‘Basic’ accounting no more
With “work from anywhere” becoming more of a necessity right now, performing accounting tasks online has changed from being an option to the best choice for many. And now that you and your clients have gone down this road en masse, that’s not likely to change much, at least in the near future. That’s true whether the accounting is done with basic accounting systems or full-blown ERP solutions. As we do annually, we surveyed a number of accounting software vendors to gather their insights as to where we are in this market segment, and where online accounting software options are going and developing.
All about the features
When it comes to online accounting capabilities, “basic” accounting isn’t so basic anymore. Many software vendors are focusing their development into increasing the functionality of their offerings to meet the increasing needs of even smaller businesses as well as what used to be referred to as mid-market. Even a single-person firm or client is likely to need the ability to capitalize on more advanced features. Invoicing, payroll, CRM, inventory and other functions and capabilities aren’t really optional for many entities. And the current pandemic has just emphasized the necessity for full-featured solutions.
Many vendors focus their development efforts on features requested by current and future users. Enhanced reporting is a common request. “Reporting is probably one of the most important features we hear about. Given that it’s the way that accountants communicate their clients’ data to them, it needs to be flexible and adaptable so they can provide the best possible services,” said Dave Emmerman, head of enterprise at Xero.
That’s also true with Sage Intacct, according to senior manager of product marketing James Tilk: “We hear all the time from our customers that the key thing they are looking for is a strong set of core accounting functionality, coupled with robust and dynamic reporting capabilities. Other key items include integration with third-party platforms, automated approval workflows, and integrated budget and planning tools.”
Acumatica vice president of product management Doug Johnson added several more customer-requested capabilities including mobility, remote access, and overall ease of use. And Kurt Kunselman, COO and product owner at AccountingSuite, shared a customer-request list that includes integration with e-commerce platforms, payroll integration, KPI dashboards and KPI reporting, bar code scanning, omnichannel inventory capabilities, and integrations with document scanning and pre-accounting.
Above and beyond
Many vendors and users still equate the term “accounting” with just providing GL capabilities. But that’s not especially true of today’s online accounting offerings. Even if a vendor provides basic GL capabilities, most provide integration with other applications, accounting-oriented and beyond, as well as many reporting that they’ve built out their accounting applications to include more functionality.
Integration with other applications is an important capability of today’s online accounting software. And those integrated offerings can cover a lot of ground. For example, NetSuite senior director of product marketing Tom Kelly mentioned, “Third-party partners play an important role in supporting integrating the various applications that are on the market. We won’t see this need go away but we will see even more functionality being built into ERP platforms to provide as much flexibility as possible to one’s user base. Functionality like planning and budgeting, period close management and account reconciliation continues to evolve. It’s likely that we will see ERP systems of the future act more and more like smart TVs that serve as a technological convergence of devices and applications.”
James Tilk, senior manager of product marketing for Sage Intacct, agreed, mentioning a number of applications that many Intacct customers choose: “Integration with other applications will continue to grow into the foreseeable future. Today, most Sage Intacct customers integrate our software with at least two other external applications, like Salesforce for CRM. We see cloud accounting software solutions becoming more and more tightly integrated with FP&A, financial close, HR/people systems, and payroll applications.”
And FreshBooks’ senior director of business development and partnerships, George Kyriakis, mentioned, “We use feedback from our customers, sales teams and existing partners to help prioritize which categories to add to. It’s also important that our integrations are easy to find. The way in which we offer up relevant integrations is as important as the number of integrations.”
The capability to enhance their software offerings is important enough that most of the vendors we surveyed already provide extensive integrations, often within their own offerings and with external software.
“We like to consider ourselves a platform with our robust and versatile API,” Xero’s Emmerman said.
Intuit is another company that realizes a single software application often doesn’t provide a complete solution. “Currently, QuickBooks Online integrates with more than 640 apps, helping accountants with everything from billing, CRM and analytics,” said Rodrigo Salas, group product manager for Intuit QuickBooks Accountant. “There are also several industry-specific apps available.”
ERP software vendor Acumatica has approached this customer need by building out its offerings to include tools for reporting, analysis, budgeting and planning; advanced financial modules such as fixed assets, deferred revenue, AR and AP; related modules such as payroll, CRM, project accounting, inventory management, order management, manufacturing, commerce and field service.
Finally, Twyla Verhelst, head of the Accounting Professionals Program at Freshbooks, added, “Using a cloud platform also allows for integrations with other apps, making for a robust tech stack that is tailored to the small business with the ability to gain efficiencies across more than one area of the business.”
Vertical versions or customization?
Rather than looking to meet specific user requests, some software vendors, such as Zoho, are building in the capability for extensive customization, or low-code or no-code application enhancement and modification. According to Prashant Ganti, head of Zoho Finance, “Cloud-based solutions like Zoho often come with powerful platform capabilities to enable businesses to customize and extend the application beyond the in-built features offered. For example, typically, box subscription businesses get a lot of questions from their customers related to their orders, billing and subscription plans. The customer support agent must have all this information at hand without having to follow up with other teams. With our platform capabilities, our box subscription customers were able to build a widget in Zoho Desk that automatically displays information about their clients’ order details from Zoho Inventory and subscription details from Zoho Subscriptions.”
