Cloud accounts packages for small businesses including comparisons
The
following is a guide to Cloud based accounting systems produced by Yes Accounting Limited.
It
is intended to be a guide to help owners of small businesses decide on which system
is right for them and provides a number of things to consider. A guide to some of the most
popular applications is also provided.
Why
use a web-based or Cloud accounting system?
- You, your staff and your accountant can access your accounts from any location, on any computer including a Mac.
- You don’t have to worry about software updates and back-ups.
- More reliable and flexible.
- Easily deployed.
PRIMARY
CONSIDERATIONS
All
modern accounting solutions should have the following key functions:
- Customer and supplier maintenance
- Sales Invoices and sales orders
- Purchase Invoices and purchase orders
- Bank account reconciliations
- Expense management
- General ledger maintenance
- Reporting tools to provide profit and loss reports, balance sheets, transaction reports and VAT reports
Additional functions:
- Integrated payroll
- Stock and replenishment integration
- Work In Progress billing and timesheet integration
- Bill of materials to define raw materials required to create Finished Goods
- Assembly Process to convert raw materials to Finished Goods
- Asset Register with flexible depreciation functionality
- Budget and forecasting ability
- Cash flow forecasting
- Is the system provider sustainable and reliable?
- Can you download data to migrate to another system at a future time?
- Is it possible to access your data after your company ceases, without continuing to pay the subscription?
- Will you be forced to pay more?
- Is the system secure and is the data encrypted?
- Is there a history of downtime, where the system is not available?
- Is there a commitment to my local market?
- How is support provided? Often there is only e-mail support.
WHAT IS THE RIGHT SYSTEM FOR MY BUSINESS?
There
are several excellent entry-level systems available today, which will provide
simple and easy processes to control the key areas of the business.
For
a small business, there are a number of factors about the business that are
pre-requisite considerations, when determining which accounting system is
optimum for the needs of the business.
E-Commerce integration
If
you intend to sell merchandise or services on the Internet, you will almost
certainly need greater functionality from our accounting system.
The ability to have bi-directional data flows will ensure data is synchronised. This will ensure stock on hand will be visible to your e-commerce customers even if you have more than one sales channel.
The
accounting system will need to transfer customer and sales transaction records
directly into the accounting system from the e-commerce system. In addition, if payments are handled in the
e-commerce system details of the customers’ payments will need to be
transferred.
Back orders that drive stock negative need to be parked pending replenishment. Negative stock is to be avoided if you want to accurate profitability reporting.
E-commerce sales could be in currencies other than the company’s standard
trading currency.
E-commerce
sales will probably mean dealing with different EU countries and accounting to
HMRC for EU sales and VAT. You will need the
system to be able to report EU sales as part of the standard VAT reporting.
If
your EU customer provides you with a VAT number, you will not need to charge
VAT but vendors do need to validate the VAT number. A sophisticated accounting solution will
carry out this validation for you.
Stock control and EPOS (electronic point of sale) systems
Stock control and EPOS (electronic point of sale) systems
If
you are buying and selling merchandise, then you will need robust mechanisms to
control and report stock levels. If you
are also using an EPOS system, then this can manage the stock and replenishment
processes, and the accounting system will not need to duplicate these
records. However, the accounting system
will need to mirror a summary of the stock movement for each accounting period.
Manufacturing
and assembly
To handle raw materials and various stages of assembly, bill
of materials functionality to maintain and control complex build up of
components, possibly in multiple currencies with different costs according to
supplier and varying costs for the same component. An assembly feature to convert raw materials to finished goods will be required. It will be also beneficial to include non stock items such as freight and labour in the bill of materials.
This
level of sophistication may warrant an Enterprise Resource Planning (ERP)
system dependent on the scale of the operation.
This is outside of the scope of this document. We plan to review ERP systems in a
forthcoming report.
CRITICAL
CONSIDERATIONS
Sales
Invoices and credit notes
Customisable
sales invoices and credit notes so that the business logo appears and documents
can optionally be sent to the customer via e-mail.
