Accounting software: time to buy
- — 10 August, 1998 21:49
This is the ideal time of year to buy business accounting software. Your accountant has to finalise your accounts for June 30, and it's the one time of year you can start off fresh with a completely clean slate. It's much better than purchasing new software halfway through the financial year, when you'll either end up with a hybrid of systems or an enormous backlog of transactions to enter.
This review looks at four of the main players in the Australian SOHO accounting software industry: M.Y.O.B., Pastel SOHO, QuickBooks and Sterling. M.Y.O.B. and QuickBooks own the lion's share of the market by a long shot, and it's easy to see why. Both of these products excel in making accounting easy, even for those inexperienced in both computing and bookkeeping. And both M.Y.O.B. and QuickBooks have a depth of features remarkable in accounting software at this price level.
Having said that, it's still a case of horses for courses when it comes to accounting software and there are certain situations where both Pastel SOHO and Sterling would be the best choice. It all depends on what type of business you are in, how experienced your bookkeeper is, and where your business is heading in the near future. This review digs below the surface to find what products suit which business types, and where the weaknesses and strengths of each product lie.
The core products in this range are M.Y.O.B. Accounting (with or without Payroll) and M.Y.O.B. FirstAccounts. With over 115,000 registered users, M.Y.O.B. is the most established and popular small business accounting software in Australia.
In addition to these two core products, there's M.Y.O.B. Premier (the multi-user version of M.Y.O.B. Accounting), M.Y.O.B. PowerPay and M.Y.O.B. AssetManager. PowerPay caters for businesses with 25 employees or more, and AssetManager is a stand-alone program that tracks fixed assets and calculates depreciation.
M.Y.O.B. has probably been such an enormous success because it has struck a clever balance between being easy to use and providing solid business reporting. Follow your nose, be explorative and you can make your way through the majority of everyday tasks without even needing a manual.
Make a mistake, and you can zoom in on this transaction (even months later) and fix it up. Mixed with this ease of use is excellent analysis reporting, an intelligent chart of accounts design, and an approach that your accountant will find easy to work with.
M.Y.O.B. Accounting does everything one would expect from accounting software in this price range, including sales, customer statements, a cashbook, purchases, inventory, bank reconciliations and easy Profit & Loss reporting. Along with this you'll find comprehensive job and cost centre analysis, so that you can see how much money you make (or lose!) on each project you undertake, or on each "arm" of your business.
M.Y.O.B. Accounting with Payroll is the only product in this review that provides integrated payroll. What this means in plain English is that payroll is not a stand-alone application in its own right, rather it's part of M.Y.O.B. Accounting itself. The benefits of this integration are twofold: first, you don't need to mess around with importing and exporting between files; second, as soon as you process pay cheques, these payments will be reflected in the rest of your accounts, including your bank balance and Profit & Loss report.
The recent release of M.Y.O.B. version 8 has brought some welcomed improvements in custom reporting with the new OfficeLink feature. Click the Excel button from within the reports index and M.Y.O.B. will automatically open up any report in Excel, load a pre-defined template, and display this report ready formatted in spreadsheet format.
Not only does this pave the way to almost unlimited customised reporting but it allows the user to take advantage of the powerful analytical tools found within Excel itself. For example, you can draw up a report that lists your top 20 customers, displays your 10 slowest moving stock items or calculates sales commission.
OfficeLink also extends to word processing, so that M.Y.O.B. can automatically generate letters in Microsoft Word or Corel WordPerfect. This is great for marketing but the most common benefit of this feature is undoubtedly for debt collection. Click the Letter button from your To Do List and your word processor will generate personalised reminder letters for overdue accounts, with the wording adapted depending on how overdue these accounts are.
Although there are lots of great new features in version 8, it's disappointing to see that there are no changes to the inventory module, which has stayed virtually static since version 4. There's still no scope for multiple sell prices or multiple discount levels, no clear stock transaction reporting trails and no inventory grouping features. Certainly, if you're a manufacturer or wholesaler, you'll have to take a careful look at M.Y.O.B.'s inventory to see if it can meet your needs.
However, it remains easy to find out how to adapt M.Y.O.B. to your business. M.Y.O.B. has the best support resources of any products included in this review, including annual support schemes, a Fax on Demand service, quarterly newsletters, specialist training courses, TAFE and community college courses, how-to books, industry specific guides and a network of over 200 specialist consultants.
In conclusion, M.Y.O.B.'s chosen combination of features and user-friendliness, along with its strong commitment to customer support, makes its position as market leader of Australian small business accounting software a well-deserved one.
