Costing roundup: MYOB, Mamut, TAS, Sage, QuickBooks. By David Carterby
For many users it's the management accounting features of an accounts package that are really important rather than the basic ledgers. In this roundup David Carter compares the job costing facilities on offer from MYOB, Mamut, TAS Books, Sage Line 50 and QuickBooks.
In principle, job costing is very simple work for a computer. Whenever you post a purchase invoice, for example, for each amount entered there is a box where you enter a nominal code describing what type of expense it is. To add job costing, all the package designer has to do is to add another box where you can enter a job code or cost centre code to identify where the expense was incurred.
And that's basically all you need. In computer terms cost centre codes and job codes perform the same function, except that job costing includes extra features such as work in progress.
Although job costing is basically very simple in computer terms, it various enormously from company to company dependent on the type of business you're in. Before buying a job costing package you need first to have worked out the answer to this question: where do our costs come from?
Costs can come from the following transaction types:
Purchase invoices Items bought in for specific jobs will be recorded via purchase invoices.
Timesheets You may have people assigned to work on different jobs and the time they spend on each needs to be recorded.
Stock issues are for items that you charge out to jobs at a certain rate. The word 'stock' is very wide-ranging here. They might be real stock items which you use in assemblies. Or they might be 'non-stock' items such as 100 photocopies @ 10p apiece, or 50 miles travel costs @ 45p per mile, etc. Either way, these 'non-ledger' items are not part of the double entry, and you need to have some way of recording them against the job.
Payments and receipts There may be some job costs which you record when you make payments or receipts, e. g. commission deductions.
Nominal Journals You may need to make adjustments such as accruals, inter-company transfers etc. You will do this via a nominal journal. It is remarkable how many packages provide the facility to analyse costs in invoices but fail to provide it in journals.
Purchase orders If you want to control job costs by monitoring them against budgets, you need to think about including purchase orders. This will enable you to see 'committed' costs on a job (i.e items ordered for this job but not yet invoiced) as well as invoiced costs. If you want to compare Actual vs Budget during the life of the job, the figures are only truly comparable if committed costs are included in the actuals.
Sales invoices Are your jobs fixed price or are they cost plus (i.e. you simply recharge your time and materials to the client)? If you recharge costs to the client, you may want the facility to generate sales invoices automatically. The computer displays a list of all the non-recharged costs for a job on the screen. The user goes through the list and ticks which ones should be included, whether a markup should be added, whether to change the description, etc. etc. [ A note of warning here: this sounds great in theory but often a lot of care has to be taken in preparing a cost statement for the customer. So any sales invoicing module has got to be really flexible if it is going to work. In practice, I think many accountants prefer to export all the transactions into Excel, and massage them there. Then provide the Excel spreadsheet as a backing schedule to a simple, one-line summary invoice. ]
Bills of Material If you are in the business of making things, as opposed to supplying services, you may need a parts list facility or 'BOM' (bill of materials). Where a job is assembled out of numerous components, the BOM lists all the components. Running the BOM will automatically tell you whether you have sufficient stock of each item. In addition, the BOM will automatically calculate the total cost of the assembly from the individual costs of the components. With a good quality package the latest prices of components should flow automatically through from purchase invoices and update the stock file. This way the BOM costing is constantly kept accurate and up to date with the latest prices.
Job Costing for Service companies
Once you get into manufacturing, the ledgers aren't really very important. It's the Stock, BOM and Purchase Ordering modules which are the key. These are a bit outside the remit of this review, which is concerned primarily with entry-level accounting packages.
So we'll be looking at the job costing needs of service companies rather than stock-based. These tend to fall into two main types:
- Professional services companies such as lawyers, accountants, consultants, PR agencies etc. Most of the costs involved here are staff time which is charged out at an hourly or daily rate. There will also be additional costs such as travel expenses and photocopying. In the IT industry, the software for this type of company is often called a PSA ('Professional Services Automation') package. These companies usually recharge their time to the client.
- Contract Costing companies. These are organisations to which a company will subcontract out a part of its operations. They offer a complete service and incur not only time costs, but also quite a high level of bought out costs. These companies tend to work on a fixed price basis rather than time and materials.
