The web accounting debate
Over the past two weeks, practitioners have debated the advantages and claims of different online accounting systems on a busy Any Answers thread. John Stokdyk reports.
The great online accounting debate was set in train by an Anonymous Any Answers post on Tuesday 11 August. Setting out the criteria for an online accounting system for an accountancy practice, the anonymous questioner posed a series of challenges for prospective systems:
1. Capable of handling the books for multiple clients.
2. Purchase and sales ledger included.
3. Support for bank payments and receipts, and reconciliations
4. Generate the same basic reports as Sage (eg transaction history in various ledgers etc).
5. Affordable and easy to use.
As fans and developers paraded the credentials of different systems, the questioner followed up with further queries that broadened the debate into new areas, including: VAT requirements; project accounting; what Sage has to offer in the online arena; and the advantages of using online accounting system over emailing software files back and forth between desktop applications. These points will be summarised after looking at the main contenders.
There is a “horses for courses” aspect for any software recommendation. It’s pretty difficult to declare that one application is best; it’s more a case of getting the best fit with the prospective user’s needs and budget. That said, KashFlow won the popular vote with five recommendations from the 20 or so participants; while FreeAgent, e-conomic and Liberty Accounts drew two recommendations each. Here are what people had to say:
- KashFlow - “well received by clients”; has most of the basic functionality of Sage, but easier to use,” said alansmoore. Ease of use makes it very simple for clients to keep good, reconciled records to minimise rework at year end. “It also provides all the reports that the accountant needs. This helps advise the client on a day to day basis and also makes the end of year accounts production easy,” added cjdavies.
- e-conomic - “It is an excellent and fully functional system and an excellentt online alternative to Sage,” suggested accounting software-as-a-service veteran Richard Messik. The chart of accounts mimics Sage and gives the accountant flexibility on how to design the books and what to make available online to the client, added Paul Scholes. While the terminology can take some getting used to, he continued, “What finally sold it to me however is that it costs us nothing, ie no partner programme to pay for... the charges only start when you sign up clients and then you can chose for them to be charged directly by e-conomic or for e-conomic to charge you, leaving you to roll up the cost in the annual charges to the client.”
- FreeAgent - Recommended by Emily Coltman for smaller clients: “More user friendly for small businesses even than KashFlow... It manages mileage and expenses beautifully easily and there are far fewer entry screens to confuse a client.” Phil Richards added: “More than an accounting system, it actually helps clients manage their business too.”
- Liberty Accounts - Has an integrated payroll, with online filing of HMRC returns. “The user interface is very easy for non Accountants to use” commented Ray Backler. Kevin Salter added: “Very responsive to enhancement suggestions, and clients like it too.”
- Pearl Office - Coltman’s suggestion for firms looking for similar functionality to sage. Like KashFlow, Pearl uses the same nominal codes as Sage, and has a good import-export facility for data transfers. “Pearl isn't just an accounting system either, it has lots of other modules such as CRM and websites, and has a fantastic stock control system which knocks Sage’s stock into a cocked hat.”
- WinWeb - “It works for us, does everything you could ask of it and more,” commented Jason Holden.
VAT requirements and project accounting
As Anonymous grew more interested in the facilities available, the questions took a more detailed slant, with queries on how applications handled VAT, including the flat rate scheme, and what facilities they had for project accounting.
According to comments, KashFlow, e-conomic, FreeAgent and Liberty passed muster on the VAT issue.
For project accounting, KashFlow founder Duane Jackson responded quickly that while his application had some built-in project management features, it could integrate seamlessly with specialist third party programs to cope with more extensive project management requirements.
FreeAgent’s Ed Molyneux joined in to explain that this was precisely the kind of task his program was designed to support. “You can attach time and expenses (from either bills, the bank account or out-of-pocket) to a project, and then produce an invoice to rebill them in about 20 seconds.” FreeAgent’s developers are also working on a routine to link expenses to a project without rebilling them, so providing a real-time view of project profitability.
The Sage dimension
The elephant lurking in this particular room* was the absence of an application from Sage. “Do Sage have an online version and anyone used it?” asked Anonymous. Sage did put its prototype SageLive application online at the beginning of the year, but went back to the drawing board after Duane Jackson highlighted some underlying security vulnerabilities.
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Sage 50 has been available online for years via ITinsideOut’s hosted Online50 service, Peter Guinn pointed out. But with Sage working on its own application, it was interesting to see that Online 50 had brought in its own replacement service, Ambition Accounts. “It allows a scaleable upgrade path as our clients grow, with the same software at the core so there's no data transfer or major retraining issues. It copes easily with multicurrencies and large volumes of transactions and has proper period end close downs,” commented Guinn.
What are the benefits of online accounting?
Again, Duane Jackson was the first to pick up on this question. The main benefit, he explained, was simultaneous access – “You can both be working on it at the same time. Nor would you need to wait for the client to email you files (and then he’d have to wait for you to send them back) – it’s all done whenever you want to do it.”
Emily Coltman filled in some additional advantages. First, she noted that because the online systems were designed more for non-accountants, they were easier to use. “You try finding a desktop-based package that's as simple as FreeAgent or KashFlow.”
The direct, real-time access to client data also means that there's lots of scope for collaboration, for example to help clients learn the package, or when posting journals for them or preparing management accounts.
Finally, she added, “Everyone's always on the same version and same copy of the software - no messing about playing ping-pong with backups, wondering who's got the latest one, having to upload on to a different version and realising you can't send it back once you've input the journals because the package isn't backward-compatible.”
What happened next?
Anonymous appeared to have taken all these points on board: “Wow, quite a few choices to consider. Thanks everybody for contributing.” FreeAgent appeared to have made the best impression, but Anonymous was soon back online to recount their initial confusion with the FreeAgent sign up system. The initial issues have been sorted out and our online accounting pioneer is planning to take a closer look when time permits.
AccountingWEB’s Head of Insight has been with the site since 1999 and likes to spend his time studying accountants’ technology habits. When not nerding out, you can find him exploring obscure indie music and searching for the perfect organic sourdough loaf from his base in Brighton, UK.