Pastel SOHO is the entry-level product to the Pastel accounting range, and offers a Windows accounting solution including all the essentials for small business, such as sales, purchases, inventory and general ledger.
In terms of everyday tasks, such as sales or cheque-book entries, Pastel SOHO is straightforward, with the Transaction Assistant guiding you through each task in a logical sequence. Online help is good, and the Setup Assistant gets you and up running with the basics fairly painlessly.
Inventory is relatively comprehensive, with good inventory transaction summaries, inventory grouping and the ability to adjust pricing globally. However, there's no job costing or cost centre reporting -- a sad omission for small businesses for whom this analysis is often so important to ascertain where they are making their money.
On the up side, the open BTRIEVE database means that extensive custom reporting is available. Admittedly, you'll have to purchase the Crystal ReportWriter as an add-on (and this add-on is more expensive than Pastel SOHO itself) but for those with some knowledge of Crystal, or with an understanding of databases, the report options are extensive.
The big bugbear, especially with a product aimed at this level of the market, is the fact that transactions are grouped in batches (at which point they can be changed) and then updated to the general ledger (at which point they become unchangeable). Batches are another process for the small business person to remember (and get right!) whilst unchangeable transactions are without doubt too inflexible for the average small business.
The best thing about Pastel SOHO is actually nothing to do with the product itself. It's to do with the product range to which it belongs. The easy upgrade path to Pastel Partner is a worthy consideration for fast growing businesses, especially those with inventory or distribution requirements. Pastel Partner retails for between $1000 and $4000, and offers affordable and versatile multi-user accounting.
Quicken for Business, QuickBooks and QuickBooks ProThe Intuit family of accounting products includes Quicken, Quicken for Business, QuickBooks, QuickBooks Pro, and QuickPayroll.
Quicken is the highest selling personal finance manager in Australia (indeed in the world) and is fantastic for individuals who want to manage their home budgets, shares and investments. Quicken for Business includes simple invoicing and business reporting (as well as personal finance) and provides a starting point for cash-based home or hobby businesses.
The next step up is QuickBooks, which provides full small business accounting. Add to QuickBooks time-billing and job management, and you have QuickBooks Pro. Working in tandem with QuickBooks is QuickPayroll, a popular Australian payroll program ideal for businesses with four employees or more.
A major strength of QuickBooks is the way that you can adapt it to different businesses. It's easy to create custom fields in customer, supplier or item records, or include additional columns on invoices. For example, you could include membership numbers for customers, or add an extra column for size or colour for stock items.
The other thing that sets QuickBooks apart from its competitors is its extensive job management and time billing features. QuickBooks Pro caters for estimates, bids and progressive invoicing (especially useful for builders). It can track hours worked for each employee or subcontractor, allocate these hours to jobs, and automatically bill for this time. The latest development (courtesy of the new QuickBooks Developer Kit) is a link to BuildSoft, a special quotation and materials program for builders.
Also included with QuickBooks Pro is QuickBooks Timer, an add-on utility that tracks time spent with clients on phone calls, meetings or consultations. When it's time to update your accounts, you can import these time details for each staff member directly into QuickBooks Pro. The fact that it's possible to bill in six-minute intervals, coupled with the fact that it's easy to switch between cash-based and accrual-based reporting, makes QuickBooks particularly attractive for professionals.
However, the downside to all this flexibility, especially when in the hands of inexperienced users, is that the quality of accounting information can suffer. For example, the chart of accounts can quickly become unmanageable; it's unnervingly easy to "fix" bank reconciliations; you can date transactions anything from 1992 to 2002 without QuickBooks giving so much as a bleat, and year-end procedures are virtually ignored. This might sound great, but pity be the accountant trying to untangle the mess months later.
The other weak area of QuickBooks is in inventory and sales tax. Because sales tax rates are linked to customers and not to items, invoicing becomes cumbersome and error prone for businesses that sell goods at multiple sales tax rates.
QuickPayroll provides the payroll component for QuickBooks, and is an excellent program in its own right. The user interface is great, and the set-up for tricky bits (such as leave entitlements and superannuation calculations) is delightfully idiot-proof. Again, the building industry is well catered for, with attention given to PPS and subcontractors.
You'll have to export your pay cheques from QuickPayroll into QuickBooks, and although this process is apparently improved with QuickPayroll version 4, there's still the issue of detailed expense and department costing not travelling across in the export.