Each
sales invoice may need to handle different rates of VAT for each line on the
invoice.
Handling and delivery charges, - ensure there is a
suitable mechanism to handle these additional charges on the sales invoice and
the different VAT rates applicable for the ancillary charges.
It
would be preferable if systems allowed defaults for these to be configured
within the invoice structure, but most entry-level systems do not provide this
functionality.
Managing book debts by automatically sending statements and reminders can save considerable time.
If
you are in the practice of supplying quotations or sales orders, the system
should allow generation of sales invoices directly from these primary
documents.
The
ability to create recurring sales transactions, for monthly or quarterly fixed
maintenance charges, could reduce book keeping errors and costs.
There
should be a simple mechanism to allow the cancellation or adjustment of a sales
invoice. Most legacy systems were too
rigid in this respect, but we are seeing better flexibility in most modern
systems.
Your
Accountant, auditor and HMRC will need to see audit trails of all accounting
transactions, but as long as everything is locked down at the end of each
accounting period and before the VAT reports are generated, flexibility can be
a boon in terms of saving time when an invoice needs to be corrected. Of course, you need to ensure a customer does
not have two versions of the same invoice.
If
you are selling overseas, do you need to send invoices in different
languages? Some systems can
automatically translate the invoice headers appropriately.
Multi
currency
Multi-currency
functionality is essential if you trade in multiple currencies. Ideally, the system will receive a live feed
from an authoritative source such as xe.com or the ECB at least once a
day.
You should also decide if we need bank accounts to be held in foreign currency.
Exchange
rate variations should be handled seamlessly.
Incoming
payments
If
you are handling a high volume of transactions, which are paid via different
credit cards and other incoming payment sources, you will want mechanism to
integrate the incoming payments into the accounts system.
If
you accept credit card payments over the telephone, you will want to enter payment
details directly into the accounting system to validate the payment and maintain
optimum control of this key area of the business.
It
is also worth checking that you can record an incoming receipt from a customer
and allocate that amount to several invoices.
It will make bank reconciliations much harder if you regularly receive
incoming payments from customers that relates to several invoices, and are
restricted to recording a separate receipt for each invoice.
Purchase
Orders and Invoices
You
should be able to place purchase orders on the system and when a purchase
invoice from a supplier is received, it can be matched to the purchase invoice to the
order.
If
for example you buy a case containing 24 items but sell those items individually, this
will need to be considered in the purchase order and inventory process.
The
purchase order system should be linked to the stock or products file. Some systems allow minimum stock levels and
produce purchase orders autonomously when the stock levels reach the minimum
stock level designated for each product. The maximum stock level also needs to be recorded against each product for this functionality.
You
may need to order the same product from different suppliers, so ideally we will
have a preferred supplier for each stock item.
Settlement
discounts
HMRC
allow for settlement discounts to be deducted before the calculation of VAT.
If
suppliers offer settlement discounts for payment within a number of days, this
should be handled within the system.
You
may wish to offer a settlement discount and again, would want to see a
mechanism to simply handle this in the receipting process.
VAT
It is important to ensure the application is compatible with any VAT scheme that you use such as Cash Accounting, Flat Rate schemes or Retail schemes.
Businesses
with a turnover below £1.35m can opt for Cash Accounting or the Flat Rate
Scheme if your turnover is less than £150,000.
Of course, it may be preferable to use the Standard VAT scheme. It is worth getting advice on this from your
accountant or HMRC.
Banking
The
banking module should allow for bank statements to be imported or better still,
provide a live feed from the bank.
Bank
reconciliation should be a simple process, and if large transaction
volumes are anticipated, provide automatic matching of records.
The facility for multiple bank accounts in multiple
currencies is also a key point to look for, if required. Some accounting systems allow invoices to be created in different
currencies, but do not allow bank accounts to be held in anything other than
the base currency.
General
ledger
A general ledger that reports transactions in multi-currency is a useful feature.
Ideally, your accountant will be able to record accruals and prepayments
and have the functionality to create recurring and reversing journals.
MULTI
USER
If
the business is going to grow, multi-user functionality is essential to allow more than one person to be working on the system at any one time. You may wish to limit certain areas of the system to certain staff members, so user levels should be available.
It
is also helpful to have a log automatically maintained, showing who did what
and when. This is now a standard feature
on most good accounting systems.
EXCEL
or CSV file transfer
This allows for greater flexibility to allow data to
be reported externally.
API (Application Program Interface)
This
allows the system to integrate with other systems.
Migration
from other systems
If
we already have another system running the accounts, very careful consideration
needs to be taken to how this will be best achieved.
Which
software solution is right for my business?
The
Cloud software solutions that seem to be the most popular are listed below, with
price comparisons (all prices exclude VAT).
KashFlow
- UK focused
£18
per month (14 day free trial)
Although
it is not possible to maintain bank accounts in multi currency, for a small
business, this may not be an immediate issue.
The business may prefer to trade only in sterling and not build up
reserves of other currencies. However, there will be increased costs from the
bank to convert each individual transaction to sterling at the point of receipt
and no flexibility to sell the currency at the most opportune times.
KashFlow
advise they are going to deliver a multi user system, but no details are
available as to planned delivery.
KashFlow
undertake not to increase prices for existing users.
KashFlow
is an excellent value system with great functionality and ease of use for non-accounting
staff. In addition there are a number of
add-ons available through its API that integrate into KashFlow such a CRM
systems, time and project management, card processors to mention a few.
The
features of a basic stock control are to be commended at this price level.
There
are many UK users and accountants, who are very pleased with the KashFlow
system.
Some
people are unhappy with the terms used throughout the system, as they are non-accounting
terms. That said, it soon becomes second nature to understand.
Xero
- unlimited users
£12
per month (5 invoices a month limit)
£19
per month unlimited
£24
per month unlimited and includes full multi currency
Xero continue to expand there customer base. It is widely recommended and offers many Add-ons for CRM, eCommerce, expenses, inventory, Job tracking to mention a few.
Xero continue to expand there customer base. It is widely recommended and offers many Add-ons for CRM, eCommerce, expenses, inventory, Job tracking to mention a few.
Payroll
is at extra cost and is an external add in provided by MyPaye, Payescape or The Payroll Site. MyPaye can be integrated to the general ledger.
Good
reporting tools.
Stock control for Xero
Unleashed is an excellent stock control add in for Xero. It seamlessly integrates with several e-commerce platforms including Magento. It is easily deployed, has multi currency functionality and bill of materials and assembly functions.
Unleashed seamlessly integrates with your e-commerce platform.
Unleashed is an excellent stock control add in for Xero. It seamlessly integrates with several e-commerce platforms including Magento. It is easily deployed, has multi currency functionality and bill of materials and assembly functions.
Unleashed seamlessly integrates with your e-commerce platform.
Video tutorials are helpful.
ClearBooks
– multiple users
Expansion - £19 per month
Connect - £39 per month including priority support
ClearBooks
is produced by Fubra Limited. It is an
easy to use, well-designed system. It is particularly well designed for the UK
market, with good VAT reporting and functionality.
The
documentation seems poor compared to other systems.
FreeAgent
Sole
Trader £15 per month
Partnership/LLP
£20
Limited
Company £25
Excellent
features but expensive for small limited companies. It has a useful tax time
line, showing upcoming tax deadlines. It is fully multi user. Each user can have separate logins and
passwords.
It
is well suited to freelancers and contractors.
It allows very good project management and allows remote workers to
login and manage their own timesheets.
How
to further evaluate the right choice for your business
All
systems reported here have free downloads for trial periods.
It
is recommended you carry out a thorough test of the system you plan to use to
ensure the important areas of your business will be adequately catered for. It would be a good idea to get a
knowledgeable professional to help with this.
A
thorough testing plan should be devised and documented, to ensure you are
buying in to the product that best meets the needs of your business.
For a feature comparison table, please feel free to contact me.
Author: John Cotter of Yes Accounting Ltd