Other vendors, such as Acumatica, provide vertical-specific versions of their core application. “We offer specific vertical editions for manufacturing, commerce, construction, field service and distribution,” said Johnson. “Customers want and need industry-specific solutions, so they are bound to increase in availability from the SaaS-only options available today.”
NetSuite is another vendor that has branched out into vertical offerings. Kelly detailed the company’s approach: “Historically, ERP was seen by organizations as a one-size-fits-all solution. Companies would purchase it based off that assurance but then spend a significant amount of time configuring it to meet their industry-specific requirements. This is changing, and ERP is no longer a monolithic solution. NetSuite is already taking this industry approach as we offer several 100-percent cloud-based vertical editions of NetSuite. Key verticals that we have specific versions of our software for ... include: manufacturing, retail services, software and more.”
Intuit takes a somewhat different approach with QuickBooks. “Our approach is to provide an open platform that enables the creation of an online accounting solution that is uniquely built to meet a specific vertical market with a specific customer need. This provides small businesses with choice as they create a right-for-me solution that meets their unique requirements. With the hundreds of apps that integrate with QuickBooks, accounting professionals are also able to tailor their services to grow a niche-focused business that serves their specialized client base,” Salas said.
Online: A better choice?
Moving to the cloud for performing accounting and related functions gets more popular as time goes by. We asked our vendor panel what they felt were some of the value-adds for operating online rather than in-house.
“Now, more than ever, people recognize the benefits of flexibility and remote capabilities. The ability to collaborate with partners in real time — regardless of where either person is physically — has become a part of our day-to-day lives since the emergence of COVID-19, and will only further accelerate the existing trend towards online solutions,” said Intuit’s Salas. “More importantly, however, operating online allows accountants to work in real time with accurate, up-to-date data. The seamless flow of data between apps and features further increases productivity, removing the need for manual data entry. All of this empowers accountants to provide more strategic and forward-looking guidance to their clients, rather than reconciling after the fact or spending time on tedious, low-level work.”
NetSuite’s Kelly cited real-time information and dashboards as benefits, while Zoho’s Ganti mentioned scalability and cost: “Cloud-based systems are significantly less expensive and require zero upfront costs. There are no implementation and maintenance costs as well.”
“One of the advantages that we see customers excited about is all of their data in one place for them to collaborate with their accountants and advisors,” said Xero’s Emmerman, “The second advantage would be flexible and customizable reporting tools. We have the ability to create firm-level report templates that can be pushed out to every client on Xero in moments. The third item that comes to mind with our accounting partners is ‘Find and Recode,’ which allows for you to do searches on transactions and quickly bulk recode those items back to the source transaction in moments.”
Acumatica’s Johnson detailed several other benefits: “Automated backups and data recovery, zero concern about server and database versions and upgrades, reduced IT costs and operation of servers (which is not a core competency of most of our customers), and enhanced security provided by Tier 1 datacenters.”
FreshBooks’ Verhelst noted the effect of the pandemic: “COVID-19 was the catalyst that showed everyone that it’s imperative that you have a way to work online.”
A crystal ball
Finally, we wondered if our respondents had any predictions on the future of online accounting.
Zoho’s Ganti feels that accessibility of data is a prime direction for the industry. “In today’s landscape, businesses need cross-functional visibility, where financial data should be made contextually available across other business applications. Having an accounting system that provides cross-functional value will help with better planning and decision-making.”
“I believe as we adjust to the new normal, we are going to see business owners who need more from their accountants and advisors,” Xero’s Emmerman added. “They need to be versatile and most likely have already accelerated their technologies in their own businesses to continue to support the customers, so a cloud solution for their accounting is the next step.”
And Accounting Suite’s Kunselman predicted that blockchain protocols will trickle down to mid-market and small-business accounting software by 2025: “The efficiencies are just too great — speed is the only issue I see at this time. This will eventually become a new ‘EDI’ for digitizing the digital supply chain.”
AI is an area Sage’s Tilk sees coming more into play. “In the coming years, we expect to see an increase in the inclusion of artificial intelligence embedded into online accounting applications, with machine learning and other features enhancing the capabilities of these systems. The move to online/cloud systems will continue to grow, as inflexible on-premises solutions that prohibit agility and virtual collaboration will no longer be relevant.”
Better efficiency and depth of understanding are some of the predictions from Intuit’s Salas. “We know that technology will continue to evolve, and that it will have a tremendous impact on online accounting. In the years ahead, I believe it will take accountants less time and effort to collect/input data because of compliance automation technologies. This, in turn, will give them more time to act as strategic advisors to their clients, helping them to grow their practices and scale their impact,” he said. “We also believe as online accounting technology gets smarter, accountants will better understand their clients’ overall financial picture better, empowering them to provide more impactful, holistic advice to the small businesses they serve.”
Said FreshBooks’ Verhelst, “I predict that with even greater technological advances and data capture, we’ll see an emphasis placed on the things that technology can’t replicate or replace — human relationships. Great data and insights will act as the foundation for building more meaningful client and customer relationships.”