Crowe Horwath’s Mary O’Driscoll says there is more to picking an accounting system than price.
The arrival of cloud-based accounting systems has busted open a space long dominated by incumbent MYOB, but picking the provider which suits your business best comes down to more than price.
“They’ve all got their good points and you need to be across more than one,” says Mary O’Driscoll, a principal in Crowe Horwath’s business advisory practice.
The four main players in the Australian market are MYOB, New Zealand’s fast-growing born-in-the-cloud Xero, global giant Intuit with Quickbooks, and Reckon, the former Australian distributor for Quickbooks which now has its own cloud-based offering.
Picking an accounting system is a vital yet often baffling decision for new businesses, O’Driscoll says, particularly as the players seek to attract start-ups with free trials that can convert into paid subscriptions when transactional levels increase.
The jaw-dropping performance of Xero shares reflects “the fundamental change that cloud-based accounting and bookkeeping is making to the way we do business,” O’Driscoll says.
She acknowledges that Xero is “ahead of the rest” when it comes to compatability with smartphones and tablets for entrepreneurs on the go.
However Crowe Horwath – which is a ‘platinum partner’ for Xero with more than 1000 clients using the software, but also a partner for MYOB in transitioning clients to its cloud-based AccountRight Live and Live Accounts platforms – regularly recommends a range of systems to businesses based on their needs.
“For example if you want inventory tracking, the Xero product on its own would not be sufficient – you’d need an add-on, whereas that is included in MYOB’s off-the-shelf product,” O’Driscoll says.
There is no “expensive” provider, she explains, but there is money to be saved in packaging add-ons tailored to your firm’s individual needs.
“MYOB also offers more a hybrid model. You can sync it and choose to use it offline, which suits some businesses. Obviously you can’t do that with a cloud-only solution.”
O’Driscoll says Intuit is “a bit behind in terms of its cloud product” but once localised it will offer a global heft the others lack. An example of its innovation is Quickbooks Financing, which uses the cloud-based data it already holds on its customers to try and give banks a better measure of their creditworthiness.
An MYOB to Xero case study
The choice between accounting systems was a lot easier in March 2012, when WA’s Caretech switched from MYOB to Xero, according to managing director of the wholesaler to pharmacis and health stores, Warwick Wilson.
“These days the competition’s really hotted up but back then Xero presented a unique opportunity for us,” Wilson says.
“MYOB was a specific bookkeeping system, and expensive in the sense of continually paying for upgrades. It was hard for newcomers to understand and there were no extras for sales reps back then.”
Wilson says buying Xero allowed him to redeploy “two or three” fulltime equivalents away from the books and into sales roles that can grow the business.
Cloud-based accounting in general has saved him time and money and presented opportunities to improve, for example through diarisation of all calls to and from customers and sales reps (delivered through a $35-a-month add-on to Xero called Insightly).
“The relationship with our accountant was behind the times, they were just glorified bookkeepers and if you made a mistake, you’d have to recreate everything. It was just silly compared to now where you can all see what everyone’s doing. They can be true management accountants.”
Caretech will also adopt Xero’s inventory management add-on, Unleashed, “probably within the next six months”, Wilson says.
He has one note of notion of caution for first-time buyers of accounting software – don’t expect miracles overnight.
“In the first few months you gain nothing from a system really, it’s just record-keeping because there’s not enough data in it. Only with the passage of time does it become useful, when you can compare quarter-on-quarter then year-on-year.”
Internet banking through your accounting system will be reality
One of the revolutionary aspects of Xero was its enabling of a direct feed between a company’s bank accounts and its accounting system, says HLB Mann Judd business advisory partner Tony Kabrovski.
“It matches up the invoices you’ve sent out with the monies receivedinto your account, so reconciliation becomes as simple as the bookkeeper clicking ‘yes’ or ‘no’,” says Kabrovski.
He says cloud accounting generally allows businesses to react far more quickly to changing conditions.
“With some clients now, its only February but we’re already reforecasting for this quarter because new information has come in.”
Crowe Horwath’s O’Driscoll says more direct bank connectivity is happening across the space. One example is MYOB’s deal last year with mobile payments solution provider Mint Wireless.
“In 10 years’ time your internet banking could be operating solely through your accounting system,” she says.