Thursday, 20 October 2011

Cloud Accounting and Stock system guide

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.

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
Other considerations for Cloud Computing
  • 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.


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
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.


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 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.

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.

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.

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.

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.

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.

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

Tuesday, 23 August 2011

Do you spend too much time reporting in MS Excel?

How many times do you painstakingly produce a report, which you then discover needs to be adapted  to add or exclude criteria such as a products, customer accounts, date ranges or general ledger accounts?

If this means you have to virtually start at the beginning again, you are not using the true potential of your Accounting and ERP (Enterprise Resource Planning) data.

If you do not have your data linked directly to MS Excel via an ODBC link, you cannot quickly and simply produce the revised data you need in your excel based report without re-keying or restructuring the data from scratch.

Many accounting professionals are experts in their Accounting system and also expert users of MS Excel, but by linking these two tools dynamically, you will achieve greater productivity!

You will be amazed at how simply you can produce high quality reports with no investment costs (apart from a couple of hours configuring the links). 

From ad hoc business demands to group consolidated accounts, together with professional looking dashboard presentations.

You will never again need to laboriously produce an Excel report, keying in data which in minutes is out of date.

Simply refreshing the data brings your report up to date (or optionally, when you re-open the file).

The information you need to present is quickly and easily available in seconds, in a format that is presentable to the board, clients and colleagues alike!

Reports to provide charts and pivot tables can be set up, easily and by using filters, change criteria to suit the nature of the report you need.
    The following dashboard was created from a dynamic ODBC link to Sage Line 50 data:

    If you would like to learn more on how this process can be achieved, I will be adding a step by step tutorial, in later posts.

    Alternatively, please feel free to contact me via my website: