Case Studies: Online accounting

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A decade ago, firms had very few options in cloud-based accounting software, and solutions that addressed the specific needs of their smaller, niche clients were more or less non-existent. Today, there are a range of software options for firms that serve individuals, large corporations, nonprofits and everything in between.

Below, three firms — and one small business — discuss their online accounting software of choice.

Evident advantages

Product: Xero
Firm: Acuity
On record: Founder and CEO Kenji Kuramoto
Start date: 2015
Users: 34, 27 of whom are Xero-certified
Price: Ranges from $9 to $70 per month

Objective: Acuity was founded by Kenji Kuramoto in 2004 as a firm to provide “fractional CFO” services to small businesses. Since then, the company has added controller, accounting and bookkeeping services. Acuity added bookkeeping services to its offerings five years ago, and last year the company started using Xero to support its bookkeeping business. Acuity positions itself as offering “tech-savvy accounting experts” to small businesses, so Xero was attractive as accounting software built completely in the cloud.

“Around this time, we’d seen the advantages of cloud-based software in other industries,” Kuramoto said. “Even though the accounting professional had been slower to adopt technology, the advantages it could offer accounting were evident.”

Implementation: At the time of implementation, Kuramoto had already been through “other more rigorous and serious integrations and implementations” at Acuity. In comparison, the implementation of Xero was “really easy, thankfully.” Xero offered set-up walkthroughs, which Kuramoto found very helpful, and the software company’s support team was responsive. “We found migrating from other software that may not have been the right fit worked pretty well. Some clients were using a bank account or spreadsheets, and those integrations were easy, too.”

Advantages: “From a business owner’s perspective, I like how well Xero works on mobile devices,” Kuramoto said. “I’m always on the move, and I love that I can access Xero from an iPad, iPhone, tablet — even an Apple Watch. Usability was configured for each of those mobile settings. The company was really specific in thinking about true use cases for Xero customers and how they work each day.”

Kuramoto added that his team loves Xero’s find & recode tool, which allows accountant users to take large quantities of transactions and recode them appropriately in batches. “Let’s say you bring on a new client,” he explained. “Maybe they had a bad bookkeeper before, and a whole bunch of transactions were handled incorrectly. It’s easy to search for those and then do a massive recode of all of them. Tools like that are extremely beneficial for transactions spanning multiple years.”

Challenges: One of Xero’s key features is automatic bank reconciliations: The software automatically integrates third-party bank account transactions into Xero.

“As a U.S.-based accounting professional, I have been trained pretty specifically on how to do a bank reconciliation,” Kuramoto said. “You go and compare transactions within accounting software bank balances to third-party bank statements and compare the difference. The reason we do it that way is there are lots of transactions and it’s always possible they’ve been miskeyed with errors; and we then check them against bank statements.”

“Xero tries to take a modern approach that in theory eliminates the need for that old-school bank rec, and that can be challenging for old-school accountants who are used to seeing a very specific bank rec function within a software,” he continued. “It’s a normative change that CPAs and forward-thinking companies like Xero are trying to work through as fewer and fewer manual transactions are put into software.”

Suggestions: Kuramoto likes that Xero gives a lot of freedom for what type of credit card merchant small businesses want to use to accept customer payments, but would like to see improved ability to manage customers who are using subscription-based revenue models. He explained that Xero, like most accounting software programs, can be “hacked” to take subscriptions, but it’s “clunky.”

“You find you’re using a few other components and tools to sit on top of the Xero system to really do all the billing you need it to do if you’re a subscription-based business,” he said. “Xero plays well with other software tools and APIs, but it would be nice to have those functionalities directly in Xero — like sending the invoices right out of Xero and setting it to be a subscription every month until you alter it.”

Currently, Kuramoto uses add-ons like Stripe for payments, and Chargify, which manages more complex subscriptions. He also uses ChartMogul, which provides subscription, analytics and revenue reporting, to manage subscription-based customers, because the ability to see monthly revenue return rates isn’t built into Xero’s software.

“I also like that Xero is enabling ways for users to interact with accounting information,” Kuramoto added. “They’re rolling out the functionality of making queries using text messages. I hope they continue that trend by using voice integrations like Alexa.”

What’s next: “Today we’re using Xero as a foundational component of our bookkeeping service,” Kuramoto said. “Customers are overwhelmed with choice. We’ve found they’ve been really responsive when we’ve stepped in and recommended Xero. We’re going to continue recommending it and Xero’s going to be a natural fit for them once they continue accepting cloud technology, especially once they see Xero was purpose-built in the cloud. Xero is a pretty instrumental component of how Acuity will continue growing.”