Overall, QuickBooks, QuickBooks Pro and QuickPayroll are excellent products that offer enormous flexibility and choice. Although particularly suited to the building industry and to professionals who bill for their time, these products are readily adaptable to most small business needs.
Sterling 3 for Windows
Sterling 3 is a single-user Windows accounting package from the UK. The distributor changed recently from Solution 6 to Reflex Computers, which has taken on the whole Sterling/Sage range. An earlier version of this product, Sterling 2, is also still available. Although Sterling 2 is older and has fewer features than Sterling 3, it's still around because it can be operated on a network, whereas Sterling 3 multi-user is yet to be released.
The bad news about Sterling is that it isn't, as yet, Year 2000 compliant. Admittedly, they are working now on an upgrade which will be Year 2000 compliant, but meanwhile this rather surprising problem remains, especially considering that this is accounting software and we're already in the middle of 1998.
Still, if you feel comfortable in the guarantee that a fix is on its way, there are some things about Sterling which make it worth considering. Sterling offers by far the best inventory management of any product in this price range. There are three standard pricing levels, bill of materials (that's where other products combine to make another product), reorder quantities, quantity discount matrix, item weights and item budgeting.
The general ledger also has some strong features, despite the sad lack of job or cost centre analysis. There are comprehensive budgeting and budget reports, as well as an inbuilt asset register. This means you can keep track of every asset owned by your business, including where it is stored, how much it cost, what depreciation rate is charged on it, and how much has been written off so far.
Accountant-speak is the dominating force in Sterling -- it's not user-friendly by any scope of the imagination. And it's not easy to fix mistakes either, you're forced to come to terms with month-end procedures (an excessive process for most small business), there's a very yucky chart of accounts, and the interface leaves a lot to be desired.
Although Sterling 3 is not an appropriate choice for service based businesses seeking a friendly SOHO accounting solution, it's worth a second look if your business has complex inventory and pricing requirements. Do bear in mind however, that you'll need a qualified and meticulous bookkeeper along with your purchase.
Some rules of thumb when choosing accounting software:
It's true, choosing accounting software can feel like a barbaric rite of passage. It's hard trying to see beyond the glossy advertising and work out how to meet the often idiosyncratic needs of small business.
However, here are some simple dos and don'ts to help you along the way:
When evaluating software, focus on the everyday tasks most important for your businessLook for simplicity. Can you perform most functions in the demo software just by following your nose?
If you've got four employees or more, then payroll software will save you both time and moneyIs your business growing fast? If it is, look for a product with a good upgrade pathCheck out available support options carefully, and ideally, look for a diverse range of resourcesAsk your industry association or business colleagues what software they've chosen, and whether it works for them. Learn from others' mistakes!
Don't spend hours poring through feature lists. They're pretty meaningless marketing devices, and convey nothing about how easy or difficult the software is to useDon't set up a system where you're keying information into one place, and then keying the same information in somewhere else. Instead, look for good import/export features and flexible custom reporting -- this should enable you to share information between programsDon't purchase industry specific software without considering how it fits with your accounting software. Custom software may be great at calculating pigment weights or projecting the temperature in Outer Mongolia, but can it send necessary details to your accounts?
Don't underestimate your capacity to make mistakes. Look for accounting software that will forgive your transgressions and is flexible enough to cope with changeDon't forget about your accountant. Find out what software they recommend to their clients, as it's important that you are both talking the same language when discussing reports, journals or information flowRead a reader's response to this article, and Veechi's reply in turn.
Data-Tech Software, phone 1800 555 007
Pros: Wide range of support, strong reporting, upgrade path to multi-user Cons: Weak inventoryFirstAccounts: $199; M.Y.O.B. Accounting $379; M.Y.O.B. with Payroll $549; M.Y.O.B. Premier for three users $999Pastel SOHO, Pastel PartnerPastel Software, phone 1800 024 851Pros: Upgrade path to multi-user Cons: Batch processing, inability to edit mistakes, thin on features in placesPastel SOHO $199; Pastel Partner $1000 to $4000 depending on user requirementsQuickBooks, QuickBooks ProReckon Software, phone 1800 674 888 Pros: Great job costing and time management, custom fields, flexible reportingCons: Poor inventory and sales tax managementQuickBooks $349.50; QuickBooks Pro $449; QuickPayroll version 4 $399Sterling 3 for WindowsReflex Computers, phone (08) 9455 4477Pros: Excellent inventory and pricing features, inbuilt asset registerCons: You'll need to be a trained bookkeeper to use itSterling 3 $499