To test each package, I tried to enter one transaction of each of the different types, and to analyse it to the one job. Then I tried to find a Job Detail report which listed all the costs I had typed in for this job, from whatever source.
1. MYOB Accounting Plus (£199)
MYOB has been around since 1992. Originally a Macintosh product, it always dominated the market for accounting packages for the Mac. But it's never been backed with sufficient marketing clout to make a big impact on the PC area. On the other hand, it's always been a thoroughbred and its sheer quality has given it a small but faithful bunch of fans. Nigel Harris was surprised at just how good the latest version is in his review of February 2004. A test copy can be downloaded from the MYOB web site www.myob.co.uk.
When it comes to time recording, MYOB is far and away the best package amongst the group. It is very sophisticated. For example, you can create a special billing unit to which MYOB will automatically round up the actual time. So, you may take a call that lasts for 11 minutes, but your minimum charge for any call is 15 minutes. MYOB will record the actual time you've spent, but then automatically round it up to the standard billing unit of 15 minutes in your invoice. This is an essential feature for professionals who sell their services on a time basis. Very neat; MYOB is the only one in the group with this feature.
On Job Costing, MYOB starts equally well. There's a detailed record about each job with start and end date, job status etc. And there's space to enter a job code field at transaction level on all the main transaction types - purchase invoices, stock issues, nominal journals.
But when you go into the Job Detail reports, disaster strikes. MYOB brings over the wrong Description field. Instead of the description you've typed into each transaction line, MYOB brings over the description for the journal as a whole. Effectively you've lost the details of what the cost item actually was.
For me this flaw is so fundamental that it immediately rules out MYOB ' what a pity.
[MYOB have taken this on board and have put this modification on their wish list. If corrected, it will put MYOB where it belongs ' one of the top market contenders for entry-level job costing]
2. TAS Books (Tas Books 2, £349)
TAS Books was released in 1991 as a £99 package available by mail order and at one stage was claiming over 20% of the entry-level marketplace. I installed TAS into a lot of customers during the early 90's and they were all very happy with it. Unlike many entry-level packages TAS doesn't try to hide the accounting element, but it is organized in such a way that everything makes sense. For me, anyway, TAS has always been an eminently satisfying package.
But going head to head with the Sage leviathan was too much of a struggle and in a few years ago TAS sold out to Sage. At the time TAS fans worried that Sage were just eliminating a competitor and would leave TAS to wither on the vine.
TAS Books 2 includes Job Analysis. This allows you to add a 'Tag Code' to an invoice which effectively cross-references it to a job. This was a big improvement, but was still fairly rudimentary in that you can only allocate a tag code to the transaction as a whole. So if you have an invoice containing costs that apply to more than one job, the invoice cannot be split among the two jobs.
Two years ago TAS user Graham Pears made a plea for improved Job Costing facilities in TAS, which generated a lot of discussion. A number of Graham's criticisms have been addressed ' it is now possible to analyse to jobs in nominal journals and in stock issues ' but the basic problem still remains, that you can't analyse costs at transaction line level in TAS. And there's no timesheet analysis either.
So TAS cannot really be recommended for Job Costing. And yet its superior basic design means that management accounting is an area where TAS really should be strong. It will be scandalous if Sage allow such an excellent product to fade away, but right now it seems that no serious money is being put into development of TAS and the doom-mongers' predictions of its future under Sage are coming true.
3. Mamut (Enterprise edition, £399)
Originating from Norway, Mamut only arrived in this country last year. Almost immediately it won an Accountancy Age award for best entry-level package. There's no doubt, this is superb software and the arrival of Mamut is the most important event to take place in the entry-level marketplace for a decade.
Mamut is a complete business management package, with particular emphasis on the CRM side, which is terrific. Go into a customer record and you can see all the invoices you've sent this customer, all the sales you've made, the balance owing on his account, all the conversations you've had, all the Outlook messages you've sent to him or he's sent to you, any related Word or Excel documents. Everything you've ever done with this customer is there.
There's an astonishing amount of functionality for the price, but it does take some time to find your way around the sheer volume of features. The Projects module is found in the Contacts menu. It holds plenty of information held about the project ' start date, end date, the stage it's at, etc. You can define the project as internal (no invoicing to a customer, simply a cost collection exercise), or as external, which pops up an extra 'invoice' button allowing you to invoice a customer.
