One
of the things I often have to do is to advise businesses on how to keep their records. There's no "one size
fits all" approach. Here are some of the things that you should
think about when making a decision.
For many businesses, using accounting software is overkill. In most cases, there are really only two key benefits to accounting software when all's said and done:
- It makes it easy to track amounts owed to you by customers.
- It makes it easy to create reports from your accounting data.
Often, neither of those things are a concern. Many small enterprises only have one or two customers, and might only invoice them once a month. If that’s the case, the owner is unlikely to have much interest in tracking amounts owed to the business – he or she will always know how much is owed. Similarly, it’s all very well being able to easily create a profit and loss account for a given period with your accounting software, but if you only raise a single invoice each month and have fairly fixed costs, you may well feel that you know perfectly well how much you’re making.
So, for businesses like that a simple Excel cashbook can do the trick – it accurately captures details of income and expenditure in a form adequate for year-end accounts (and, if necessary, VAT returns) with minimal effort.
But many businesses are more complex. For complicated or growing businesses it can be important to track amounts owed by multiple customers, and to report on accounting data to track profitability, solvency and growth. That means that accounting software is really useful.
Lots of accountants have a favourite accounting package. Many are fans of Sage. Many are fans of QuickBooks. Most of the Sage fans sneer at QuickBooks. Most of the QuickBooks fans sneer at Sage. We’re now seeing a big move towards browser-based online accounting systems. Most of the fans (and providers) of the online accounting systems sneer at both Sage and QuickBooks.
The thing is, for most businesses, any of those systems (and others, like MYOB and Tasbooks) are fine. They’re good products. Double entry bookkeeping hasn’t changed for around 600 years, and Sage, QuickBooks or any other similar package is really reliable at doing double entry bookkeeping. They can all track customers who owe you money. They can all provide you with a profit and loss account, or a list of your most lucrative customers. For most businesses, choosing between Sage and QuickBooks is like choosing between a blue pen and a black pen. They’re both perfectly adequate tools for the job.
For what it’s worth, I like QuickBooks a bit more, as I find the reporting function more flexible and I find it quicker to enter data and correct errors. And I think it looks a bit nicer. But if I pick up a new customer who uses Sage, I won’t encourage them to change if they're happy, because Sage is fine too in 90% of cases.
The interesting thing over the next year or two will be the progress of the online, browser-based services. These have a key benefit: easy sharing of data between a business and their accountant, or between different members of staff at a business. Rather than being emailed a data file at the year-end or when there’s a problem, I can just log on to my customer’s account to check their data and make adjustments or corrections where necessary. Where a single company has multiple employees in different locations, or employees who need access to the accounting records but travel a lot, an online system that can be accessed from a PC anywhere – or even a smartphone - makes a lot of sense.
I think it’s likely that before long we’ll be partnering with an online accounting provider so that we can offer this service to our customers. Watch this space!
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