idea of how the product has been developed so far. Microsoft’s aspiration to create a community of small business owners has received a warm reception from the target market, with over 2 million downloads of the program. Integration of Office Accounting stock with eBay stores is a big feature in the US version which is planned for the UK later.

Office Accounts has been available in the UK for 18 months or so as a beta, so it’s a sure bet that the principal producers of final accounts software will be ready to release updates to allow the import of Office Accounting data into their system before long. Digita, for example, demonstrated it at their spring 2006 conference so expect them to be one of the first to announce this facility.

Sage, QuickBooks, MYOB, etc have been pushing out entry-level and micro-business products over the last couple of years, but it looks like time’s up – Office Accounting 2008 Express is totally FREE and does a far better job than many of the current small business accounting packages, so expect some realignment in the UK market. In the meantime, download a copy of the new software and get ready for a deluge of requests for help from small businesses. Look out for the launch of the Microsoft Professional Accounting Network – we’ll be covering it on AccountingWEB as soon as details are available.

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FOOTNOTE: Looking through the launch day press releases, etc a few points struck me which I didn't cover above:

• This software has been developed using a single global code. This means that obgoing improvements in the US version can be rolled out globally very easily. It also enables Microsoft to promote the package worldwide very quickly. This may not mean much for us, but it does suggest that Microsoft has big, long-term plans, so it spells bad news for some of the competitor producst.


• Version 3 just launched in the US is bi-lingual - users can toggle between English and Spanish as the user interface, and on a multi-user installation different users can use a different language. Interesting for multi-national companies - especially when it costs only £150 per seat!


• The Sage import seems to be a bit of a red herring. Microsoft states that its target market is small and micro businesses which use manual or speadsheet-based accounting records. While they obviously welcome ex-Sage/Intuit/MYOB, etc users, they are not the (initial) target market, so the strengths and weaknesses of the data import facility are probably not a major issue.