Five key considerations for choosing accounting software

Choosing an accounting software package is a major decision, the results of which you’ll inevitably end up living with for many years, so it’s important to get it right. “Nobody ever got fired for buying IBM”, as the 1960’s maxim went, and more recently, the same could be said for those buying Sage accounting software for SMEs. But in recent years, the choice of software packages for small and medium companies has expanded considerably. Here are a few key points to consider in deciding which is best for you:   1. Does the package meet your core requirements, (ideally without customisation)? All accounting software packages perform a core set of processes – managing invoicing, processing payments to suppliers, reconciling bank balance; but you may be looking for additional requirements such links to your MRP or CRM systems, or the provision of a particular metric for management reporting. A well-tried method for deciding which package best meets your needs is to carefully list all the accounting processes in your organisation, identify those which are (a) essential and can’t be modified, (b) those which can be tweaked to fit and (c) those which could be dropped. When you come to either running the software for a free trial period, or for larger packages, at the reseller’s demonstration day, this should be your checklist to determine the extent to which the package meets your critical requirements.   2. Cloud or server? Key considerations here are cost (see point 3), access to upgrades (usually free on cloud packages) and security (cloud data is backed up automatically, server based data will be down to your own routines)....

A choice of accounting software (at last…)

For many years the default accounting software choice for small companies has been Sage – Instant Accounts for micro companies and Line 50 or 100 for small and medium enterprises. With a huge share of the SME market, Sage have been able to dominate the sector for years whilst offering customers only small changes in functionality. Users have been pushed to buy annual maintenance packages, with support being withdrawn from older versions, forcing them to work with unsupported software or splash out on upgrades. This has now started to change, as cloud-based packages from companies such as New Zealand’s  Xero, offer a whole new set of features at considerably lower prices. This has started to eat into Sage’s market share: With around 100,000 users in the UK and over 600,000 users worldwide, Xero reported year-on-year growth in 2014 of 80%  making them the world’s fastest growing accounting software company. Sage, with annual growth in single digits, is finally starting to stir. Their recently installed CEO Steven Kelly admitted they had been slow to adapt to the cloud-based approach and would need to catch up. At the Sage Summit last August, Kelly also promised to end forced end-of-life migrations to new versions. Sage One launched in 2011 and by June 2015 had built up 92,000 customers in the UK, charging £10 per month, the same as Xero. However, this is hardly stellar growth and only represents a tiny fraction of Sage’s total revenue of £1.4bn. Their website boasts how they had developed Sage Live, a cloud based successor to Line 50, in just 26 weeks, although apart from a rather irritating video,...

Blockchain – the future?

In my last blog on productivity and the impact of digitisation on the accountancy sector, I made no mention of at all of blockchain. A few days later, the front page of the Economist read “The trust machine: How the technology behind Bitcoin could change the world”, and two days later, the FT ran a full page feature on the impact of blockchain technology. This is rapidly shaping up to be a game changer across a huge number of markets in the no-so-distant future. So what exactly is blockchain?   Very briefly blockchain uses cryptography to build a dependable ledger, allowing parties who do not know (or trust) each other to manage transactions between them. So if Alec wants to make a payment to Beryl, Alec’s transaction is fed into the blockchain through a cryptographic ‘hash’ function which boils the transaction down into a sting of data and which is loaded into a block. Through a series of actions involving such esoteric concepts as miners and merkle trees, the payment leaves Alec’s online wallet and appears in Beryl’s. (For a good guide to the steps involved, have a look at the 31 October 2015 copy of the Economist hyperlinked above). The most important features are that once the transaction has been commenced, it cannot be tampered with – this relies on a network of computers (miners) unbundling the block using a complex process of trial and error. The technology involved is all one-way – the puzzles can be solved and checked but the underlying data cannot be changed.   Back in May 2015, the Economist ran a similar article...

Productivity

In July, the government announced its Plan for Productivity – for GDP per head to increase productivity has to improve and the government’s plan envisages tackling this through a combination of long term investment and making the economy more dynamic. But businesses too need to improve their productivity and a large part of it will be through increased automation. And finance departments will not be exempt. Major changes in the world of accounting are inevitable – a recent study in the Economist gave the probability of computerisation leading to financial processing job losses in the next two decades at 94%. So what would the automation of an organisation’s finance function involve? The day to day work of most finance employees involves a mixture of matching, posting, authorisation and the triggering of actions – making payments, raising invoices etc. Much of this is repetitive and not generally life-enhancing.  By tagging transactions at the start a lot of re-keying and checking of data can be avoided. This is already common in larger companies, particularly for online businesses. But it should be possible for much smaller organisations. Take a typical manufacturer. In the past, to top up a supply of widgets, the production department would raise a requisition and Accounts would turn this into a purchase order. When the goods arrived, the goods inwards team would approve the goods received note and this would go to accounts payable to be matched with the supplier’s invoice and the purchase order before payment could be made. Now, relatively inexpensive MRP software, such as that from 123 Insight, can automate the requisition and matching processes...