A critical tool

Product: QuickBooks Online (Intuit)
Firm: Sechler CPA PC
On record: CEO and sole shareholder
Carolyn Sechler
Start date: December 2004
Users: 28
Price: $360 per year

Objective: Carolyn Sechler started her own firm, Sechler CPA PC, in 1985. She took the practice home a decade later so she could work remotely and spend more time with her young daughter. “Technology is critical to what I do and who I am,” she said, explaining how important it was to have tools that afforded her the kind of flexibility she needed for her family. She started using QuickBooks Online almost immediately after its release, in part because it was online, but also because she found it to be cost-efficient.

Implementation: Sechler doesn’t remember needing much support when first setting up QBO. Because she started using the software almost as soon as it was released, she remembers having questions about various functions over the years that, over time, did become available. “When we said, ‘We wish we could do this,’ QuickBooks always responded with, ‘That’s a good idea.’ Since its release, QuickBooks Online has caught up and surpassed the desktop version.”

Advantages: Sechler tested QBO for a year and a half before rolling it out to her clients, because she wanted to make sure it was the right tool for the more than 550 nonprofit organizations that make up her client base. QBO is particularly good for her nonprofit clients because, “Other accounting softwares are geared to larger nonprofit organizations,” she explained. “If I ask a client startup or an early-stage organization to use a tool that is complex and requires high-level accounting skills, I’m not going to get good data at the end of the year. They won’t comply. QBO is easy and intuitive, so I get good results. I have to have a product that is for people who are passionate about the work they are doing every day, that enables them to focus on that work.”

Other advantages Sechler mentioned were the ability to create customized reports that go out to individual clients on specific dates and the ability to support multiple currencies. She also likes QBO’s integrations with other online add-ons, such as as membership management systems for churches.

Challenges: According to Sechler, batch processing of transactions has been an issue for her firm. However, this known issue has been addressed in the QuickBooks Online Accountant version. She has also noticed that her QBO system has gone down this year multiple times, and she was told that it was because her firm has more than 350 clients in the system. However, QBO support has come up with a solution each time.

“We look every year to see if there’s anyone out there doing anything that’s more effective. We used [a different product] for a short time but we ended up moving everybody back to QBO because that worked better for us,” she explained.

Suggestions: “I would love to be able to see a survey of my clients that I have under my master admin role, as well as an overall database of all my clients,” Sechler said. “It would be nice to review and compare commonalities and trends. For example, revenues generated by clients across the board; which five are producing the most; a report on which clients weren’t active in the last three months.”

What’s next: Sechler teaches QBO classes every month to the broader community in Phoenix. “We sell out every time,” she said. “I just want to keep preaching the gospel on how to manage your organization well. I just think that in the NPO and small-business sector, organizations would be crazy not to have a good tool like QBO around to manage and sustain their operations.”

“I want that”

Product: Intacct
Firm: Gray, Gray & Gray LLP
On record: Partner Paul Gerry
Start date: 2013
Users: 28
Price: Between $35 and $95 per client

Objective: Though Gray, Gray & Gray started using Intacct in 2013, Gerry had used the accounting software previously with a smaller firm circa 2000 when the technology was still “on the bleeding edge.”

Gray, Gray & Gray performs a lot of outsourced accounting, and one of its niches is restaurant franchises. Previously, the firm was using a desktop accounting system together with a host of offline Excel calculations, and that wasn’t meeting its needs. During an American Institute of CPAs meeting in which the association walked attendees through several different accounting software packages, Gerry decided Intacct looked like a good fit for the firm.

Implementation: “Before we started rolling the software out to clients, we decided to use it internally,” Gerry said. “We hoped our people would become a resource to our clients, having gone through our own implementation and learning the hard way. But overall, it wasn’t a bad process. The staff person involved in day-to-day implementation said it wasn’t that difficult, and Intacct was there to answer any questions. And now we’re there for our clients to help them through their implementation process.”

Advantages: As with any online accounting software, being based in the cloud is a major plus for Gray, Gray & Gray. In addition to that, Gerry said that Intacct offers a very robust general ledger package. Intacct’s software also allows the firm to create almost any type of report it needs, Gerry said.

“One of the things we love is not just how it all works but the ability to throw up dashboards of what’s important to business owners and managers. We’ve been growing our practice, focusing on niches like restaurants. When we go to meetings and we bring out the big TV screen with the big dashboard, owners are like, ‘I want that.’ It’s very attractive. It makes the sell that much easier,” he said.