Timesheets entry seems comprehensive. I wasn't sure how to post non-ledger items such as photocopying charges, but I'm sure there's a way.
The doubts with Mamut lie in the Reporting. I was just looking for a simple listing of all the transactions analysed to one job. Mamut has a whole suite of 'Project' reports, none of which seemed to be of much use. In the Accounting reports there's one entitled Transaction List with Dept and Project, which was fairly good, although it omitted any details of the supplier.
What is surprising is the lack of a decent report writer. Mamut's reporting is curiously similar to Sage. Its Report Editor is equally bad, but with Sage you have the Report Designer Wizard which allows you to select all the data you need and export it into Excel. Users who buy a product as sophisticated as Mamut are the sort of people who want to be able to this sort of thing, but Mamut won't let them.
I cannot say that I have yet got the measure of Mamut. We need some feedback from readers who are using it. Is there anyone out there who uses Mamut for Costing and who can tell us how they've got on? [if you wish to investigate Mamut further, you can download a trial copy of the software from their website, www.mamut.co.uk]
4. Sage Line 50 version 11 (Accountant Plus, £695)
Until recently Job Costing in Sage was handled by a stand-alone package that you had to buy separately as an add-on to Line 50. Integration with Line 50 was rudimentary, and Sage Job Costing has usually excited frustration and derision among Accountingweb readers.
Perhaps Sage have been listening. With the latest version of Line 50, version 11, they have embarked on a different and much better strategy. From now on Project Costing will be an integral part of Line 50 rather than a stand-alone product.
In March I did a detailed review of the new Project Costing features. Although all the features aren't there yet, the basic design is pretty good. Whereas previously Sage only allowed you to analyse costs to GL code and a Department code, version 11 now allows you to analyse costs to a Project Code and a Cost code as well. Much better.
You can enter Project codes on purchase invoices, payments and stock issues. However, you can't put them on nominal ledger journals for period end adjustments, transfers etc. Nor can you put them on purchase orders. If you want to see committed costs on your reports, I don't think Sage is for you.
There's a 'Project Charge' transaction type for costs that are not part of the double entry. You can use this for timesheets.
On the crucial test ' displaying a list of costs from various sources ' Sage picked up all the costs, which is excellent. On the reporting side, the new fields for project costing are not yet integrated into the Sage Report Writer, which is a pity. However, there's a couple of decent Job Detail reports which contain all the important fields and transactions, and you can easily export the contents of these into Excel.
A very good start, then, and for the first time Sage now has a credible offering for Job Costing. The main drawback is price ' Accountant Plus at £695 is far more expensive than any of the other packages.
5. QuickBooks (Professional, £299)
Among the more progressive readers of AccountingWeb it has long been an article of faith that QuickBooks is a much better package all round than Sage, particularly when it comes to reporting and cost analysis.
I must confess, however, that when I first looked at Job Costing in QuickBooks I couldn't make head nor tail of it. This led to an article How Good is QuickBooks at Job Costing which encouraged many QuickBooks users to point out where I was going wrong.
The basic thing you have to get straight about QuickBooks is that it is designed on the assumption that all costs are going to be recharged to the customer. The Job Detail reports only list those costs that have been recharged through sales invoicing. So if your jobs are all fixed price, you will find that the Job Detail reports in QuickBooks are empty. Instead, you will find that your costs are all held in the Unbilled Costs by Job report.
Following the advice given by readers, I wrote a second article QuickBooks and Job Costing tips ' part 1. . This contained a tutorial 'How to create a new Project Detail report out of the Unbilled Costs by job report' which users new to QuickBooks might find useful.
The article was entitled Part 1 because I couldn't find a way of getting costs from ALL sources onto the Unbilled Costs report. Part 2 was going to explain how to pull together costs from all sources. I haven't managed to work out how to do this yet, so part 2 remains unwritten.
QuickBooks is great at analysing data to Jobs when you are entering transactions. However, getting a simple report out of QuickBooks that lists all these transactions in one place may take a little thought. But QuickBooks is cheap (£299), it's very good quality, and there's lots of readers on Accountingweb who will help you along if you get into difficulties.