Cloud Accounting: Side by Side
Technology moves fast, and if you want to keep your clients, you’d better be able to keep pace with change. Just a few years ago, everyone was struggling to make sense of, and define, the “cloud.” Today, a few years later, your clients (and hopefully your firm) have stopped worrying about defining it, and instead, have started using applications and storage based on cloud technology.
Various forms of social media, along with backup, are probably the most common cloud applications that companies and individuals use. But bookkeeping and accounting are also popular and becoming more so every time you look.
This is by and large for the best. For years, the offerings from accounting vendors shrank from year to year as companies offering software were acquired by others. Many of the founding members of personal computer-based accounting have vanished. State of the Art, Great Plains, BPI, and many others are just history. And along with companies being subsumed into accounting software behemoths, choices have narrowed.
Cloud-based accounting has reversed that trend, especially in the bookkeeping/entry-level area where much of the action is taking place. Choices are better than ever, and there’s a pricing plan to meet almost every need, from free for a single service-oriented operator, to hundreds of dollars a month for enterprise-level companies with sophisticated requirements. What’s really exciting about the applications detailed in the charts (and those from vendors we weren’t able to include) is the depth of features and capability, even in very reasonably-priced products.
The accompanying charts detail some of the major features in offerings from eight vendors. We’ve segregated the information into features that will be most germane to your clients (see the table here), and those that will be of interest to you in working with the clients that decide to adopt bookkeeping or accounting in the cloud (see here).
In examining the charts, keep in mind that the products listed vary in capability from basic bookkeeping to sophisticated ERP. In many cases, this is reflected in the price, and many of these vendors offer versions with basic capabilities for little or no money, and paid versions with additional features. In all cases, these cloud-based applications are priced using a subscription model, with payments due on a monthly or yearly basis. For many of your clients, this will be an added bonus, as it doesn’t tie them into long-term contracts, or additional charges for support and/or upgrades, and obviates the need for huge expenditures in capital equipment. In fact, with many of the products appearing in the charts, a smartphone or tablet is all the equipment needed (other than possibly a printer) to perform and access all of the features and capabilities of the application.
We’ve endeavored to make the accompanying charts as accurate as possible, verifying the entries with each vendor. But keep in mind that all of these applications are works in progress, and that a feature that wasn’t available at the time the chart was being prepared may have been added in the interim, so double-check with the vendor if you feel that an application is almost perfect for one of your clients. (As an example -- when we originally compiled the tables, Xero did not have inventory, but they released it just last week.)
The bottom line
Accounting Power: Cloud-based applications are the evolutionary descendants of Software-as-a-Service/hosted apps, and AccountantsWorld, the provider of Accounting Power, was one of the original pioneers of SaaS. Accounting Power is a write-up system with client bookkeeping capabilities, and is part of a modular cloud-based set of integrated applications that include payroll and document management.
FreshBooks: FreshBooks is very much more oriented toward basic bookkeeping, rather than true double-entry accounting. It has strong invoicing, time and expense keeping, and optional credit card processing for accepting electronic payments. A large number of partnerships let your clients expand FreshBooks’ capabilities into e-commerce, CRM, and other capabilities. There’s a free version of FreshBooks if your client has simple needs.
Intacct: Intacct is based around a core of financial reporting, offering a modular cloud-based system very similar to mid-market and enterprise in-house applications. Intacct has small-business packages starting at as little as $50 a month, but its portfolio of applications, third-party partners, and scalability will make it particularly worth considering for your midsized clients who are growing.
Kashoo: Kashoo’s entry-level plan provides a good level of features including invoicing, bank transaction downloading, and familiar financial reports such as a balance sheet and income statement. Even this inexpensive plan allows your client to track sales taxes and prepare remittance reports (though not to fill in specific official forms). A slightly more expensive plan adds accountant access and multi-company support.
NetSuite: NetSuite is targeted more toward the mid-market and enterprise-sized businesses than it is SMBs. It offers a suite of cloud-based products including ERP, CRM, and PSA (which is a project management offering that contains project planning and management, as well as time and expense management). Also included under the NetSuite umbrella is e-commerce, and vertical versions of the different components are also available.
QuickBooks Online: In the SMB market, QuickBooks is the accounting application with the largest market share. Like the in-house version, QuickBooks Online offers several editions, with more expensive editions offering more features. New to the QuickBooks approach is an inexpensive online edition for freelancers and contractors that eschews many of the features and offers an uncomplicated way to keep track of what expenses are business and which are personal.
Sage One: Sage One offers two different plans — Sage One Invoicing and Sage One Standard Accounting, which includes invoicing. The entries in the chart reflect features found in Standard Accounting. Sage One isn’t meant as anything more than a basic bookkeeping system. Sage has more robust and comprehensive applications available as both hosted and in-house solutions.
Wave: Wave offers a relatively complete set of bookkeeping tools, and for the most part they are free (you do occasionally get hit with ads for products and services from other companies — that’s what pays the bills). Wave offers several products — accounting, invoicing (and invoicing from mobile devices), personal financial management, and receipt management are all free. Wave does charge for its payroll service, as well as the ability to accept credit card and electronic payments.
Xero: Xero offers three plans, starting as inexpensively as $9 a month and rising to as pricey as $70 a month. The least-expensive plan limits your client to sending five invoices a month, paying five bills, and reconciling 20 bank transactions, while the two more expensive plans remove these caps and add payroll (in seven states) for either five or 10 employees, though additional employees can be accommodated for an extra cost. (Note: Xero also now offers inventory; earlier versions of this story included a table that was prepared before this was announced.)