Challenges: Gerry said that there are both advantages and disadvantages to the configurable nature of Intacct. Intacct offers a host of integrations, and is not a “one-stop shop.” While that can be challenging, “At the end of day it’s a good result,” Gerry said. “I believe we have a better product at the end of the day, but it requires more time and thought to make sure you have the right partners in place to serve your needs. When bringing in third-party partners, Intacct can direct you, but it’s up to you to decide who the right fit is in the right circumstance.”

Suggestions: Another one of Gray, Gray & Gray’s verticals is architects and engineers. Because of this, Gerry would like to see a better project accounting functionality from Intacct. “Architects and engineers track all their projects, and they have work in process, and it doesn’t necessarily get billed through each month,” he said. “Intacct’s not built for that. There are some separate apps that do that, that are built for that specific industry.”

The firm would also like to see more focus on user permissions.

“None of this is new,” Gerry said. “Intacct takes our feedback and they do update the system. The software continues to evolve. But right now, it’s difficult to accommodate all owners’ needs and requirements when it comes to what employees should and should not be able to see. A more extensive list of user permissions would be a huge help.”

What’s next: The attractive dashboards feature has been a major driver of customer acquisition, so Gray, Gray & Gray will continue to use that as a growth strategy. This feature has especially been useful in displaying the firm’s annual Energy Industry Survey for its oil and energy clients. The extremely customizable reporting also helps retain clients.

Straightforward, powerful

Product: FreshBooks
Company: Beyond Media
On record: Co-founder Andrew Klotz
Start date: 2013
Users: 1
Price: $300 (Canadian) per year

Objective: FreshBooks is a cloud-based accounting software targeted at small-business owners and solopreneurs. When Andrew Klotz started using it, he had just moved from a Fortune 500 company to doing freelance work providing digital marketing tools to organizations. “I needed to put in place a system to minimize the time I needed to dedicate to accounting tasks, that was automated, and would help me work more efficiently and have more time to execute business and pitch myself to new customers,” he said. “Beforehand, I had been using Microsoft Excel and Word to track clients in a spreadsheet, which was also tracking projects and potential projects. There was a whole mess of information within that sheet. It was just a really bad system, and very quickly I realized it wouldn’t be something that would be scalable.”

After founding Beyond Media, which creates marketing offerings such as 360-degree virtual tours of a location, he continued to use FreshBooks after considering a few different options.

Implementation: “Implementation was very simple,” Klotz said. “It was as simple as entering in client details, and then entering in services or items that I was selling at the time. It’s very easy to keep the list updated with products, descriptions and tax fees. I was up and running in less than an hour. At the time I didn’t have a ton of clients, but as I picked up new clients I was easily able to add them in.”

Advantages: The foremost advantage of FreshBooks for Klotz is its simplicity. The software allows users to “see at a glance” what stage an invoice is at. Secondly, the reporting function allows him to view the last 12 months and compare it to the previous year, or a specific month to the corresponding month the previous year.

Built into FreshBooks is also a receipt imaging capability, which allows Klotz to take a picture of a receipt on the go and quickly categorize it. He used to use Expensify to categorize and track receipts, but FreshBooks has since improved in this area, especially for small operations, so Klotz now uses FreshBooks exclusively for this function.

“You can always get a good gauge of how you’re doing from a profit and loss standpoint at any given time,” Klotz said. “It’s nice to have that level of detail and reporting, and also displayed front-and-center on a dashboard.”

Klotz added that his tax accountant appreciates that FreshBooks effectively deals with the harmonized sales tax payments in Canada, which makes tax preparation easy.

Challenges: “FreshBooks has my clients listed within it, but I also use a CRM sales tool, Pipedrive, to track all of my deals that I either have proposals for or am reaching out to clients for,” he said. “FreshBooks and Pipedrive don’t talk to each other, so when I move a deal into ‘won,’ and I need to estimate it, there’s no way to quickly put that into FreshBooks.”

Suggestions: Besides more integrations, Klotz would also like to see more analytics that would help him with budgeting and cash flow: “Most reports are geared towards backward-looking data, but in business you have to plan ahead. Anything to do with forecasting would be extremely helpful.”

What’s next: “When the opportunity comes up to hire someone, I think they’ll have a very easy time with accounting because of the system that FreshBooks has established with invoicing, expense reconciliation and the HST payments,” Klotz said. “It’s very straightforward and powerful.”

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Nonprofit accounting software Small business accounting software Accounting software Technology Xero Intuit QuickBooks Intacct